Automotive Industry Action Group

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The Automotive Industry Action Group (AIAG) is a not-for profit association founded in 1982 and based
in Southfield, Michigan. It was originally created to develop recommendations and a framework for the
improvement of quality in the North American automotive industry. The association's areas of interest have
expanded to include product quality standards, bar code and RFID standards, materials management, EDI,
returnable containers and packaging systems, and regulatory and customs issues. [1]
The organization was founded by representatives of the three largest North American automotive
manufacturers: Ford, General Motors and Chrysler. Membership has grown to include Japanese companies
such as Toyota, Honda and Nissan, heavy truck and earth moving manufacturers such as Caterpillar
Inc. and Navistar International, and many of their Tier One and sub-tier suppliers and service providers.[2] Over
800 OEMs, parts manufacturers, and service providers to the industry are members.
AIAG corporate governance relies on over 650 volunteers from various automotive companies who lend their
expertise to working groups, subcommittees, and leadership roles. The AIAG staff supports the efforts of the
volunteers and handles administrative roles. Executives on loan from OEMs and Tier One suppliers often
provide key leadership roles in major initiatives and programs.[3]
The AIAG publishes automotive industry standards and offers educational conferences and training to its
members, including the advanced product quality planning (APQP) and production part approval
process (PPAP) quality standards. These documents have become a de facto quality standard in North America
that must be complied with by all Tier I suppliers.[4] Increasingly, these suppliers are now requiring complete
compliance from their suppliers,[5] so that many Tier II and III automotive suppliers now also comply.
Contents
[hide]

1Supply chain management

o

1.1Customs, security, and trans-border parts flows

1.2Bar code standardization

1.3MMOG/LE

1.4Returnable containers

1.5Automotive Network Exchange

2Quality
o

2.1Advanced product quality planning

2.2Production part approval process

3Corporate responsibility
o

3.1Conflict minerals

3.2Managing chemicals in production processes

3.3Improving working conditions

3.4Anti-trust considerations

4Related organizations

5References

6External links

Supply chain management[edit]

The automotive industry is dependent on a vast supply chain of companies that provide parts and components,
including major subsystems, to manufacturers. The AIAG provides services to companies at all levels of the
supply chain, including standardization efforts, to help manage complexity.[6] Of particular interest is services
to sub-tier suppliers - those suppliers who in turn supply Tier 1 or Tier 2 manufacturers - as their ranks were
thinned by the severity of the automotive industry crisis of 20082010.[7]

Customs, security, and trans-border parts flows[edit]

Government sponsored initiatives including the Customs-Trade Partnership Against Terrorism (C-TPAT)
and Partners in Protection (PIP) are cooperative programs aimed at strengthening and improving
international supply chains and improving supply chain security.[8] Automotive parts suppliers and OEMs have
a substantial interest in efficient transportation of parts across borders, as supply chains in the North American
market frequently cross the US-Canadian and US-Mexico boundaries. Supply chain security efforts to enhance
the security of the supply chain by such activities as credentialing of participants in the supply chain, screening
and validating of the contents of cargo being shipped, and advance notification of the contents to the
destination country.
An AIAG initiative in customs and supply chain security seeks to address the issue of supply chain security by
forming a centralized Web-based to identify the movement of finished goods, parts and materials through the
automotive supply chain.[9] This database, known as the Supply Safe-Supplier Security Assessment, provides
a central repository for information which is shared as needed throughout the supply chain and to satisfy US
Customs and Border Patrol compliance requirements. The resulting effort is designed to allow shippers to use
U.S. Customs Free and Secure Trade (FAST) lanes which enable faster processing of shipments through border
patrol and fewer inspections.

Bar code standardization[edit]

The AIAG first developed standards for bar codes for automated tracking of parts through the supply chain in
1984 with a standard format called Code 39. Prior to that, each automotive manufacturer had used more than
one format, requiring multiple bar codes and multiple readers for single parts. [10] A variety of software vendors
provide automated bar code and label generation software designed to help suppliers comply with common
requirements.[11]
Worldwide standards for bar coding have evolved due to consolidation, mergers, and supply chain practices in
the industry. As of 2014, there are also bar code standards in use developed by General Motors (GM1724),
[12]
the Odette "Global Transport Label",[13] and the German Verband der Automobilindustrie VDA-4902.[14][15]

MMOG/LE[edit]
MMOG/LE (short for Materials Management Operations Guideline / Logistics Evaluation) is a self-assessment
tool used by auto suppliers to score their competency in materials handling and logistics. Developed by the

AIAG, this self-survey is designed to validate that the supplier has robust material planning and delivery
processes in place to support overall business objectives. It is a required component of many automotive
supplier programs, including Ford, GM, Chrysler, JLR, PSA, Volvo car and Volvo Truck.[16][17]

