What is MMOG/LE?
The Automotive Industry Action Group (AIAG) and Odette International are releasing the fifth version of the Materials Management Operations Guideline/Logistics Evaluation (MMOG/LE) assessment this summer. The MMOG/LE assessment has been a go-to document for automotive supply chain best practices for thousands of global Tier 1 and Tier 2 suppliers since its first publication in 2002.
MMOG/LE is used by automotive customers to select and evaluate production and parts, service and warehousing processes. The assessment also establishes a common definition of supply chain management processes to help organizations:
- Determine the robustness of existing internal processes
- Benchmark supply chain operations
- Facilitate continuous improvement
- Increase customer satisfaction
- Mitigate risk throughout the tiers of automotive suppliers
MMOG/LE includes both a Full and Basic assessment. In general, the Full assessment is used between the OEM and Tier 1 suppliers, while the Basic assessment is used in the lower tiers of the automotive supply chain. The Basic assessment is a subset of the Full version, which allows lower-tier suppliers the opportunity to continue with the assessment and reach world-class status.
While MMOG/LE version 5 has reduced the number of criteria to 187, to achieve a Level A or ZA score will be more difficult. The number of F3 criteria has increased from 34 to 43. The F3 criteria are core to the foundation of supply chain management. Therefore, if an organization misses one F3 criteria, MMOG/LE will automatically give it a Level C or ZC score.
These 43 criteria are centered on ERP, EDI/Web, barcoding and quality processes that should be leveraged in the supply chain. These complementary quality processes are focused on processes such as customer and supplier communications, corrective actions, risk management and sub-supplier management. Several of the additional F3 criteria were updated to align with principles in International Automotive Task Force (IATF) 16949.
On top of the additional F3 criteria in the new version, an organization must fulfill 95 percent of the criteria to achieve Level A as opposed to 90 percent in prior versions.
New Criteria, Alignment and Concepts
Much has changed in the industry since the last version of MMOG/LE in the areas of technology, supplier and risk management, quality and performance. Therefore, MMOG/LE was updated as follows:
- Alignment with IATF 16949 (e.g., corrective actions, supplier performance, cascading best practices and standards throughout the supply chain)
- More emphasis on risk management and contingency plans throughout the supply chain including a cybersecurity policy
- A deeper alignment between strategies, objectives and continual improvement
- More emphasis on minimizing or eliminating skills gaps
- Further emphasis on end-to-end systems integration, completely leveraging the planning system
- Strengthened requirements in Chapter 6: Supplier Interface (e.g. supplier selection and assessment, new product launch, use of metrics in the supplier assessment process)
- Full electronic exchange of data with sub suppliers by striving to achieve 100 percent EDI/web
- Adoption of advanced technologies (machine learning, smart manufacturing, China 2020, digital transformation) to increase performance and efficiency
New Way to Submit the MMOG/LE Assessment
Although the Excel-based MMOG/LE assessment tool has served the industry since 2002, it was time to update it to a more modern application. With this in mind, Odette developed a modern browser-based application called MMOG.np (.np stands for: New Platform). MMOG/LE version 4 will be the last assessment that can be submitted in the Excel format. Starting with version 5, the MMOG/LE assessment can only be submitted in the Cloud. Suppliers have the coming year to transition to MMOG.np.
MMOG.np includes the exact same content and capabilities as the previous Excel-based versions. However, it also offers organizations a state of the art tool that includes audit trails, user access management, data security and more. MMOG.np supports version 4 today and will support version 5 by summer 2019.
What Should You Do Next?
In the coming months, look out for customer bulletins to understand when they expect suppliers to transition to version 5 and MMOG.np. I highly encourage everyone to obtain version 5 as soon as it becomes available. With the significant changes in scoring as well as the criteria, you will want to allow yourself plenty of time to prepare for next year’s submission. I also encourage you to attend this year’s AIAG Supply Chain Summit in June. I will be leading a session that provides an overview of the changes as well as a panel discussion with Ford, FCA and Odette.
From a QAD perspective, we have already completed the QAD MMOG/LE Answer Sheet for version 5. Following this, the QAD Adaptive ERP automotive process maps will be updated to reflect the new version 5 processes.
QAD provides training on behalf of AIAG and Odette in North America, Eastern Europe and Asia/Pacific. We hope to see you in the coming year if you are in need of an update or a refresher on MMOG/LE. To read more about how QAD helped one customer achieve their Level A Certification by conducting a MMOG/LE Q-Scan to identify areas for improvement, check out this case study.
If your organization is in need of assistance with the new version, support in preparing for a customer audit or a review of MMOG/LE, QAD offers a service to help you through the transition so that you meet your customers’ requirements. The QAD customers we have worked with to assist in answering the MMOG/LE assessment have achieved a 15-60 percent reduction in inventory as one of the many benefits. As always, I encourage you to reach out to us if you have any questions about MMOG/LE version 5 or MMOG.np or need help managing the process.