The fact that most manufacturers struggled to achieve supply chain agility during COVID is not news. But Molex, a global electronics and connectivity solutions company, has been investing in their intelligent digital supply chain strategy to improve their supply chain agility and customer experience. While not completely protecting them from the supply shocks that occurred during the pandemic, it allowed them to respond to their customers with greater speed and agility, manage costs, and provide options when a supply chain disruption occurred.
Molex LLC offers more than 100,000 products across a variety of industries. Those industries include data communications, medical, industrial, automotive and consumer electronics. They are notable for pioneering the Molex connector, which has seen universal adoption in personal computing. The company is present in 38 nations and has more than 40,000 employees. It is part of Koch Industries.
The Molex Supply Chain
The Molex global supply chain is complex. Molex has more than 80 manufacturing facilities around the world supported by an 18,000 strong supplier eco-system that provide raw materials, electronic components, and services. And while a product may be manufactured in one geography,” Ralf Eberle explained, “we’re selling and supporting customers across the globe. This involves a lot of long-haul transportation.” Mr. Eberle is the vice president of logistics and distribution operations at Molex.
First and last mile shipments are usually by truck. But more than half of their shipments – including a significant portion that begin at factories in Asia – travel across oceans or continents These long-distance shipments go by ocean, air, or rail. Those shipments can move directly to customers or move to several regional distribution centers (DCs) that serve as forward inventory locations and consolidation hubs servicing customers and channel partners.
Molex Realizes it Needs Better Visibility
Based upon the complexity and interdependencies of this supply chain, “we had an intense need for in-transit visibility”, Mr. Eberle said. The 2010 Eyjafjallajökull volcano eruptions in Iceland, for example, caused enormous disruption to air shipments across Western Europe. “There was no air freight possible then into Europe,” added Gerald van den Eijnden. Mr. van den Eijnden is the director of global logistics operations planning and systems at Molex.
Molex ended up selecting a product from Infor Nexus – GT Nexus at the time. By 2012 they had implemented this multi-enterprise supply chain network (MSCN) solution. A multi-enterprise supply chain network platform provides network-based order fulfillment applications and advanced network-based supply chain risk analytics. It is a solution built on a public cloud, many-to-many architecture that supports a community of trading partners. While many solutions contribute to supply chain agility, MSCN is its primary solution for agility.
The Advantages of Agility
Prior to Nexus, trying to understand whether a shipment would arrive on time was a challenge – it was manual and time consuming. “You would call up the freight forwarders, and they would send an Excel spreadsheet” that contained all the shipments for Molex in the coming days or weeks. Mr. van den Eijnden continued, “Or you might need to go to a carrier’s portal, log in and see how many parcels are coming in. Yes, SAP had inbound ASN’s (advanced ship notices). But they were very basic. They have a date and the quantity, but it is not refreshed.” Having better ETAs (estimated time of arrivals) improved operational performance and service levels.
The Infor Nexus solution has proven itself when supply chain disruptions occur. In one major case in 2017, the Hanjin Shipping company was declared bankrupt by South Korean courts. Hanjin was a major carrier for Molex. “There were so many vessels not moving,” Mr. Eberle explained. But Molex was able to assess which of their customers would have late shipments as well as the number of ordered units that would be delayed. “We had a competitive advantage. We could see a vessel with our container on it that was idling.” Or if the ship was in transit, Molex could see the geoposition and the speed of the vessel, and we could clearly tell it wasn’t going to go where it was supposed to go. It’s going to another harbor.”
Infor Nexus is an orchestration solution. As new estimated times of arrival (ETAs) are produced that suggest a shipment will be late, Molex can make itinerary changes. The planners could choose to switch cargo from a slow-moving ship to air, for example. These changes allow them to provide higher service levels for their customers. The ETAs produced by the Nexus solution are far superior to what is produced by carriers and forwarders. And changes to the ETA are often reported much more quickly by Nexus than by logistics partners.