Returnable containers[edit]
Returnable and reusable containers are used by the automotive industry to transport parts through the
automotive supply chain. The AIAG has working groups and programs focused on the development of
initiatives in returnable container visibility, tracking, and needs calculation, container and packaging
standardization, and other best practices related to increasing efficiency in containers and packaging
management.[18] Efforts in this area focus on reducing the cost of shipping containers, and eliminating theft of
empty containers which are valuable for the economic content of the component plastics they are made of.
Efforts under study include pooling of use of containers (as is underway in European markets) and tagging of
containers with RFID or bar codes for improved automation of container return. [19]

Automotive Network Exchange[edit]

The Automotive Network Exchange is a private extranet initially set up and maintained by the Automotive
Industry Action Group,[20] Telcordia, General Motors, Ford, and Chrysler. It was launched in 1995 for the auto
industry with a stated goal of providing consistent, reliable speed and guaranteed security for data
transmissions between the automakers and their suppliers. The ANX Network was designed to allow trading
partners to collaborate electronically on product design and development; solicit and process orders; and
facilitate just-in-time manufacturing and post shipping schedules. [21]
In 1999 the Automotive Industry Action Group sold the ANX Network to the Science Applications
International Corporation (SAIC), in the face of criticism about high costs and interoperability problems on the
network.[22] In 2006, the private equity firm One Equity Partners acquired ANXeBusiness from SAIC.[23] Since
2006, ANX has expanded into other areas and now provides managed security, compliance and connectivity
solutions to businesses in the healthcare, retail, and automotive sectors.

Quality[edit]
The quality efforts in the AIAG focus on industry-wide efforts to improve the production quality of parts
suppliers at all tiers. The industry depends on a network of suppliers, many of which provide parts for multiple
OEMs. Quality programs seek to provide industry-wide improvements in the development and production of
automotive components, as well as to synchronize and minimize compliance and certification costs for
suppliers that had otherwise faced multiple certifications of quality from multiple OEMs.

Advanced product quality planning[edit]

Advanced product quality planning (or APQP) is a framework of procedures and techniques used to develop
products in industry, particularly the automotive industry. It is quite similar to the concept of Design for Six
Sigma (DFSS). It is a defined process for a product development system for General Motors, Ford, Chrysler
and their suppliers. The purpose of APQP is "to produce a product quality plan which will support
development of a product or service that will satisfy the customer." A manual from AIAG describes the process
in detail.[24]
The APQP process was developed in the late 1980s by a commission of experts gathered from the 'Big Three'
US automobile manufacturers: Ford, GM and Chrysler. This commission spent five years analyzing the thencurrent status of automotive development and production in the US, Europe and especially in Japan. At the
time, Japanese automotive companies were seeing remarkable success in the US market

Production part approval process[edit]

Production part approval process (PPAP) is used in the automotive supply chain to establish confidence in
component suppliers and their production processes, by demonstrating that: "....all customer engineering
design record and specification requirements are properly understood by the supplier and that the process has

the potential to produce product consistently meeting these requirements during an actual production run at the
quoted production rate."
Although individual manufacturers have their own particular requirements, the AIAG has developed a
common PPAP standard[25] as part of the advanced product quality planning (APQP) process to encourage the
use of common terminology and standard forms to document project status. The PPAP process is designed to
demonstrate that the component supplier has developed their design and production process to meet the client's
requirements, minimising the risk of failure.

Corporate responsibility[edit]
AIAG's corporate responsibility work began in 2005 in an effort by the leadership of several AIAG member
companies to provide shared leadership and messaging regarding corporate social responsibility in the
automotive industry.[26] An annual summit brings together industry leaders for education.[27]

Conflict minerals[edit]
The DoddFrank Wall Street Reform and Consumer Protection Act, passed in July 2010, mandates that public
companies report on their direct and indirect sources for "conflict minerals" - gold, tin, tantalum, and tungsten
- in their SEC filings beginning in 2014.[28] In response, the AIAG formed a working group [29] to allow member
companies to share resources in identifying conflict minerals throughout the supply chain. Suppliers can use
the iPoint Conflict Minerals Platform [30][31] to track their compliance and provide mandated quarterly reporting
in support of the legislation.
These minerals are found in many automotive products, including fuel tanks, seat cushions, batteries, brake
pads, radiators, sealants, glass and electronics. The task of complying with these new rules is estimated at
anywhere from $3 billion to $16 billion across the entire US economy.[32] Over 11,000 companies have
registered with one of the conflict materials reporting platforms, iPoint, as of January 2014. [33]

Managing chemicals in production processes[edit]

AIAG works with member companies to provide support for best practices in the management of chemicals in
the production process.[34] Ford Motor Company has taken a lead in this effort, lending an executive in 20122013 to lead up the effort.[35]

Improving working conditions[edit]

Business for Social Responsibility (BSR), a non-profit that promotes social responsibility in businesses,
worked with the AIAG in 2009 to develop programs and best practices relating to improving working
conditions in the global automotive industry.[36] The project was funded in part by the United States Department
of State.

