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© 2011 Eaton Corporation. All rights reserved.
Vehicle Group SCMBreakout Session – Supplier Event March 2011
The Cleveland Marriott
22© 2011 Eaton Corporation. All rights reserved.
Agenda
• Introduction (Harrison/Houle)
• Market Ramp Up (Dickenson)
• Supplier Development (Greenwald)
• Japan Tsunami Update (Rollero)
• Open Discussion
33© 2011 Eaton Corporation. All rights reserved.
Our vision
To be the most admired company
in our markets.
Measured by
• Customers say: “We want to do more
business with Eaton.”
• Shareholders say: “Eaton is one of my best
investments.”
• Employees say: “I am proud to be part of the
Eaton team.”
• Suppliers say: “Eaton is one of my most valued customers.”
44© 2011 Eaton Corporation. All rights reserved.
Global• Employees - 299
• Number facilities
• Truck – 15
• Auto – 32
• Vehicle – 47
VG SCM Who we are
NAFTA• Employees - 142
• Number facilities
• Truck – 8
• Auto – 12
• Vehicle – 20
EMEA• Employees - 61
• Number facilities
• Truck – 2
• Auto – 10
• Vehicle – 12
Brazil• Employees - 52
• Number facilities
• Truck – 3
• Auto – 1
• Vehicle – 4
North East Asia• Employees - 28
• Number facilities
• Truck – 1
• Auto – 7
• Vehicle – 8
India• Employees - 16
• Number facilities
• Truck – 1
• Auto – 2
• Vehicle – 3
Marco RolleroSteve Houle Bryan Huang
Rogerio Branco
Mark Greenwald Bill Braun Marie Wartham
Raju SB
Bill Bennett
Stuart Harrison
2010 Sales $3.5B2010 Spend $1.66BSuppliers >10k
55© 2011 Eaton Corporation. All rights reserved.
Vehicle Group Supply Chain Management
Purpose:
• To accelerate value creation, by leveraging Eaton‟s
size, scale, resources and assets in partnership
with our business, suppliers and customers.
Role:
• Lead value creation and delivery from the supplier
base to our stakeholders/customers via:
• Strategic Sourcing
• Category & Commodity Management
• Supplier & Program Management
• Materials Management & Trade Compliance
• Supplier Quality Management
66© 2011 Eaton Corporation. All rights reserved.
Program
Management
•New Program BOM Mgt
•Flawless Launch
•New Technology
Commercialization
•Product Aligned Cost Out
• Standard Material Processes
•SIOP, Customer Scheduling,
• Material Plan, Inventory Mgt
•Strategy Deployment
•Materials Assessment (MMA)
•Systematic Reporting (LZ)
Materials &
Logistics
•Commodity Strategy
•Supplier Strategies &
Roadmaps
•Source Selection
•Contract Management
•Total Material Cost Out
Purchasing
•Commodity & Manufacturing
Technical Competence
•Supplier Capability Assessment
•APQP & Launch Readiness
•Supply Performance Imp
•Global Reach
Supplier
Development
Ethics
Doing Business Right
VG Best Practice
Standardization – Globally / Regionally
Eaton Vehicle Group SCM FoundationEBE Processes Drive Functional Excellence
77© 2011 Eaton Corporation. All rights reserved.
Why global SCM processes?
• Support cross region cooperation… speak the same SCM language
• Best cost country sourcing (20-40% of any region comes from outside region)
• Extension of increasingly global products into new markets
• Agile global supply chain with currency, demand, other fluctuations
• Harvest scale economics• Leverage with suppliers
• Process tools and training development
• IT infrastructure
• Develop world-class process capability• Global process with global input (vs multiple
regional processes)
• Supports Manufacturing Excellence (IS)
• Build organizational capacity & capability• Standard process, tools, training
• Better ability to move personal across regions
SCM
Architecture
„EPM‟
Trade
& Risk
Management
Supplier
Development
Integrated
Supply Chain
Management
Program
Management
Materials &
Logistics
Purchasing
88© 2011 Eaton Corporation. All rights reserved.
