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Bill KruegerSenior Vice President, Manufacturing, Purchasing and Supply Chain Management for the AmericasNissan North America Inc.
Senior Vice President, Manufacturing, Purchasing and Supply Chain Management for the AmericasNissan North America Inc.
Global Sourcing Global Sourcing StrategiesStrategies
Supply ChainSupply Chain
15,000km, 150km …or 15km? Bill KruegerBill Krueger
Automotive News Manufacturing ConferenceMay 17, 2007
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
INDIA
INDIANA
IN THE PLANT…or
What’s the correct answer?
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Low cost of labor availability
349 M807 M
2,600 M
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Source: The Economist, June 24th 2000, p.81
Technology map of the world
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Sillicon Alley,
NY
Boston, MA
Austin, TX
Cambridge,England
Stockholm, Sweden
Helsinki, Finland
Sophia Antipolis,France
Munich,Germany
Tel Aviv, Israel
Bangalore,India
Singapur
Hsinchu-Taipei,Taiwán
Silicon Valley,CA
MonterreyMEX
Technology centers
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Japan – Local
130km
Europe - Local
600km
Lower labor→JPN
2400 - 6500Km 18-50 x
Lower labor → NA
2000 - 15000Km
4-30 x
US - Local
500km
Average Distance 350 Km →4,600 Km(13 x)
Logistics Distances for Global Parts
Lower labor → EUR
2500 - 8000Km
4-13 x
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Order Lead Time – Firm Horizon
U.S. Mexico Japan China
86
40
16
4
DAYS
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Risks associated with Global sourcingFinancial Risks• Obsolescence-Commitment for Fab & Raw
materials due to extended supply pipeline.• Currency Fluctuation/Stability-price adjust
agreements• Premium Freight-recovery & refilling the pipeline• Inventory Carrying Cost• Non-Price related Supply Chain Costs
–Warehousing–Repackaging–Expendable packaging disposal–Sequencing parts
• Transportation Price Fluctuations• Supplier Management & Oversight Cost
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Supply Risks • US Customs Delays due to lack of C-TPAT
certification• Transit Delays –
• Weather• Carrier route changes• Port of call cancellation• Port labor or Customs disruptions/ strikes
• Freight Damage• Systems failures• Raw Material Supply Control & Stability• Design Change & Engineering Change Coordination• Global Supplier Capacity
Risks associated with Global sourcing
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
•
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
SCM process map
Manufacturing
Material Handling CCR
Parts Arrangement
SchedulingInventory Control
Parts Ordering
Production Material
Transport
Nissa
n an
d In
finiti
Dea
lers
Veh
icles
Vehicle Orders & Forecast
M&SVehicle Orders & Forecast
Production Part
Suppliers
Parts Orders & Forecast
Service & Accessories
Service Part
Suppliers
Service Parts
International Logistics
Domestic Logistics
Service/ Accessory
Parts
Service/ Accessory
Parts
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
MANUFACTURING PURCHASING
DESIGNSUPPLY CHAIN
MANAGEMENT
STRONG BUT STRONG BUT INDEPENDENTINDEPENDENT
CustomersSuppliersCONSEQUENCESCONSEQUENCES??
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Sub-optimalLogistics
OptimalPurchasing
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
MONOZUKURI – “MAKING THINGS”
MANUFACTURING
DESIGN
PURCHASING
SUPPLY CHAIN MANAGEMENT
CUSTOMERQUALITY
NOWNOW
CONSOLIDATEDOBJECTIVESREGIONAL
INTEGRATIONNNA, NMEX, NBA
CUSTOMERRESPONSIVENESS
CustomersSuppliersVALUE NETWORK
OPTIMIZATION
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
MONOZUKURI’S Overarching Goal:
Value creation by reducing the total delivered cost of high quality products to our customers.
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
• Parts assembly level optimization
• Development of efficient packaging
• Transportation filling optimization
• Build the logistics corridor
Regional Supply Chain Management(Americas)
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
NGNG
OKOK
Utilization of Efficient Packaging
0.00
0.50
1.00
- p
art
s p
er
m³
+
- logistics cost (pkg & freight) +
• Packaging must guarantee parts QUALITY during transportation and handling.
• To achieve max. quantity of parts per m³.
• Use of returnable or disposable packaging based on optimum logistics cost.
Best practice
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Transportation fill optimizationModular
Modular packaging
packaging““okok””
Non modular
Non modular
packaging
packaging““ngng””
Dimensions according to AIAG standards(48” x 45” pallet footprint) to get
maximum transport utilization
NGNG
Key elements to succeed:• Use of modular packaging (AIAG)
• Standardized transportation equipment
• Supplier responsibility as shipper of their own products
(per piece)
OKOK
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
NNA-SNNA-S
NNA-DNNA-D
NNA-CNNA-C
NMEX-ANMEX-A
NMEX-CNMEX-C
Aguascalientes (MEX)•Stamping•Engine & Transaxle•Vehicle
CIVAC (MEX)•Vehicle•Production of service parts Canton, MS (USA)
•Stamping•Vehicle
Decherd, TN (USA)•Engine & Transaxle
Smyrna, TN(USA)•Stamping•Vehicle
Nissan Mexico & USA plantsNissan Mexico & USA plants
Laredo, TXLaredo, TX
VeracruzVeracruz
AltamiraAltamira
Lazaro CardenasLazaro Cardenas
ManzanillManzanilloo
AcapulcoAcapulco
Eagle Pass, TXEagle Pass, TX
Logistics corridor
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
Critical success factors
• Manage the supply network, not just suppliers
• Effective supplier relationship management and supplier development
• Focus on total delivered cost, not price
• Involve all functions in the value network
• Develop parts commonization strategy – reduce complexity
• Seamless global processes, program discipline and efficient way of working
• KPIs and Goals aligned across all functions
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
The Americas SCM Mission is to ….
Support Regional Purchasing sourcing activities which result in the optimum Delivered Duty Paid (DDP) parts cost.
Support the manufacturing process with the packaging designs, logistics routes and facilities which optimize the delivery of globally, regionally, and locally sourced parts.
Bill KruegerBill Krueger Global Sourcing Strategies – Supply ChainGlobal Sourcing Strategies – Supply Chain
VALUE NETWORKOPTIMIZATION
MONOZUKURI – “MAKING THINGS”
MANUFACTURING
DESIGN
PURCHASING
SUPPLY CHAIN MANAGEMENT
NOWNOW