Resolving Supply Disruption

Resolving Supply Disruption

A client seeks turnkey support to re-establish parts supply for 150 part numbers by identifying, qualifying and launching new suppliers along with component testing and validation.


Challenge

A global automotive OEM experiences a severe service parts shortage for five premier models accounting for over 20 million vehicles in the field. All these vehicles are less than 10 years old and many are still under warranty; a growing number of customers are forced to rent vehicles without a feasible repair solution for their own car. The situation is becoming a drain on customer satisfaction and loyalty as well as opening up legal liabilities and lawsuit risk. The client is spending millions of dollars every month on this problem with no end in sight.

The part shortage includes complex transmission parts originally manufactured by a dissolved supplier and most of the equipment and tooling was scrapped or lost. Several parts from liquidated tier-2 suppliers no longer have drawings available. The OEM client has recently recovered from the financial crisis with a lean team and does not have enough cross-functional resources available to deploy to this issue.

Approach

RSC provides a self-sufficient team of engineering, quality, purchasing and finance specialists with the mandate to prioritize and resolve these part shortages, starting with the most severe. The action plan has five elements:

  1. Evaluate make/buy business case: Assess whether to outsource parts to external suppliers or produce internally considering available equipment, investment requirements, technical capability of source, lead time and total cost
  2. Find qualified niche suppliers: Identify, evaluate, and screen niche suppliers capable of re-developing and manufacturing fully validated service parts
  3. Optimize design and test plan: Optimize design, test and validation plans for parts to shorten lead times accounting for residual life of vehicle population
  4. Conduct technical reviews: Reverse engineer part drawings and technical specifications for cases where legacy documents are missing
  5. Select suppliers and accelerate launch: Select suppliers and accelerate production, testing and PPAP

Recommendations

  • Identified all costs for both in-house make and outsource options. Developed holistic metrics to assess technical capability of suppliers vs in-house, costs and lead time and recommend optimal solution
  • Utilized Ricardo’s global supplier database to extend RFIs to 200+ suppliers and shortlisted 78 vendors capable of producing these parts for RFQ
  • Re-engineered part drawings, technical specifications and process sheets for parts where original documents were lost
  • Conducted operation by operation technical reviews with selected suppliers to optimize cost and assure quality
  • Finalized 17 suppliers for sourcing 150 part numbers, worked with suppliers to accelerate production, and oversaw testing and validation. Led root cause analysis for any stumbles on the road to PPAP

Results

  • Resolved supply disruption from drawing generation to PPAP for complex transmission parts in 14 months
  • Avoided $27M (31%) in incremental cost
  • Identified and qualified 17 new suppliers as go-to vendors for future part needs
  • Developed a mitigation plan to avoid future occurrences and quick recovery for unforeseen events

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