The Journey to Becoming Your MostValued Customer…
• Introduce VG Organization Leadership to key
Suppliers
• Provide key updates for Market and performance
issues
• Create Open Dialogue with Supplier Partners on any
issues
• Secure Supplier Commitments to Join Eaton in
Proactively Meeting Challenges of the Market Place
• Strengthen Relationships & Strategic Alignment to the
Eaton Strategic Imperatives
1010© 2011 Eaton Corporation. All rights reserved.
Ramp Up Capacity Management UpdateMarch 31 , 2011
1111© 2011 Eaton Corporation. All rights reserved.
Feb 2011 PMI new orders rose to 60, output to
59.5, input price to 76.7Feb 2011 PMI new orders rose to 60, output to 59.5, input price to 76.7
1212© 2011 Eaton Corporation. All rights reserved.
Fuel prices
Mar 14 diesel price increased 3 cents to $3.908 a gallon, barrel prices $99
1313© 2011 Eaton Corporation. All rights reserved.
ATA Truck Tonnage Index
Jan freight up 7.6% yoy, Manufacturing/Automotive recovery helping freight
1515© 2011 Eaton Corporation. All rights reserved.
Demand Changes
2011
January
Q1 Q2 Q3 Q4 TOTAL
Eaton
PP
47 54 59 67 227
Eaton OEM
build plan
50.8 57.4
FTR
Dec 23
46 48.3 52 54.7 201
2011
February
Q1 Q2 Q3 Q4 TOTA
L
Eaton 1/18
PMI
46.3 57.5 63.5 71.8 239
Eaton OEM
build plan
51.7 62.1 67.6 64.5 245.8
ACT
Feb 10th
52.3 60.0 63.2 68.5 244
2011
March
Q1 Q2 Q3 Q4 TOTAL
Eaton 2/18
PMI
45K 57K 65K 73K 240K
Eaton OEM
build plan
52.1K 63.5 73.4 70.6 259.6
ACT
Feb 10th
52.3K 60.0
K
63.2
K
68.5
K
244K
January 227k~244 +7%
February 239k~246k +3%
March 240k ~260k +8%
13% Aggregate Change from PP
1616© 2011 Eaton Corporation. All rights reserved.
Truck Demand Percentage Change since January 1 . . .
January February March April May June July AugustSeptemb
erOctober
November
December
January 630 652 699 727 743 717 698 737 868 947 948 949
February 629 672 713 747 742 749 834 820 881 938 951 949
March 629 656 730 788 805 869 922 937 950 965 977 988
February 0% 3% 2% 3% 0% 4% 19% 11% 1% -1% 0%
March 0% -2% 2% 3% 8% 16% 11% 14% 8% 3% 3% 4%
March (M/M) 16% 22% 27% 17% 26% 27% 16% 17% 12% 8%
0%
3%2%
3%
0%
4%
19%
11%
1%
-1%0%0%
-2%
2%3%
8%
16%
11%
14%
8%
3% 3%4%
16%
22%
27%
17%
26%27%
16%17%
12%
8%
-5%
0%
5%
10%
15%
20%
25%
30%
0
500
1000
1500
2000
January
February
March
February
March
March (M/M)
1717© 2011 Eaton Corporation. All rights reserved.
Light VehicleQuarterly Production
-3.8% 2.6% -1.4%
5.6% 1.7% -2.7%
13% 15% 6.1%
-10% 0.2% 4.7%
Q4/Q1 Q1/Q1 Q1/Q1
„10/‟11 „10/‟11 Corp PMIFORECAST
SOURCE: IHS AUTOMOTIVE
* South Asia includes India, Thailand, Australia,Malaysia and Indonesia
NAFTA Q1 production expected to be the strongest of
2011; February LV Sales up 27% with Easier credit
and lease incentives.
Europe LV up 1.7% (PMI 3.4%) with strong export
1818© 2011 Eaton Corporation. All rights reserved.
