Supplier Expectations Day November 9, 2011 - Connection Expectations-Supplier... · – Only one common “stakeholder ... – APQP – TS16949 Compliant. ... • Review your plans

Mark MensonidesDirector of Purchasing

Supplier Expectations DayNovember 9, 2011

Supply Chain Collaboration -Working Together in a Fiercely

Competitive Environment

3Disclosure or duplication without consent is prohibited

The Procurement Marketplace

• The marketplace is undeniably the most competitive ever –at all Tiers

• GeoPolitics, Catastrophic Supply Interruptions, Economic / Demand fluctuations exponentially result in supply chain volatility

• The ways of transacting business are radically different than just a couple years ago– Supply Risk– Cost Reduction– Customer Driven Expectations


Volatility Index – Nov 2011


The Procurement Marketplace

• Yet, the basics of fundamental business practices are more important than ever– Quality– Cost/Value– Delivery– Service


Looking at “Partnerships”

• Partnerships can work………but usually do not– There exists a real lack of understanding of what

customer/supplier partnerships are– Primary objective for each are in conflict -- maximizing profit– Only one common “stakeholder”– Individual trust may exist, but organizational trust usually does

not


Looking at “Partnerships”

• If not “partnerships”……… then what?– “Old style” relationship (e.g. confrontational win-lose?)– Opportunist relationships (e.g. power based)– Collaborative relationships (e.g. recognizing interdependence

for success)


Competitive Collaboration

• What Does “Competitive Collaboration” Mean?– Most importantly it recognizes that our relationships and

successes are interdependent– It accepts and embraces that we exist in an environment in

which we have competitors and competing objectives– It drives us to jointly define the best solution for our business

relationships


Competitive Collaboration

• What is success in a competitive collaboration environment?– Value becomes the measure of success in both buy and sell– Business is evaluated across all products and services, not

part by part basis– All parties understand and are playing by the rules of the game

(both buy and sell rules)


Magna Mirrors’ Collaborative Guidelines

• To Our Suppliers– Magna Mirrors will develop and reward suppliers for

performance and improvement (we will clearly articulate the expectations)

– Commitments made by our purchasing staff are made on behalf of our entire organization (we will build organizational trust)

– Procurement & supply chain technologies (i.e. web based tools) will be utilized when advantages exist to both parties


Magna Mirrors' Collaborative Guidelines

• From our Suppliers– Monitoring and reacting to performance metrics provided by

Magna Mirrors will be each suppliers’ responsibility– Commitments made in choosing Magna Mirrors as a customer

come from executive commitment, Magna Mirrors is not a customer of convenience

– The best in market, technology, and process improvements will be brought to Magna Mirrors and Magna Mirrors products


Purchasing Organization

* Matrix Reporting Direct Through Divisional General Managers

OPERATIONAL PURCHASING

Reports through Division General Manager

MONTERREY HOLLAND 128N & 128S

Jose HernandezBuyer

Mark MensonidesDirector

Commodity Mgr Inter-Co, Glass, Actuators,

Adv. Product Dev.

Cindi KooyersStaff Assistant

Asia Purchasing Office

Mirrors/Closures

Beverly Bekius*Commodity Mgr.

Inj. Molding, Paint, Resin, Foams, Gaskets

Dave Carlson*Commodity Mgr.

Wire Harnesses

Doug TeepleBuyer

Karen WoudstraBuyer

Roxanne RepaalAdministrative

Assistant

Bev BekiusBuyer

Tom MaycroftBuyer

Dick DeMaagdBuyer

Dave CarlsonBuyer

NORTON SHORES

Leigh ReboneBuyer

Tom MaycroftCommodity Mgr.

Die Casting

Aaron HarringtonCommodity Mgr.Packaging, Fasteners,

Springs & Stamping

Rob GauckPurchasing

Analyst

Doug Teeple*Commodity Mgr.

PCB, LCM

Jose Hernandez*Commodity Mgr.

E-Motors

KRAFT

Newaygo

LOWELL /SPARTANBURG

Aaron HarringtonBuyer

NEWAYGO

Rob GauckPurchasing Analyst

Dick DeMaagdCommodity Mgr.Lighting, Heater Pads


Buyer Roles - Matrixed

• Strategic– Develop and Execute Commodity Strategy including

management of the Approved Supplier List– Negotiate productivity improvement agreements

• Tactical– Manage program RFQ activity– Source new programs– Manage day-to-day activities


What does this mean to me?

Impact to the Supply Base


QualityDelivery Commercial

Service

Supplier Performance Rating System


Expectations of the Supply Base

• Quality– 10 PPM– PPAP inclusive of Run at Rate– 0 DCARs during Launch + 90 days– On-time response to DCARs– APQP– TS16949 Compliant



• Delivery– 100% On-time shipments– Adherence to release quantities or min/max inventory levels– Accountability for supply continuity - while working to decrease

inventories in the pipeline– No paperwork defects



• Commercial– Competitive market-based pricing at launch– Year-over-year pricing improvements that meet OEM program

expectations – Averaging 4% across the scope of spend– VA/VE implementation


Why Annual LTAs & VA/VE Cost Reductions?

• Manufacturing improvements & supply cost reduction provide the greatest opportunity for profit improvement – for all Stakeholders

• For each dollar saved in supply cost reduction, approximately 70% flow through

• By contrast, for each dollar of incremental sales, only approximately 30% flow through


The Facts - Cost of Business Must Decline

60

305 5

Cost Drivers

Material Cost Manufacturing Cost

SG&A Cost R&D, Corp. Alloc., etc.



• Service– Proactive involvement– Responsiveness to Magna requests– Open Issues resolution– Participation in new initiatives– Development of competencies

• Manufacturing• Materials• Product and Process Technology• Speed/first to market• Creativity and flexibility


Supplier Stratification

• Supply base is stratified by commodity• Stratification used in future sourcing decisions• Current sourcing reviewed for worst performers



• Weighted Average SPRS score less than 70• Supplier Stratification = Eliminate• Impact:

– Resource and/or Balance-Out



• Weighted average SPRS score 70-79• Supplier Stratification = Probationary• Impact:

– No new sourcing without Director approval– Resourcing options explored– Supplier improvement plans required



• Weighted average SPRS score 80-89• Supplier Stratification = Approved• Impact:

– Approved for new sourcing– Supplier improvement plans required



• Weighted average SPRS score 90-100• Supplier Stratification = Preferred• Impact:

– Preferred source for new programs


Recommended Supplier Actions

• Review your SPRS information every month• Understand how you are performing and where you are

stratified• Develop improvement plans to address non-performance• Review your plans with your buyer• Roll plans into your BOS/CIP and monitor progress/results

Documents

Supplier Expectations Day November 9, 2011 - Connection Expectations-Supplier... · – Only one common “stakeholder ... – APQP – TS16949 Compliant. ... • Review your plans