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Restoring Trust and Performance: A Tier 1’s Recovery Journey​

Case Study

Automotive

Services Used
  • Risk Management
  • Performance Management
  • Supply Chain Risk Management
  • Targeted Performance Improvement initiatives
  • Operational Excellence
  • Quality Improvement

Background:

A major OEM was experiencing serious performance challenges stemming from extensive backlogs at a critical supplier. With over 100,000 parts past due and growing pressure to meet service-level commitments, the situation was threatening production schedules and customer satisfaction. In need of immediate support, the OEM turned to Crossover to deploy an experienced expert to take over service management and drive recovery efforts at the Tier 1.  

Critical Issues:

  • Experienced significant layoffs in the previous year, leading to a decline in company-wide performance.
  • Financially unstable, with numerous debit memos from OEM customers, on COD & CWO payment terms, relying on OEM support to identify and procure critical subcomponents.
  • The supplier was mired in supply chain complexity, with eleven customers and excessive amounts of obsolete inventory.
  • Delivery performance was severely impacted, with over 100,000 initial service parts past due
  • Lost IATF certification due to ongoing performance and quality issues.

Approach:

XO conducted a full operational review and provided an assessment of capacity utilization and understanding of what’s happening.

The objective: Implement a “Plan for Every Part” strategy to drive delivery reliability and exceed customer expectations.

Key Actions Include:
  • Developed a recovery plan to eliminate the backlog of 100,000+ past-due service parts.​
  • Assumed the role of mediator and liaison early on, facilitating collaboration between the OEM and Tier 1 supplier to address supplier issues and OEM needs—eliminating bottlenecks, optimizing production output, and fostering a win-win partnership aligned toward a common goal​.
  • Provided hands-on support for daily operations to stabilize performance​.
  • Established accountability in weekly report-outs to the global Supply Chain team​.​
  • Realigned priorities to focus on:
    1) VORs
    2) Emergency Past Dues
    3) Past dues based on volume and aging

Results:

  • Achieved complete elimination of VOR cases.
  • Cleared all emergency backorders for parts.
  • Reduced all past-due service parts for critical parts.
  • Identified 156 non-planned obsolescence part numbers (NPOs), slashing OEM costs.
  • Improved workforce stability through hands-on collaboration.
  • IATF Certification was successfully reinstated with a marked improvement in OEM-supplier ratings, sustaining the business relationship and continuity of supply.

By the Numbers

600
Reduced vehicles off (the) road (VOR) cases to 0
18,000
Emergency backorders reduced to 0
99,664
Reduced past-due service parts from over 100,000 parts
11
Dealer vehicle buybacks prevented
40% to 2%
Reduced employee turnover
220,000
Service parts shipped