U.S. Lt Vehicle Sales TrendHistory of Monthly US Lt Vehicle Sales
Source: Wards Automotive Reports
0
200
400
600
800
1,000
1,200
1,400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2009 2010 2011
Thousands of Units
February 2011 Sales up 27%
1919© 2011 Eaton Corporation. All rights reserved.
February U.S. Light Vehicle Sales
Feb '11 Feb '10 % Change YTD 2011 YTD 2010 % Change
Chrysler 94,412 84,201 12.1% 164,304 140,680 16.8%
Ford 153,592 135,944 13.0% 278,056 246,676 12.7%
General Motors 207,028 141,454 46.4% 385,925 287,286 34.3%
Honda 98,059 80,671 21.6% 174,328 148,150 17.7%
Nissan 92,370 70,189 31.6% 164,217 132,761 23.7%
Toyota 141,846 100,027 41.8% 257,702 198,823 29.6%
Hyundai 76,339 58,056 31.5% 141,342 110,681 27.7%
U.S. Big 3 Brands 455,032 361,599 25.8% 828,285 674,642 22.8%
Asian Brands 458,351 349,623 31.1% 828,840 668,726 23.9%
European Brands 76,419 67,208 13.7% 149,468 131,605 13.6%
Total Lt. Vehicles 989,802 778,430 27.2% 1,806,593 1,474,973 22.5%
SAAR 13.3 10.3
Source: Ward‟s Auto.com
PAST RUN RATES:
Sept SAAR 11.7
Oct SAAR 12.2
Nov SAAR 12.2
Dec SAAR 12.5
Jan SAAR 12.5
2020© 2011 Eaton Corporation. All rights reserved.
0200400600800
1,0001,2001,4001,6001,800
Jan
Feb Mar
Apr
May Ju
nJu
lAug
Sep O
ctNov
Dec
Th
ou
san
ds o
f U
nit
s
2009 2010 2011
EU Pass Car Registrations TrendHistory of Monthly EU Pass Car Registrations
2121© 2011 Eaton Corporation. All rights reserved.
Change in
2011 YTD 2010 YTD Share
VW Group 22.2% 20.7% 1.5%
PSA Group 13.8% 14.4% -0.6%
Ford 7.6% 8.5% -0.9%
Volvo Car Corp. 1.9% 1.6% 0.3%
GME 8.1% 7.7% 0.5%
Renault Group 10.7% 10.8% -0.1%
FIAT Group 7.5% 9.2% -1.7%
BMW Group 5.1% 4.3% 0.7%
Toyota Group 4.5% 4.9% -0.4%
Daimler Group 4.3% 4.0% 0.3%
Other Asians* 12.3% 12.0% 0.3%
E.U. Pass Cars
* “Other Asians” includes Honda, Nissan, Hyundai-Kia, Suzuki, Mazda, & Mitsubishi
OEM Market Shares – 2011
Source: ACEA
2222© 2011 Eaton Corporation. All rights reserved.
Vehicle Supply Prime Risk Identification• Auto
• Current suppliers where there is capacity discrepancies between Eaton demand and market capacity(ie: Steel)
• Suppliers with extended
supply chain or protracted
production cycles (ie:
steel, gears, import parts)
• Small suppliers with low
purchasing power
• Components with
extended validation
cycles
• Truck
• Suppliers with extended supply chain or protracted production cycles (ie: steel, gears, import parts)
• Current suppliers where there is capacity discrepancies between Eaton demand and market capacity(ie: Steel)
• Small suppliers with low purchasing power
• Components with extended validation cycles
Primary risk areas are different between auto & truck and risk
management approach need to recognize uniqueness of major risk
areas
2323© 2011 Eaton Corporation. All rights reserved.
Managing Strategic Global Commodities (Valve Steel). . .
1313© 2011 Eaton Corporation. All rights reserved.
Global Valve Steel SIOP Planning
January 20, 2011
1313© 2011 Eaton Corporation. All rights reserved.
