Case Study: American Axle & Manufacturing
Solution: Plex ERP
Industry: Auto & Truck Driveline Manufacturing
Location: Detroit, Michigan. In addition 30 locations in 13 countries
About The Company
American Axle & Manufacturing (AAM) is a multi-billion dollar, Tier 1 supplier to the automotive industry, with more than 30 locations, nearly 13,000 associates and more than 100 customers, including General Motors, Fiat Chrysler Automobiles, Ford Motor Company and Honda. AAM is a world leader in the manufacture, engineering, design and validation of driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for light trucks, sport utility vehicles, passenger cars, crossover vehicles and commercial vehicles.
AAM’s core brand values are to strive for operational excellence, quality and technology leadership in the processes and systems it uses and the products it delivers.
The organization comprises two main divisions: Driveline and Metal Forming Products Business Unit (MFPBU). The management team of MFPBU was finding it challenging to gain real insights into how the business was performing, how to drive quality, better plan capacity and how to get a real-time understanding of its financial status. This was because each of the business unit’s seven operations had its own ERP, a partial ERP, or none at all. The challenge was to consolidate and fully understand non-standard and/or untimely data.
Michael Trathen, Senior Manager Lean Systems at AAM takes up the story: “We wanted one business system for all of the operations in our metal forming group. Having developed the original version of Plex as the core Manufacturing Execution System (MES) at our forging facility in Oxford, Michigan, we wanted to explore how the Plex Manufacturing Cloud could be deployed across our entire business unit. We were looking for a comprehensive solution to help us streamline and formalize our business processes, including hire-to retire, procure-to-pay, order-to-cash, record-to-report and product lifecycle activities.”
Integrating a single ERP across such a large, geographically distributed and busy organization, without interrupting production, losing data or interrupting the workforce required help from fellow experts. Trathen notes: “The senior management team chose to partner with Baker Tilly, a global business consulting and accounting firm because its team was extremely experienced in helping enterprise-size businesses, like ours, undertake deep and broad deployments of the Plex Manufacturing Cloud and drive the right business outcomes.”
Solving the Business Challenge with Plex
Together, and supported by the Plex product team, AAM and Baker Tilly worked through a proven methodology to design, implement and train users on Plex—and implementing the manufacturing cloud in parallel with their corporate Oracle ERP system allowing enterprise wide financial consolidation and performance management.
Peter Pearce, Principal at the Baker Tilly Business & Technology Growth Strategies practice: “One of the biggest challenges for this business unit is that it is very numbers driven. A great deal of this reporting was done manually but what it required in order to make better, faster, more informed business decisions was an integrated and automated way to gather operational data. This deployment was one of the broadest we have ever overseen, incorporating all the core Plex capabilities such as inventory control on the shop floor to quality management and manufacturing performance.”
Baker Tilly spent a number of weeks developing a common model of deployment that was unique to AAM. This allowed AAM to roll-out Plex across the seven metal forming locations in a standardized way, mitigate risk and “go live” as rapidly and efficiently as possible.
“This initial phase was a deeply immersive experience given that we included all process owners, allocating Plex modules to supervisors who would take responsibility for understanding the software’s capabilities and how it could deliver value,” explains Trathen. “Along the way we consulted with the Plex User Community and the team now sees them as a vital source of best practice on demand and an invaluable tool for continuous improvement.”
Meeting Business Risk Head On
The team’s priority was to roll-out all Plex’s plant floor modules including, but not limited to, engineering, quality, inventory and production and then focus on the top floor modules such as accounting and supply chain.
AAM was concerned that changing from multiple systems to Plex and introducing a new ERP, where there was none before, was a complex operation and could expose the business to a certain degree of risk. Furthermore, AAM’s metal forming unit is a high revenue organization, whose customers would not tolerate downtime caused by a system failing to transition smoothly.
Trathen goes on: “The AAM management team was very keen to understand our plans to mitigate risk during the Plex implementation. They established a steering committee that met on a monthly basis to review our project schedules and assess risk. We had Baker Tilly on board to help us assess and assuage risk at every step.”
“In the next phase, we rigorously trained our users on Plex, bringing process owners in to deliver weekly workshops that walked all our associates through their new role-specific processes. We had a very high success rate with user adoption, not only because these sessions were extremely useful and efficient to on-board users and build their confidence, but also due to the intuitive and user-friendly design of Plex.”
Centralized versus Divisional ERP: A Tale of Integration
One of the original business drivers for Plex was the need for a single view of the truth using real-time data. At a corporate level, AAM was using Oracle as its ERP system, so a key task for AAM and Baker Tilly was to ensure that operational data could be consolidated back into the company’s financial reporting system, Hyperion. “We went through a significant data review,” says Trathen “where we assigned data to three different categories. The first was new data that would be manually keyed in or entered via the Plex upload tool.
