In 2002, the Automotive Industry Action Group (AIAG), a not-for-profit association in United States dedicated to publish standards for supply chain management, and its European counterpart, Odette, introduced MMOG/LE as result of a visionary project from the three largest automotive manufacturers of North America: Ford, General Motors and Chrysler (now Fiat Chrysler Automobiles), to raise their supply chains to a high performance level in terms of continuity, efficiency and responsibility.
MMOG/LE is the acronym of Materials Management Operations Guidelines/Logistics Evaluation; it is a consolidation of best practices of logistics in automotive industry translated in almost 200 logistics criteria which allow organizations to assess their practices and benchmark them against the top performance in industry. Nowadays, Ford, GM, Fiat Chrysler, Volvo, Land Rover, Renault, Peugeot and other OEMs require an annual submission of this assessment to tiers, in order to guarantee that their supply chain is as lean, effective and safe as it can be in the understanding that the adoption of a continuous improvement culture helps to avoid disruptions and downtime in production lines and increases the benefits to companies maximizing the utilization of resources. If you are not part of automotive industry don´t stop reading; in my opinion, any industry can use MMOG/LE, it is a great exercise of cross-industry benchmarking that will help you to improve the performance of your industry by adopting some best practices.
MMOG/LE is a self-assessment. Some consulting companies offer their services as a third-party auditor, especially for those companies where the sentimental value is high, it´s recommendable to get some help, but basically any individual can use this friendly tool and assess the business.
I can´t share the file due to copyright laws, but you can download the MMOG/LE, excel or PDF file, in this link https://www.aiag.org/products/products-list/product-details?ProductCode=M7-4, prices are listed in the same website, but usually they are not higher than 80 USD.
Well, once you have your tool, you will find two versions FULL and BASIC. Normally OEMs require the full version which contains 197 criteria; the basic version reduces to 106 criteria. I suggest trying with full version since the beginning, you will have a chance to see the real size of challenge that you are getting. Right away, you will find the criteria divided in 6 chapters that I will describe briefly to give you an idea of what is all about:
CHAPTER 1 – STRATEGY AND IMPROVEMENT
In this chapter, you will be asked about the basics of your company: mission, vision, strategy and goals; if these elements are not clear in your organization, it means that your business was founded over sand and will fall at some point. As well, will be evaluated how you measure and react to problems, it must be evidenced with historical data including action plans.
At this point, you will assess how much conscious your company is of their own constraints and what you are doing to overpass your obstacles, I mean, if organization has adopted a continuous improvement culture.
Finally, the last set of criteria in this chapter is to know if you are contributing in develop of strong relationships with your supply chain partners, suppliers and customers. This is clear when saying “your company is as strong as the weakest link in your supply chain”, your enterprise must be committed with the growth of your partners as much as its own.
CHAPTER 2 – WORK ORGANIZATION
An organized business is basic for success. Your processes must be clear and reflected in writing operating procedures, work instructions or any other document that works as guideline to reach a standard. Communication and work environment play a big role in this evaluation; actually this part is about people, so human resources management is assessed as a supplier of training and development of high performance employees.
Last part of this chapter is to know about your “business continuity plan”; I mean, in case of contingency your company should be prepared to react and back to operation in a short time, that´s why the risk management procedures must be set and understood for decision makers of your company.
CHAPTER 3 – CAPACITY & PRODUCTION PLANNING
In few words this chapter is to assure that your company is able to produce the volume that you are being required to build by your customers. The strategic planning is evaluated in this part of MMOG/LE: product realization, capacity of your machines, equipment and personnel to meet client´s release, even how you receive and work with customer requirements to translate them in orders to production line. If you have a trucking company or a business different of a production plant, it´s easy to adapt the criteria to your job, your production line is your yard and your product is a service.
For MMOG/LE standard is recommendable having these processes integrated in a system (MRP or ERP) to guarantee the accuracy and control of your planning.
CHAPTER 4 – CUSTOMER INTERFACE
This is the core chapter in my opinion, the contact with your customers. Every business works for their customers, doesn´t it? So, the criteria in this section of assessment are orientated to review how your communication with your clients is. It is not just about verbal communication; it includes packaging, labeling, shipping, transportation and customer satisfaction, understanding that those are ways of communication because talk about your company more than thousand words.
CHAPTER 5 – PRODUCTION & PRODUCT CONTROL
This chapter is about materials management. Inventory management (identification, storage, non-conformance supplies or product, finished goods, work in progress, etc.), traceability and engineering changes are the subjects of this section. Your company must have procedures to guarantee that parts are not mixed, damaged or even lost in your facilities. Few weeks ago, I wrote about inventory as the strongest link in your supply chain, a good management can improve the efficiency of supply chain.
CHAPTER 6 – SUPPLIER INTERFACE
Last chapter of MMOG/LE is dedicated to suppliers. Are you choosing good partners? Do you have signed contracts where responsibility in each part of the supply chain process is assigned? How is your communication with suppliers (you know, packaging, shipping, etc.)? Are you evaluating your suppliers? These are the questions that you have to respond in the criteria of this chapter.
Finished the assessment you will be graded. If you took the BASIC option your classification will be ZA, ZB or ZC, where the higher is ZA which means an understanding of supply chain management fundamentals with the opportunity to take the full version and verify if best practices are adopted in the company or not. If you made the FULL version, the grades are A, B or C. In C there are deficiencies that represent a risk of disruption in supply chain, B is just an “almost” and A is the closest to have a World Class Logistics. Where is your business?
In my experience MMOG/LE has helped me to improve the control of my supply chain, I have reduced inventory and premium freight and in one of my jobs I decreased line stoppages. In consequence I have happier customers; it is the magic result of enhance the reliability of your entire supply chain. MMOG/LE will not solve issues by itself, it helps you to identify them, your actions taken will be what mark the difference.
I think is not necessary to remind you that the base of a self-assessment is honesty, don´t be rude but neither too soft. If you decide to implement an assessment MMOG/LE in your company let me know how it is going on, I will be happy of read your comments, as always I thank you for reading me and until next one!
AIAG. (2002). About AIAG. Retrieved November 24, 2015, from AIAG: https://www.aiag.org/about
Industry Forum. (2014). MMOG-LE. Retrieved November 24, 2015, from Industry Forum. Business Excellence through inspired people: https://www.industryforum.co.uk/expertise/manufacturing-operations/purchasing-logistics-2/mmog-le/
ODETTE. (2015). Global MMOG/LE. Logistics capability evaluation. Retrieved November 24, 2015, from Odette: https://www.odette.org/services/mmog
QAD. (2015, April 1). MMOG/LE Overview. Retrieved November 25, 2015, from QAD.com: http://www.qad.com/documents/3488095/3499615/qad-mmogle-brochure.pdf