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In a general sense, customers worldwide want many of the same things in the cars and other vehicles they buy. The differences, however, are great enough that meeting their requirements is a highly complex undertaking, Thomas says. Customer centricity necessitates having factories in every part of the globe and a supply base that caters to individual needs and quantities. The downside is an inaccurate forecast. Getting the demand side wrong drives cost throughout the system.
“My role is to help make certain that we have the most efficient supply chain, and the lowest possible inventories to enable us to sell the maximum possible number of units. It’s minimizing holding costs and maximizing revenue. That is becoming more and more critical as a competitive differentiator. It’s simply too expensive to have vehicles sitting in inventories, whether at factories, at dealers, at ports, or anywhere in the supply chain, because that’s dead money. You have to eliminate as much of that as possible,” Thomas says.
Every manufacturer in the automotive vertical has some kind of supply chain management system, Thomas says. The question is, what tool do they have to make that supply chain as accurate and as lean as possible?
Recognizing that it needed something to consolidate data about company performance both regionally and globally, Ford initially engineered its own tool. Its objective was to analyze data from all functions from each internal organization. Though it saved Ford quite a bit of money, Thomas says, the company needed something more powerful.
“We needed something to better see the problems,” Thomas says. “Regional issues can cause global problems, and global solutions have regional implications. Unless you can see both sides of the business, close to the ground to see what’s happening regionally, yet be able to step back and see the global picture, with global product coming out of global factories with global suppliers, you just can’t manage efficiently.”
After 18 months of vetting a number of software vendors, Ford partnered with Kinaxis, and is implementing its RapidResponse tool to enable and enhance its comprehensive supply chain processes.
Building its own system taught Ford executives what they needed to do, but Thomas says it was never intended to be a long-term solution. “We’ve kind of plateaued the capability of that tool. We needed to go to the next step.”
Vehicle manufacturers like Ford look out 18 to 24 months, and plans take time to work through. At the moment, SUVs and trucks are “king” in the U.S. market, but Ford has to keep its eye on such game-changing trends as autonomous vehicles. RapidResponse will enable Ford’s sales and operations planning in that effort, Thomas says.
“S&OP is the beating heart of a company,” he says. “Unless you get the S&OP right, the longer term is always in question. You can have a view of the longer term, but you still have to get there.”
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