“The earlier we know about a potential issue, the lower the cost of the resolution,” Mr. Eberle stated. “If I learn one day before a ship hits the Port of LA, my options are limited. If I if I know the vessel has left Singapore late by a week, I have a couple weeks to find an alternative solution which costs less.”
The data from Infor Nexus also helps the transportation teams do better carrier sourcing. These procurement professionals can look at how forwarders and carriers are performing by lane, and what the performance trends are for these partners. Because of capacity issues, Molex is working with more logistics partners. That increases the value of the analytics used by the procurement team.
Keys to Success
Molex avoided the Big Bang implementation trap. Molex began the journey with Nexus by working to improve visibility to ocean freight. Over the years the visibility has expanded to include all modes of transportation from their factories to the DCs and finally out to their customers. The company has visibility to finished goods movements, and inbound shipments from suppliers to their factories. They will work to continue to increase their visibility to inbound shipments.
Further, historically Molex had a focused sourcing strategy. They worked with selected top global logistics partners. That made integrating those partners systems with Nexus much easier. That in turn led to a faster go live.
One of the keys to better visibility is data quality. Molex has been working to improve data quality since 2012 when they first put in Nexus. Molex has achieved a high level of maturity in this area. Mr. van den Eijnden explained that their master data was 97% or 98% accurate. “We have a KPI (key performance indicator) that tracks how well we are doing with those basic data elements” needed for in-transit visibility.
Data quality has also been improved based on the fact they are using one global instance of an ERP to store most of their data. It would not be unusual for other companies their size to use 10 or more different ERP instances.
In addition to expanding visibility to inbound shipments, Molex is currently implementing the Control Center solution from Nexus. They believe this is a strategic anchor investment that will not only further improve customer service and operational performance but be foundational to its intelligent digital supply chain.
Currently, figuring out which late shipments are impactful to customer service is a bit like “fishing for the one late shipment that matters in the ocean of all the late shipments that we have today.” With Control Center they will have more targeted visibility; it allows planners to zoom into shipments that are likely to be late that will impact customers. While ETAs from Nexus are better than those issued by logistics partners, Control Center has predictive ETAs that will be even more accurate.
Predictive ETAs will become even more important next year. “Just fast forward to 2023 and the IMO (International Maritime Organization) regulations,” Mr. Eberle said. We will see a lot of slow steaming to meet emission standards. That will impact lead times. And I don’t expect we will always be notified” by the carriers.
In addition to the predictive ETAs, the solution also allows them to understand which late shipments are a priority. For example, if a shipment is running late, but there is sufficient inventory in the DC closest to the customer, the fact that it is late is not significant “What we care about is the movements that will have an impact on our commitments,” Mr. Eberle explained.
This targeted visibility is based on order line visibility. The solution knows which of Molex’s shipping containers a ship is carrying, the cartons and pallets they have in a container, and how the units in transit line up with what customers have ordered. This requires capturing Molex part numbers and mapping how those numbers correspond with part numbers used by their customers.
Targeted visibility also requires visibility to the inventory in their DCs; this visibility to DC and in transit visibility allows them to calculate when stock outs will occur. That inventory visibility is linked to all pending orders, production orders, all demand forecasts, all carrier sailing schedules and scheduling agreements. All this data is uploaded to Control Center. If there is a potential stock out, decisions need to be made. “Do we then want to fly extra product to the DC? Do we want to divert a shipment directly to our customer? Or do we want to just ship five boxes by parcel right to the customer to prevent the problem?” Mr. van den Eijnden explained. In short, Control Center will allow Molex improved orchestration for improved service to customers and partners.
Another thing on the Molex roadmap is the integration of traceability using their Serialized Shipping Container Codes (SSCC). That will require capturing even more data – carton numbers or batch numbers – and then linking that to the large amounts of data already stored in the solution. Nexus is already processing large amounts of data for Molex. While this will increase the data requirements significantly, the scalability of the Nexus solution will support the complex and growing needs of the business.