Managing Automation - December 2007 - (Page 33) Like Mattel, Mercedes Benz was hurt by a poor outsourcing relationship, according to Joe Barkai, practice director at Manufacturing Insights, an IDC company. In 2006, Mercedes’ initial quality rating plummeted to 139 “Both parties must agree how they will problems per 100 vehimeasure each other and hold each cles, well in excess of the industry average of 124 other accountable for performance.” problems per 100 vehi— Danny Ertel of Vantage Partners cles. The majority of the The Exostar solution is designed to let Boeinitial quality problems were caused by elecing and its partners collaborate on planning trical and software problems in the cars’ elecschedules, issue purchase orders, track purtronic systems. chase order changes, exchange shipping inWhat caused Mercedes to slip so badly in formation, manage returns, track shipments, the JD Power quality ratings? and manage inventory consumption across “The automotive industry is an example of the multiple tiers involved in the manufacturcomplex systems. The modern car is probably ing process. The system also monitors events 70% built by tier-one and tier-two suppliers,” and process exceptions that occur between Barkai says. “The brand owner does relatively partners, and it evaluates the impact of these little but integration; many items are manuevents against the master schedule using synfactured elsewhere. So, the brand owner — chronized time-sequenced information. The the integrator — is dealing with an issue software includes reporting capabilities that alwhere they have to integrate low Boeing and its partners to track the supand interface many comply chain’s overall performance. ponents, which is ver y Exostar’s SaaS delivery model and existing complex. And not only do network of connectivity into the A&D supply the systems have to work ESTABLISHING CLEAR chain enabled Boeing to go live with the solutogether, they have to fail EXPECTATIONS, CHECKPOINTS tion in less than 90 days from project kicktogether, in a graceful fashTo ensure a healthy outsourcing relationship, off. Exostar’s enterprise system was configion, so as not to cause catcompanies must: ured to meet Boeing’s current process astrophic failure. Merrequirements, and it can evolve as process cedes fell into this trap: • Manage access to, and revisions of, the outsourcing contract, statements of work, and other key documents. requirements or partners change over time. Small failures in their outMulti-partner relationships, like the ones sourced electronics sys• Track issues, analyze their root causes, manage any necthat Boeing enjoys, are among human betems led to more failures.” essary escalations, and report on resolutions. ings, not technology, says Vantage Partners’ In such a fragmented • Monitor performance and compliance with serviceErtel. However, outsourcing relationships environment, in which the level agreements (SLAs) and trigger notifications, calcusucceed or fail based on the technology as a company is dealing with late penalties as necessary, and report on performance patterns by provider, location, service line, etc. scaling factor. specifications distributed “The ability to manage complexity is huge, to a variety of outsourced • Survey stakeholders to assess the ongoing health of yet the real success that translates to a comcontractors, the spec does the relationship. petitive advantage is the combination of two not include issues such as • Manage the process of generating, approving, and factors: the ability to scale and somebody sitfunction inter faces and accounting for additional resource requests and other ting down in a top-to-top discussion and ways to ensure that the change orders. agreeing on how the risks and rewards will components would fail • Define governance models, support implementation of be shared in the relationship,” Ertel says. gracefully. Each compocommittee structures, and manage regular meetings and “Both parties must also agree how they will nent, built to spec, may their outputs. measure each other and hold each other acwork fine alone; the outSource: Vantage Partners countable for performance. Clearly, the Matsource partner may have trate across echelons of the supply chain has gone up exponentially.” Boeing turned to Exostar for a solution to manage processes executed across multiple tiers of its supply network. The manufacturer uses the Exostar Supply Chain Management Solution, powered by E2open software, to manage the complete order lifecycle and returns process across multiple partner tiers, while also tracking planning schedules and consumption, and managing replenishment for the Boeing Partner Managed Inventory program with tier-two partners. tel example is a case where that was not done to the degree necessary, but Mattel was just one of many. It is really the exception rather than the rule that companies are actively, at the senior-most levels, sitting down to decide how are they going to mitigate risks like the ones experienced by Mattel.” FAILING GRACEFULLY p bestractices Photo courtesy: Vantage Partners 33 December 2007
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