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Auto parts maker improves supply chain efficiency with One Network

Drivetrain systems manufacturer Dana Inc. gained inventory visibility and supply chain efficiency by implementing One Network's cloud-based supply chain management system.

Like most modern manufacturers, Dana Inc. has a complex supply chain, tying together suppliers, distributers and endpoints in far-flung locations from China to Mexico to Detroit. The lack of supply chain efficiency was hitting the company hard with high inventory levels and transportation costs, so the company decided to use One Network Enterprises Inc.'s Real Time Value Network, a cloud-based multichannel supply chain management network, in its Commercial Vehicle unit. The result is a much more efficient supply chain that allows daily visibility into accurate demand and inventory levels, and real-time collaboration with suppliers.

Dana, based in Maumee, Ohio, is a manufacturer comprised of four business units: Light Vehicle Driveline Technologies, which manufactures axles and drivelines for pickup trucks, SUVs and passenger cars; Commercial Vehicle Driveline Technologies, which manufactures drivelines for trucks, including long distance, heavy haul, and military; Power Technologies, which produces highly engineered sealing and thermal-management technologies, such as devices that cool the batteries in new electric cars; and Off-Highway Driveline Technologies, which produces large commercial-grade units for agricultural tractors and heavy construction machinery.

Zack MozingoZack Mozingo

Dana faces considerable challenges and costs in supplying and servicing these various global entities, according to Zack Mozingo, Dana's senior global logistics manager, who is responsible for all the transportation requirements, including inbound raw material, for all the business units.

Dana has many overseas suppliers, with one of the largest servicing the Commercial Vehicle group in India, as well as others in different geographic regions, including Mexico. The company wanted to improve supply chain efficiency, control transportation costs and get supply chain visibility that its ERP systems could not provide, so it decided to look at Real Time Value Network.

Demand and control

ERP systems are great for managing and tracking business resources like inventory, but there has been one gaping hole, according to Greg Brady, CEO of One Network, based in Dallas.

Historically, an ERP system did not allow you to transact with trading partners, so your suppliers, carriers [and] retail warehouses couldn't work together on a transaction.
Greg BradyCEO, One Network Enterprises Inc.

"Historically, an ERP system did not allow you to transact with trading partners, so your suppliers, carriers [and] retail warehouses couldn't work together on a transaction -- [they] certainly could not plan together on what the demand was -- so the ERP systems could only take them so far," Brady said. "Real Time Value Network is a cloud platform that allows companies to work together around common goals on the network, and that can be working in conjunction with the older ERP technologies or actually replacing an ERP system."

This was an ideal situation for Dana, which wanted to reduce the significant amount of inventory it carried and the transportation costs of moving the goods.

The opportunity to implement Real Time Value Network came when Dana combined its materials and logistics groups, which allowed the company to better control inventory and transportation spending levels on raw materials that were shipped to all plants, Mozingo said.

"Supplier visibility was one of the initial challenges, as we wanted more visibility to control inventory," he said. "We implemented a Min/Max tool to monitor how we order inventory, which is where One Network brought in an extremely large value to us."

The project started with inventory management in a test environment that was set up in five Commercial Vehicle and five Light Vehicle plants, according to Mozingo. After the pilot phase ended, the Commercial Vehicle unit brought hundreds of suppliers on board that provided parts to those five Commercial Vehicle plants. Real Time Value Network was implemented across three of Dana's ERP systems spanning 10 plants.

Before implementing Real Time Value Network, Dana used a robust spreadsheet that ran as a Min/Max tool to monitor how inventory was ordered and pushed out results to individual plants. The problem was that this approach was not systematic and lacked visibility and collaboration.

"When we first started looking to improve this function, we were just looking for a simple portal-type solution," Mozingo explained. "But after investigating several options, we realized we needed a tool like Real Time Value Network."

Dana's old model was inefficient and inflexible and it could take between two to four weeks to implement any changes in a customer's requirements. Real Time Value Network works in real time and changes can be made in a matter of days.

Let's get visible

Supply chain visibility is a critical function for Dana, according to Brady. Dana suppliers in India and China are responsible for making the product and shipping it to third-party logistics (3PL) warehouses in Mexico, which then send the goods to Dana's U.S.-based factories.

"They need to be able to see multiple tiers down because if the Indian supplier didn't ship the product in time, they could short the 3PL warehouse, which in turn would short the factories, which in turn would short their OEM customers," Brady said. "So, by seeing that second tier, you can make sure that some supplier in the middle of nowhere isn't going to create a ripple effect to cause you to shut down a factory or miss a delivery target window on a customer like Ford or [General Motors]."

Real Time Value Network's collaboration capabilities have proven very valuable for Dana. The planners at Dana's facilities who source inbound material can now go to a single dashboard view, and its suppliers see the same dashboard, which improves supply chain efficiency by enabling instant collaboration between the planners and suppliers. Previously, Dana's Commercial Vehicle ERP would run once a week and the suppliers would get a spreadsheet with their forecast and would have to respond accordingly by phone or email.

"We introduced them to One Network and told them they didn't have to stop calling each other and they didn't have to stop sending emails, but they quickly found that they didn't need these types of communications as they were replaced with One Network's real-time single version of the truth," Mozingo said. "The net result was we went from a one-week view with a 52-week forecast to daily instantaneous collaboration, and they're just eating it up; they love it."

Real Time Value Network is cloud-based, so Dana's suppliers just need an internet connection to join the network and Dana can bring many suppliers on board at a time. Dana designs and preps the suppliers' dashboards, but they have the ability to customize their dashboards and screens based on their needs. They can work on Dana's requirements at the time that suits them versus the previous method that allowed them to work on the 52-week forecast file only when Dana pushed it out.

"Now, if they just want to work on Dana requirements today, they click on their 52-week forecast file," Mozingo explained. "This is the part they just love because they don't have to deal with paper. But if they want to print off a copy, they can click an option on the screen and it will export it."

As the inventory turns

Keeping suppliers engaged and happy is nice, but the biggest benefit for Dana shows up on the bottom line in the form of reduced inventory. Although there is some variability between all the plants, based on plant size and the amount of inventory they carry, savings have been in the double digits on average. Dana has also been able to reduce spending on transportation because better supply chain visibility allows better and more efficient planning. The next phase of the network will incorporate all of North America and other global regions, Mozingo said.

"I'm expecting to see significant transportation savings off of our North American transportation spend, as well as savings for the other global regions," he said. "One Network provides full visibility across the supply chain and that's huge for us, as we have millions of dollars of inventory in-transit at any given time."

Next Steps

Promises and issues when supply chain partners share the cloud

Eight keys to supply chain sustainability

Supply chain analytics can boost the bottom line

Can distribution requirements planning help inventory management?

This was last published in October 2016

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