S&DCE: What are some of the things that you've bought and some of the things that you've built?
Shanti: For example, for our engineering system we partnered with EDS and purchased its product lifecycle management solutions (PLM) and TeamCenter software. But the way we are applying that technology is a differentiator; a lot of companies use PLM as a product data management system, but we use it more as a collaborative engine internally and externally with our suppliers.
S&DCE: How has the company measured the return on investment in its procurement-related initiatives?
Shanti: There are a few things that you always want to measure from an IT perspective. First, look at how effectively people are using the software that you've provide them with. Are they using it? Because at the beginning of any project, people are always excited: "Oh, we're going to do MRP [manufacturing resource planning]." But if you put the greatest MRP system in place and nobody uses it, it's a waste of resources.
Next we look at the application. Are people using it inside AAM? Are they using it the way it was intended to be used? Is the system serving them, or are they serving the system? At AAM we want the system to be an engine that generates information to help our associates make better, more informed decisions.
Finally, we ask if it is giving us the productivity that we were looking for. For example, if we decided to go from cradle to grave in six months using a specific technology, will we get there in six months? If we calculated the [cycle time reduction] and told the CEO that this is how long it's going to take us by adopting this new system, are we delivering the tangible time we said we were going to deliver? Are we doing it with fewer engineers and getting the productivity that we said we would?
So those are key measures. Personally, the most important measure for me is whether or not it changes the way we're doing business and makes us better. Our supplier portal is doing that today. I truly believe it's giving us a competitive edge over our competitors, whether they are in China, India or Ohio. We're not 100 percent there; we continue to push the envelope further and further. We're trying to go to the extreme edge of vendor inventory management, closer to something that I used to dream about called "real-time manufacturing." That's what we're trying to do.
S&DCE: What are the obstacles in the way of realizing that vision?
Shanti: The biggest obstacle is always that you are playing with something called change, and you're working with something called human nature. It is always challenging to get people to do something differently.
The other piece is education, because now you're teaching people something that they might not be familiar with. We talk a lot about computers like they've been around us forever, but there are a lot of people out there who are still afraid to turn on their PC. So, all the tools and technologies and processes that we're introducing require some recalibration or re-education of our workforce.
And again, in my current position as head of purchasing, we have to work with our suppliers as well. At AAM, we invest quite heavily in educating our associates. They receive 50 hours of training and skill set development per year. Fifty hours. That is not an option; that is a must. But we can't dictate that to our suppliers. We can only recommend or advise that our suppliers do the same thing.
S&DCE: Does that mean you have to invest your own time and the time of your staff in going out and helping the suppliers understand what you're trying to do?
Shanti: Yes, our purchasing organization is divided into several areas of expertise. We do have a group that's responsible for the commercial side of the business: the negotiation, the contracts and so on. But we have another group in my organization called the Supply Base Management group. Once we find a supplier, their responsibility is to develop that supplier, to make sure that the supplier is ready to launch our product when we need it, where we need it. So they work on development, launch, productivity and education. And if there are issues and I can't lie to you, there is always an issue every once in a while we dispatch a team almost like a SWAT team that goes into the supplier and helps them out of trouble so the problem does not impact AAM or our customers.