EMS 1, 6.5mm
Steel grade Q1 Material shortages in EMEA (kgs)
EMS1 6.5 mm 67,000
EMS1 16.5 mm GR 2,000
EMS1 16.5 mm HR 8,000
EMS1 19.0 mm GR 9,000
EMS1 19.0 mm HR 10,000
Total Q1 2011 Shortages 96,000
•EMS 1, 6.5mm – 30 tons
(in addition to 4 tons previously obtained for Europe)
•Original roll date from Villares was 2/14, ship date late February.
•We have worked with Villares to move up the roll date to 1/24, ship date mid-February.
•Remaining 30 tons to still be negotiated.
•Europe current usage is 32 tons per week, BGH only able to supply 25 tons per week
1313© 2011 Eaton Corporation. All rights reserved.
Next steps for WW team
• Each region to identify representative to support process
• Obtain WW requirement information from each of the
regions for 2011.
• Obtain capacity information for each of the suppliers.
• Build working PPC documents by supplier.
• Evaluate capacity vs. demand by month for each supplier.
• Identify short & long term issues.
• Consolidate & publish information to WW team.
• Set up monthly meetings with each region to review PPC
& demand or capacity changes.
2424© 2011 Eaton Corporation. All rights reserved.
Key Risk Hedge Action Eaton VG has taken…
ACTIONAUTO
(Focus Materials)
TRUCK
(Focus Materials)
Eaton controlled/targeted inventory ramp
-Steel
-Imported material
-Imported material
-Steel
Supplier additional
controlled/targeted
inventory
-Imported material -Imported material
Introduction/approvals of
additional suppliers-Steel
-Steel
-Gears
-Forgings
2525© 2011 Eaton Corporation. All rights reserved.
Key Challenges on the horizon. . .
• Velocity of the supply value chain (all elements
keeping pace)
• Staying ahead of the market (not only now but
2012!)
• Quality and delivery performance (contribution
to premium freight)
• Constrained commodities
• Unknown risk (Japan, increasing commodity
costs)
© 2011 Eaton Corporation. All rights reserved.
Supplier Development
Mark Greenwald – Director of Supplier Development
Dan Thelen – Manager, Supplier Development, North America
Gregorz Jozwiak – Manager, Supplier Development, Europe
2828© 2011 Eaton Corporation. All rights reserved.
Vehicle Group – Supplier Development Organization
Who Are We?
Supplier Performance – Main Themes
Systemic Quality Issues
Supplier Governance – Key Policies Impacting You!
Supplier Qualification
DMR Fee Administration
TS16949 3rd Party Certification
CQI-9, 11 and 12
Supplier Excellence Manual
Rebuilding Organizational Capability
‟09-‟10 Lag
Key Takeaways
Global Supplier Quality – Agenda Topics
3030© 2011 Eaton Corporation. All rights reserved.30
Who Are We?
Structure
Located In 5 Regions
Regionally Based & Deployed
Support All Vehicle Group Businesses
Governance
Centralized Policy and Procedure Deployment
Drive Common Global Systems
Metrics Based
Approach
Non-Generalist Approach
Deploy Commodity/Process Expertise
3131© 2011 Eaton Corporation. All rights reserved.31
SDE Work Streams
Supplier Assessments
Quality Systems and EHS
Manufacturing and Technical
Capacity Verification
Flawless Launch
Advanced Quality Planning
PPAP Support
Development
Variability Reduction
Quality Systems
Process & Tooling
Issues Resolution
3333© 2011 Eaton Corporation. All rights reserved.
QMS – Global Systemic Themes
Manage The Change Ineffective communication to Eaton – nature and timing
Lack understanding of change process/requirements
Poor planning – driving compressed timing
Problem Solving Ineffective problem solving – repeat issues
Poor communication & reaction to issues
Failure to address the systemic root cause
Sub-supplier Management Lack system of governance
Failure to clearly communicate expectations
Lack technical expertise and support structure
© 2011 Eaton Corporation. All rights reserved.
Supplier Governance
Key Policy Changes Impacting
You!
3535© 2011 Eaton Corporation. All rights reserved.
Supplier Assessment & Qualification
Change!
