Supply Chain Visibility at GKN

GKN Driveline North America (GKN DNA) sees the upside of a world in which it could view and share identical business information with both its customers and its suppliers, regardless of the software packages that its business partner uses. According to Teresko in IndustryWeek the automotive industry, as a whole, will have a better handle on the technical feasibility of this scenario by November of 2003. That’s when an Inventory Visibility and Interoperability project (IV&I) is scheduled to have generated “proof of concept (1).”

Sponsors of the IV&I project include the Automotive Industry Action Group (AIAG) (), Original Equipment Supplier Association (OESA), and Odette, an industry association of European automotive manufacturers and suppliers. According to Teresko, the IV&I project team believes that “being able to seamlessly communicate demand throughout the supply chain could result in an estimated net savings to the auto industry of $255 million.”

Currently, automotive suppliers such as GKN DNA are required to subscribe to and support multiple inventory and demand visibility tools, which increases the total cost of operations in the supply chain. In addition, the complexity delays further implementation of the tools up the supply chain. The IV&I team’s vision is that “data will be shared in a secured environment using a standard automotive electronic format that can be accessed using a PC and a browser and can be integrated into the company’s applications,” wrote Teresko.

According to Teresko, the IV&I project team believes interoperability will “greatly increase business velocity via time savings.” The idea is underscored by the notion that the project will have a positive impact on trading partner interactions such as inventory replenishment signals and will help reduce lead time in the supply chain.

“The IV&I project sounds promising,” said Geoff Greene, materials and logistics manager at GKN DNA’s Roxboro, NC facility. “I am sure that we will evaluate IV&I tools and standards as they are developed, but we have a conservative approach to adapting new information technology systems. Data integrity and security are critically important to our operations. Security, customer expectations, and expected return on investment will all be part of the evaluation process.”

Furthermore, the IV&I project is relevant to only about half of GKN DNA’s business. For example, two of GKN DNA’s customers are Toyota and Honda, who are not key stakeholders of the IV&I project. “They have their own supply systems,” said Greene (2).

It is also important to remember that no supply chain visibility system can live up to its potential without inventory accuracy. Davies, author of an article in World Trade (3), wrote: “For manufacturers and distributors looking to make smart business investments – the kind that pay off in productivity gains and customer satisfaction – warehouse automation is a key to success.”

In fact, Greene has witnessed this success firsthand. He was at GKN DNA in November of 1997, when the company was acknowledged in Automatic I.D. News for the effective use of an automated data collection and radio frequency communication system (4). Since then, the company has continued to make further improvements in this area. Supply chain inventory visibility tools have proven to be an enabler that has allowed the GKN ADD to be price competitive in the automotive industry, and consistently deliver its product to the automotive OEM on time. As such, it is clear that the entire supply management staff at GKN DNA is aware of the benefits — or rather, the necessity — of supply chain inventory visibility.

Greene agrees with a point made by Davies’, who said: “The primary goal of (supply chain inventory visibility) is to enable businesses, in the form of their distribution center managers, to take control of their operations.” But leveraging supply chain visibility is about more than having good information systems. “Doing so requires the ability to expertly handle the following key supply chain ‘levers’: orders, inventory, labor & equipment, and warehouse space.”

References:

(1)Teresko, J. (August, 2003). Sharing their way to savings. Industry Week.

(2) Greene, G. (August, 2003). Discussion with author.

(3) Davies, J. (April, 2003). Inside the best in class D/C. World Trade.

(4) Forcinio, H. (November, 1997). Dreaming the not so impossible dream. Automatic I.D. News.