Why the CIO of Daimler Truck North America believes data and technology can help solve supply chain problems
At Daimler Truck North America (DTNA), production and logistics issues often come down to one basic question: Where is the part?
The answer to that question, however, is often anything but simple. The company, headquartered in Portland, Oregon, sources hundreds of thousands of parts from suppliers around the world for its trucks, whose brands include Freightliner, Western Star and Detroit Diesel, among others.
Ensuring that trucks get to customers on time requires identifying problems early and being able to respond nimbly. But a lack of visibility across the supply chain makes it difficult to know when there are issues that could impact production and consequently, delivery.
“There are thousands of parts on a truck. Let’s say 10 parts are missing,” says Lutz Beck, chief information officer for Daimler Truck North America. “That means you need to wait until the parts are coming, then you need to rework. We need to know that in advance. This is where we need to have more visibility.”
DTNA is seeking to improve that visibility, reduce downtime and increase efficiencies through adoption of Microsoft’s new Supply Chain Center, which provides a command center experience for users to bring together data from across supply chain systems, like data from Dynamics 365 and other enterprise resource planning system providers, including SAP and Oracle, along with standalone supply chain systems.
Part of the Microsoft Supply Chain Platform, the Supply Chain Center also allows customers to use Azure AI insights to predict shortages, automate processes, track supply chain performance goals and better collaborate with internal and external partners.
Transform recently spoke with Beck about supply chain challenges and the company’s efforts to redefine how it approaches them.
TRANSFORM: From your perspective, how different is today’s global supply chain than it was, say, five or 10 years ago?
BECK: It’s more global and it’s more connected and integrated than it was five or 10 years back. You’re much more reliant on global suppliers with global reach, rather than having suppliers around your plants as they were built, as it was in the past. That has changed significantly over the past 10 years.
And products themselves are using more technology components. Nowadays, everybody wants connected products in their homes — they want to control their air conditioning or their heating, their washing machine, their dryer. We’re living in a connected world and there’s a lot of demand for those kinds of products.
If we do proper forecasting and see what kind of products are coming and what kind of parts they need, we will probably see that the capacity that we have today will by far not be enough to satisfy that demand.
TRANSFORM: What have been the major challenges DTNA has faced with its supply chain?
BECK: For us, the biggest challenge is visibility of all the different pieces that are in the supply chain. If one of our suppliers is having an issue, if we don’t know that and we still do our scheduling based on what we think is coming on the part side, we will be wrong. And that has an impact on our delivery to our customers.
We’re working on a connected and integrated approach so that we know exactly, at any point in time, where is my part? Do I have an issue on the supplier side? Are there any tools that are not working? These are issues we are working on now, to get to a point where we know exactly when the part is arriving at our plant, so that everything we’re doing in terms of scheduling and production is based on the supply chain.
The second thing is costs. Usually in the past, you would keep a high inventory on parts to let your production run. That changed over the last year significantly, where you would not keep a lot of inventory. But if you don’t have enough supply of parts, you need to stop production. So that is a danger as well.”
TRANSFORM: How important is the use of data in optimizing the supply chain?
BECK: Data is the basis to do that. We can analyze the historical data to identify what the problem was and where it happened. And when we have the data, we can react fast if something is going on. For example, if one of our suppliers has a tool that is suddenly not delivering the output it is supposed to deliver and we know that early enough, we can, based on the data, determine what the impact is for us.
What we are trying to do is not just use data internally, but to integrate data with our suppliers. We want to connect that data and then say, ‘How can we improve, and what do we need to do to improve?’ This is, I think, the missing link and what we do not necessarily have today.
TRANSFORM: How do you think Microsoft’s new Supply Chain Center can help to improve DTNA’s supply chain processes?
BECK: It will help us with transparency, with visibility. At the end of the day, our customers want to know, ‘When will the truck be delivered?’ In order to be as accurate as possible, I need to know if my build date is correct and if I have all the parts to build the trucks. This is exactly what we are targeting with the Supply Chain Center.
It will also allow us to automate what are now manual processes, because we will be able to run the data, and based on the results, trigger automatic additional actions. There are a lot of automation possibilities. But first, we need to have visibility into the insights, then we can use that data to make processes more efficient.
TRANSFORM: Going forward, do you foresee companies making changes to address the types of global supply chain issues seen over the past few years?
BECK: If you look at the current environment, we have seen how much we depend on global scale and global integration. I think we might see a significant shift away from these integrated global supply chains, because we just have too much dependency, and this is impacting quite a lot of what we do today.
I do feel there are a lot of companies looking into their sourcing strategies for the future. Those sourcing strategies might change, based on the dependencies — logistics, shipping, those kinds of things — that we have seen are not working correctly during the pandemic. I believe there will be a lot of discussions about, ‘How can we do it in a different way to mitigate the risk?’
A lot of industries were going into low-cost countries for production. But certain industries already have significant price increases due to the fact that their supply chain is not working anymore. I think the technology will help us get this transparency to make sure we make the right decisions.
Top photo: A Daimler Freightliner truck. All photos courtesy of Daimler Truck North America.