Migration of existing EHS Quality Systems
Assessment (QSA) questions to a formal
EMS based set of questions
• Aligns to Eaton‟s environmental policy
• Meets external stakeholder expectations regarding
“Greening” of Eaton‟s supply chain
• Minimizes business continuity risks within the supply
chain
3636© 2011 Eaton Corporation. All rights reserved.
Supplier Assessment & Qualification
Impact!
All Quality Systems Assessments (QSA) will
include EMS based assessment questions
• Will have own separate score (i.e. no longer a part of the
total QSA score)
• Questions focus on evidence of management systems
rather than qualitative assessment of compliance
• Influencing factor in new business awards
3737© 2011 Eaton Corporation. All rights reserved.
DMR Fee Administration
Update!
Application of $250 fee when issuing a DMR
• Administrative fee for costs associated with corrective
action review and closure
• Policy definition found in Eaton‟s Supplier Excellence
Manual under “Cost of Poor Quality”
Impact!
Consistent application of $250 DMR
administrative fee across Vehicle Group
3838© 2011 Eaton Corporation. All rights reserved.
ISO/TS 16949
Change!
Supply base migration to ISO/TS 16949 3rd
party certification
• QMS which defines requirements for design, development
and production of products
• Aligns to Eaton customer specific requirements
Impact!
Major consideration when awarding new or
replacement business
3939© 2011 Eaton Corporation. All rights reserved.
Special Processes CQI-9, 11, 12
Change!
Compliance to AIAG Special Process Heat
Treat CQI-9, Plating CQI-11 & Coating CQI-12
• Customer specific requirements ISO/TS 16949
• Provides for continual improvement, emphasizing defect
prevention and the reduction of variation
Impact!
Annual self assessment requirement
• Applicable to operations “in house” or outsourced to
service provider
• Close monitoring of suppliers with HT processes (in-house
& outsourced)
4040© 2011 Eaton Corporation. All rights reserved.
Supplier Code of ConductCompliance Monitoring
Application to Sub-Contractors
Supplier ExpectationsChange In Manufacturing Processes
Lot Traceability
Supplier QualificationInitial Supplier Assessment
On-site Assessment
Approving Parts For ProductionAdvanced Quality Planning
Production Part Approval
Supplier DevelopmentImproving Quality Systems
Improving Process Control
SEM Major Components
4141© 2011 Eaton Corporation. All rights reserved.
Supplier Excellence Manual Location
Link: Doing Business
Link: Selling To Us
4343© 2011 Eaton Corporation. All rights reserved.
Rebuilding Quality Competency
2009 & 2010 were challenging business
environments - driving a reduction in continuous
improvement activities and taking a huge toll on
our Human Capital.
Question…what have you done to assess the
impact on your quality organization’s Human
Capital losses and Continuous Improvement
Efforts?
4444© 2011 Eaton Corporation. All rights reserved.
What Has Your Organization Done To…
People Quality
Evaluate impact of lost specialized skills
Reinstate training and skills development
Evaluate talent gap - upgrade talent
Process Quality
Reinstate Kaizen/Lean events
Speed-up process capability improvements
Improve data management and communication networks
Perception Quality
Assess customer‟s perception of quality performance
Assess organization‟s perception of quality
4646© 2011 Eaton Corporation. All rights reserved.
Key Takeaways
Supplier Development
Regionally deployed – Globally aligned
Driving common global standards
Supplier Performance
Three global themes
Manage Change
Problem Solving
Sub-supplier Management
Governance – Key Policy Changes
Systems assessment now includes EMS
DMR administration fee of $250
Migration to ISO/TS 16949 3rd party certification
Special Processes audit CQI-9,11,12
4747© 2011 Eaton Corporation. All rights reserved.
Key Takeaways Cont.
Rebuilding Organizational Capability
People Quality
• Evaluate resources and skills component
Process Quality
• Reinstate continuous improvement plans/projects
Perception Quality
• Organizational and customer perception
4949© 2011 Eaton Corporation. All rights reserved.
Winston Churchill (1874-1965)
“It is no use saying 'we are doing our
best.' You have got to succeed in doing
what is necessary!”
