Takeaways from the Marelli Go&See Event

— Marelli, a leading global automotive supplier, recently hosted a ‘Go&See’ event at its headquarters in Corbetta, Italy, in collaboration with o9 Solutions. The event provided a step-by-step deep dive into how Marelli has implemented and is leveraging the o9 platform to digitally transform its SIOP and MPS processes. With o9's SIOP (Sales, Inventory, and Operations Planning), Demand and Supply Planning capabilities now live across seven divisions and 87 Marelli plants, the team shared how the transformation has led to significant improvements in cross-functional decision-making and collaboration, demand forecast accuracy, and supply chain efficiency.

The Complexity of Marelli's Operations

The automotive industry faces fluctuating demand, complex supply chains, and organizational hurdles that test even the most seasoned manufacturers. High customer expectations for timely delivery and customization clash with supply constraints, especially for critical components like semiconductor chips. The global shortage of these components has highlighted the need for more accurate forecasting and efficient supply chain management. More recently, a downturn in demand took place. Organizations must not only predict demand with greater precision but also coordinate seamlessly across various functions to meet these expectations.

Marelli, a key supplier in this volatile and complex automotive ecosystem, stands out for its operational complexity. With a footprint spanning 7 divisions and 87 sites worldwide, the company manages 50,000 finished goods and 350,000 components. This vast operation is further complicated by the legacy of multiple acquisitions, resulting in a multitude of different ERP systems across divisions. High customer expectations and the need to coordinate components like semiconductor chips—which may serve multiple Marelli plants and numerous customer facilities—add layers of complexity to Marelli's supply chain.

Before the Transformation: Silos and Reactive Processes

The Marelli team started the event by explaining the planning challenges that led the company to embark on its digital transformation journey. They explained that it faced significant internal challenges that hindered its operational efficiency. The organization was characterized by silos across divisions and functions, impeding effective communication and decision-making. Sales, manufacturing, supply chain, and procurement departments often struggled to "speak the same language," leading to misunderstandings and inefficiencies.

The planning processes were disjointed, with no harmonized approach or common data standards. Marelli's supply chain was largely reactive, responding to Electronic Data Interchanges (EDIs) without incorporating the valuable tribal knowledge held by various departments, especially concerning mid-to-long-term demand forecasts. This reactive approach resulted in poor forecast accuracy and suboptimal inventory management.

A Marelli representative highlighted these issues: "Due to history, we had many silos in our organization. We needed to break these across divisions and functions and collaborate more closely." 

The End State: A Unified, Proactive Supply Chain

Recognizing the pressing need for change, Marelli's leadership, guided by a clear vision from the CEO, initiated a comprehensive digital transformation of its Sales, Inventory, and Operations Planning (SIOP) and Master Production Schedule (MPS) processes. Leveraging the o9 Solutions platform, Marelli sought to integrate its planning processes, harmonize data across divisions, and drive cross-functional collaboration across all their divisions.

One of the pivotal changes was elevating SIOP from a supply chain-centric process to a company-wide strategic asset. "Initially, SIOP was seen as a supply chain process. It has now become a company-wide process to make decisions and align all stakeholders, expanding to sales, procurement, finance, and sustainability. Independently of the department, you will find the same source plan—SIOP," explained a team member.

Marelli bridged the gap between sales forecasts and supply chain planning by integrating sales data from Salesforce with supply chain data within the o9 platform. This integration ensured that all departments operated from a unified plan, effectively breaking down silos and driving better collaboration. "The link between sales part number and supply chain part number was key to us. Now, sales and supply chain speak the same language," the team member added.

The impact of the transformation so far has been substantial:

• Improved Forecast Accuracy: EDI accuracy for components ordered five months in advance improved from 14% to 69%, with a target of 75% at lag 3 at the part number level. "We were able to significantly improve the EDI signal accuracy on the mid- and long-term horizon when you actually need to buy critical components such as electronics," the team noted.
• Reduced Inventory and Costs: Better forecasting and supply optimization reduced inventory levels and reactive Supply Chain costs such as premium freight to expedite components. "Focusing so much on collaboration and end-of-production has significantly reduced our obsolescence costs," said one team member.
• Enhanced Collaboration and Decision-Making: With a single source of truth and integrated data, cross-functional teams can make more informed decisions quickly. "Internally, we now have a single source of truth. Externally, there are much fewer customer claims and lower obsolete inventory," a representative noted.
• Increased Agility: Access to real-time data has made teams more agile and responsive to market changes. "We now have actual post-game data and knowledge from sales, plants, logistics, etc. Teams are more agile now and can improve sales intake," another representative shared.

Lessons Learned

The transformation journey was not without its challenges, but Marelli's approach yielded significant lessons.

Marelli began with a pilot program, which revealed that a broader, more standardized approach was necessary for global rollout. "We started a pilot, but it was not enough to roll out globally. We had to go through data normalization across divisions and sites," a team member shared. The initial attempt to customize extensively and tackle both demand and supply simultaneously proved overly ambitious. Recognizing this, Marelli shifted to a step-by-step implementation aligned with industry best practices.

User adoption was also critical. By involving users as partners in the implementation process, Marelli ensured that the teams saw firsthand the benefits of the new system. "Users became partners in the implementation, so they got value and a better way of working. Hence, we got great adoption," a team member explained.

To close the session, the Marelli team shared several key principles that underpinned the successful transformation:

• Strong Executive Sponsorship: Leadership support was crucial in providing direction and resources.
• Bottom-Up Approach: Engaging team members at all levels facilitated early consensus and promoted ownership.
• Extensive Training: A structured change management program with numerous training sessions ensured that teams were equipped to adopt new processes and tools.
• Data Management Planning: Addressing data availability, harmonization, and reliability was essential for a unified planning process.
• Visibility and Transparency: Maintaining transparency on implementation status across divisions fostered positive competition and enthusiasm for the new system.

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