The second was data that was older than three years and which would be archived. Lastly, we had live data that needed to be moved in bulk to the Plex system. This final category went through a rigorous cleansing process to ensure that when we went live with Plex, we would be starting off with the latest and most accurate data pool.” “Now that Plex is live, we can send financial data once a month to AAM’s Hyperion financial reporting system to map and consolidate. We tested this process and at go-live we had absolutely no issues, which was rewarding.”
Results, Benefits & Rapid ROI
When launch day came around it was a non-event, mainly because of all the testing and user training that had taken place. Once the shop floor processes were stable and embedded with users, the metal forming team turned its attention to corporate processes such as purchasing.
By the end of the implementation, almost all of the Plex modules were in use across all locations and the metal forming unit has not looked back:
- Inventory management
AAM has seen an improvement in inventory turns of between 5-10% with a positive impact on cash flow.
- OEE & Manufacturing output
Plex allows AAM to analyze equipment efficiency and to determine the root cause of any downtime, using real-time information driving continuous improvements. “For example, Plex is allowing us to measure velocity of flow so that we know how effectively our equipment is delivering our end products. I’m delighted to say that we have already experienced a 5% increase in manufacturing output,” states Trathen.
- Quality & plant efficiency
“Having quality deeply embedded into every production activity is transforming our organization,” Trathen also reveals. “With Plex, quality checks are now completed at every stage, and the detail is exceptional. We’ve set the system up so that no one can move on to a new activity until the preceding quality check has been logged.” “Another example of how quality is transforming our business is when you look at the tracking of heat values. All our products start life as a raw steel bar that requires a certain heat value to form it into the final product. With Plex, we can trace these heat codes right through from the mill that produced the source material, to individual containers and items. This level of quality control is very important to our customers.”
AAM is obliged to comply with Sarbanes-Oxley regulations on security and role assignment. In Plex, they can assign each person’s job role to a security group, evaluate any conflicts and receive ideas on how to resolve them.
Accurate segregation of duty reports can then be produced for audit purposes. The manufacturer is also required to show that each product has been assigned its appropriate tariff, which must all be harmonized in line with trade regulations. Plex now automates this process and the required reporting.
- Workforce efficiency
“One of the reasons we wanted Plex throughout our division was to move away from other offline management tools,” states Trathen. “Via the Plex document management system we can share vital information across the organization, use the activity manager to track processes in real-time, and make the improvements that our data tells us we need. Now people are spending more time on analysis and less on collecting data, which makes for a more efficient and effective workforce.”
- Faster problem solving
The business unit is also very focused on improving scrappage, tooling and maintenance. Trathen believes they have already reduced waste by some 2% partly because the type and quality of data Plex collects makes it easier to solve challenges. “The ease of data availability makes for faster and better problem solving. Data is input at the source and can be accessed by supervisors at any time on many devices with connection to the internet, so problems can be solved even when decision-makers aren’t on site.”
- Improved business planning & decision-making
At the corporate level, data from Plex-managed processes is made available via EDI. Managers are then able to plan, forecast and order materials in line with our 16-week window (a result of our materials lead times). By understanding sales, materials orders and job profitability while being able to forecast demand, the management team is better able to make and refine decisions based on real-time, accurate and consolidated data.
- Competitive advantage & customer satisfaction
“Customers of AAM, who know Plex, now have great peace of mind knowing that all our core processes are managed by such a robust and integrated system for manufacturers,” announces Trathen. On that note, Plex has also played a major role in helping AAM to achieve BSI quality standards, including TS1649. “I’m delighted to say that the BSI auditors rate all our plants very highly, especially in terms of the way we manage our internal processes.”
- IT simplicity
The Plex cloud model has allowed AAM’s metal forming products business unit to retain a lean IT team that does not have to assume responsibility for developing the functionality of ERP software, nor does it have to buy and manage expensive hardware. “By running Plex we can target our IT resources at helping users get maximum value from the system, rather than taking care of its administration,” affirms Trathen.
Into a Successful Future
AAM’s Plex implementation has been such a huge success that new projects are being planned for the future. These include deploying Plex to a new business venture, undertaking further PLC integration, and enhancing the unit’s purchasing and finance processes with Plex.
“What has impressed AAM the most about the Plex implementation is that we have managed to launch an enterprise-wide change process without suffering any downtime and while achieving continued sales growth,” concludes Trathen. “This incredible commercial success and smooth deployment is testament to the ease with which Plex can be brought online in a large and complex organization.”