5252© 2011 Eaton Corporation. All rights reserved.
Restricting Factors to Light Vehicle Production in Japan and GloballyLight Vehicle Production in Japan restricted by the following factors:•Condition of the facility and availability of workers
•Issues with the condition of the communication, road, rail and port infrastructure as well as the availability of various fuels
•The ability to secure an ample and stable power supply as well as other necessities such as running water and sewage/waste water treatment
• Additional restrictions on suppliers inside “protection radius” from Fukushima Power plant
•A stable supply of components/systems to ensure output of components and systems
Analysts say it is just a matter of time before more supply-chain disruptions
develop for manufacturers globally- visibility on Tier 2-3-4 not completely clear as
for now
Source: IHS Global Insight, 21 March 2011
5353© 2011 Eaton Corporation. All rights reserved.
Automotive Component Industry in JapanSubstantive Near-term Bottlenecks to Overcome
• According to Nissan Motor Co. CEO Carlos Ghosn, about 40 component suppliers in Japan remain in difficulty after the earthquake
• Electronic components, plastics and rubber are in short supply and will affect Japanese automakers and rivals outside the country
• Japan accounts for a sizeable chunk of the technology in cars, including 20% of worldwide semiconductor production, according to iSuppli
• Through the Tier-2 and -3 supply chain, the majority of OEMs utilize electronic components from Japan
• The downstream effects are beginning to impact volume outside of Japan. Several variables will influence how quickly these issues take effect and how quickly the OEMs can overcome supply disruptions
• Impact varies from immediate to 4-6 weeks downstream (many suppliers managing long supply chain with additional inventory bank)
• Even if you or Eaton are not directly affected, Customer call-offs could be impacted dramatically as the OEM misses other parts to complete the Vehicles
Source: IHS Global Insight, 21 March 2011; Automotive News Europe 23 March 2011
5454© 2011 Eaton Corporation. All rights reserved.
Source: Supplier websites
Automotive Component Suppliers in Japan (non-conclusive list of suppliers- public information)
Supplier Name
Manufacturing components
Status
Denso Corp
Thermal system components, Powertrain control.
Planning to start production from 21st March 2011.
Bridgestone
tire segment, auto-related parts,
Production stopped till further notice.
Johnson Controls
Automotive interiors, batteries for automobiles & hybrid electric vehicles
5 production plants closed till further notice.
Aisin Seiki Ltds
Drivetrian, Brake & Chassis, Engine related products, Body related products.
11 plants closed till 22nd March 2011.
BorgWarner Inc
Emissions Systems , Thermal systems, Turbocharges, Drivetrian systems.
Production ongoing.
TRW Automotive Inc Integrated vehicle control, braking system, suspension system, engine components, steering system
Production ongoing.
NSK
Bearings
Production stoppage in 1 plant & 2 partial production stoppages.
Autoliv Inc
Electronics, Airbags, Inflators, Crash testing.
Production ongoing.
Takata Corp
Seat belts, Airbags, steering wheels
Production ongoing.
5555© 2011 Eaton Corporation. All rights reserved.
Eaton Approach and communications
• Team is meeting twice a week to review approach and
status• Daily e-mail updates provided to plant managers and executive team
• Direct suppliers have been contacted to
• Identify affected (potentially) parts
• Mitigation plans starting week of 21-March
• Remaining sensitive to the lives lost and concern for
the people there.
• Addressing two fold problem:
• Supplier end (potential lack of material)
• Customer end (potential reduction of sales volume)
5656© 2011 Eaton Corporation. All rights reserved.
Overall Response Status by DivisionJapanese Earthquake ResponseDivison Target Date Comment
Auto
1st Tier Suppliers Identified 18-Mar
2nd Tier Suppliers Indentified 25-Mar SCM to Canvas Supplier base
Mitigation Plans Created
Customer Advice Developed 25-Mar Reviewed by Legal, distributed to Sales on 21-Mar
Long Term Monitoring in-place
Clutch 14-Sep
1st Tier Suppliers Identified 18-Mar Spring Suppliers, Bearings
2nd Tier Suppliers Indentified 26-Mar Steel suppliers are running. SCM to Canvas supply base
Mitigation Plans Created 26-Mar Contacting Corp for intel on long term impacts
Customer Advice Developed 25-Mar Reviewed by Legal, distributed to Sales on 21-Mar
Long Term Monitoring in-place
Transmission
1st Tier Suppliers Identified 18-Mar Bearing Suppliers, Board Manufacturers for ECU
2nd Tier Suppliers Indentified 26-Mar Need to confirm electrical component suppliers
Mitigation Plans Created
Customer Advice Developed 25-Mar Reviewed by Legal, distributed to Sales on 21-Mar
Long Term Monitoring in-place
Hybrid
1st Tier Suppliers Identified 18-Mar Hitachi as primary supplier of main components.
2nd Tier Suppliers Indentified 25-Mar Tracking Sigma for housing, Hitachi to confirm
Mitigation Plans Created
Customer Advice Developed 25-Mar Reviewed by Legal, distributed to Sales on 21-Mar
Long Term Monitoring in-place
Complete
Complete
5757© 2011 Eaton Corporation. All rights reserved.
Impact on Light Vehicle Production in Europe
• Audi, VW, Fiat announcing no immediate disruption but anticipating May issues
• Daimler and BMW announcing no disruption
• Toyota and Honda overtime in EU has been cancelled
• Staged downtime at GM facilities in Europe (Zaragoza and Eisenach building the
current Corsa), loss of ~1300 units per day
• Volvo output in Europe may only have until early April until component supply is
starved- Genk plant already announced 2 weeks shutdown
• PSA‟s production of diesel engines will be hit from 23 March as a result of
electronic components made in the area affected by the natural disaster (althoug
latest news seem to remove the holdback)
“If you can‟t get that core part, it doesn‟t matter if you get 50% of
your components from Japan or just half of 1%,” said IHS
Automotive analyst Michael Robinet. “Welcome to the global
automotive industry.”
5858© 2011 Eaton Corporation. All rights reserved.
• Chrysler Group LLC
• Restricted dealers from ordering vehicles in 10 paint colors produced at factory
in Japan.
• Ford Motor Co.
• Restricted dealer orders for "tuxedo black" and three red paint shades; affects F-
150 and Super Duty pickups, Explorer, Expedition, Focus, Taurus, Lincoln MKS
and Navigator.
• Fuji Heavy Industries (Subaru)
• Canceled overtime shifts at Subaru of Indiana (Legacy, Outback, Tribeca and
Toyota Camry) until April 1; no parts shortages reported
• General Motors
• Resuming Chevrolet Colorado and GMC Canyon production at Shreveport, La.
plant; shortage of undisclosed parts from Japan halted production week of March
21. Alleged shortage of electronic parts could hit as early as 3 weeks from now
Impact on Light Vehicle Production in USA
5959© 2011 Eaton Corporation. All rights reserved.
Toyota Motor Corp.
• Informed dealers March 25 that they face a shortage of 233 parts numbers for at least
30 days; Toyota Motor Sales will not fill any orders of short-inventory parts to replenish
dealer stock
• North American vehicle and engine plants (13) running; overtime curtailed
• Sent memo to workers in U.S. and Canada March 23, warning thinning supplies will
cause some interruptions in production; no definite time frame for stoppages
• Prius availability in the U.S. could be affected by damage to a hybrid battery plant;
RAV4 crossover also affected
Japan:
• Extended production suspension through March 31; facing rolling blackouts and supply
shortages affecting all of OEMs
Impact on Light Vehicle Production in USA- continued -
Japan
6161© 2011 Eaton Corporation. All rights reserved.
Summarizing- 2011 SCM imperatives
• Supplier razionalization
• Improved Material Management
• Demand management
• Supplier integration
• Advanced Quality Planning
• New Product introduction
• Build regional capabilities
……
• By being competitive you keep us competitive
assuring continuous mutual growth