Anti-trust considerations[edit]
As an industry group, the AIAG has undertaken policies to ensure that it and its members do not violate
antitrust laws while engaged in AIAG-facilitated activities. These policies include publication of times and
dates of AIAG member meetings, recitation of its antitrust policy at meetings, and detailed meeting notes
maintained for each meeting.[37] Also prohibited at each meeting are a long list of anticompetitive behaviors,
including any discussion of pricing, price fixing, allocation of sales, design and marketing, credit terms,
supplier selection, trade secrets, and confidential or proprietary information.

Related organizations[edit]
AIAG is a global organization, though its founding members are all American. AIAG is also a member of the
Joint Automotive Industry Forum (JAIF).[38] Other JAIF members include Europe's Odette International Ltd.,
[39]
the Japan Automobile Manufacturers Association and the Japan Auto Parts Industries Association.[40] In
Germany, the Verband der Automobilindustrie (VDA) promotes national standards. [41]

References[edit]
1.

Jump up^ AIAG Company Profile, Bloomberg Business Week. Retrieved 30

September 2013.

2.

Jump up^ AIAG Dividend, AIAG.ORG. Retrieved 30 September 2013.

3.

Jump up^ Volunteer Reference Guide, AIAG. Retrieved 7 March 2014.

4.

Jump up^ General Motors Customer Specific Requirements - ISO/TS16949,

2007. Retrieved 27 September 2013.

5.

Jump up^ Global Supplier Quality Manual Revision H, TRW Automotive.

Retrieved 27 September 2013.

6.

Jump up^ Supply Chain Management, AIAG. Retrieved 27 September 2013.

7.

Jump up^ Sub-Tier Supplier Development Program, AIAG. Retrieved March

7, 2014.

8.

Jump up^ Customs/Supply Chain Security, AIAG. Retrieved March 7, 2014.

9.

Jump up^ Database tracks parts through auto supply chain, Crain's Detroit
Business, December 15, 2013. Retrieved March 7, 2014.

10. Jump up^ Bar Code Standards Save Millions In Productivity, Efficiency, and
Accuracy, AIAG. Retrieved 29 June 2013.
11. Jump up^ Compliance Labeling, Barcoding.com. Retrieved March 7, 2014.
12. Jump up^ What is GM 1724?, Worth Data. Retrieved March 7, 2014.
13. Jump up^ Global Transport Label V3, Odette International Limited.
Retrieved March 7, 2014.
14. Jump up^ Warenanhnger (barcode-fhig) Version 4 - beim VDA, Verband
der Automobilindustrie (VDA). Retrieved March 7, 2014.
15. Jump up^ Automotive Standards, Nice Label. Retrieved March 7, 2014.
16. Jump up^ Materials Management Operations Guidelines/Logistics
Evaluation (MMOG/LE), QAD. Retrieved March 7, 2014.
17. Jump up^ What is MMOG/LE, Industry Forum. Retrieved March 7, 2014.
18. Jump up^ Returnable Container Core Planning, AIAG. Retrieved March 7,
2014.
19. Jump up^ Automotive Industry - A Collective Look at Collecting
Returnables, Materials Handling and Logistics News, May 14, 2013.
Retrieved March 7, 2014.

20. Jump up^ "AIAG History Timeline" (PDF). Retrieved 2013-10-08.

21. Jump up^ "AIAG spins off ANX Network, SAIC to accelerate
development" (Press release). Thefreelibrary.com. December 7, 1999.
Retrieved 2013-10-08.
22. Jump up^ Automakers look to strengthen struggling VPN, Network World,
13 September 1999. Retrieved 26 September 2013.
23. Jump up^ One Equity Partners Portfolio. Retrieved 26 September 2013.
24. Jump up^ APQP manual, AIAG. Retrieved March 7, 2014.
25. Jump up^ Production Part Approval Process, Version 4. Retrieved 28 June
2013.
26. Jump up^ Corporate Responsibility, AIAG. Retrieved June 26, 2013.
27. Jump up^ 2013 AIAG Corporate Responsibility Summit, Crain's Detroit
Business. Retrieved June 27, 2013.
28. Jump up^ Crain's Detroit Business, Sept 24, 2012 v28 i40 p0003 African
violence touches automotive supply chain; 'Conflict minerals' rules increase
costs, red tape. Retrieved June 27, 2013.
29. Jump up^ Conflict Minerals Work Group, AIAG. Retrieved June 27, 2013.
30. Jump up^ iPoint Conflict Minerals Platform. Retrieved June 27, 2013.
31. Jump up^ Honda, Ford spearhead new conflict minerals reporting tool,
GreenBiz.com. Retrieved June 27, 2013.
32. Jump up^ Auto industry steels itself for 'conflict minerals' rule, Automotive
News, 24 September 2013. Retrieved March 7, 2014.
33. Jump up^ Press Release: 11,000th company uses iPoint Conflict Minerals
Platform, iPoint Conflict Minerals, January 20, 2014. Retrieved March 7,
2014.
34. Jump up^ Chemical Management and Reporting Group, AIAG
35. Jump up^ Industry and Cross-Industry Collaboration, Ford Motor Company.
Retrieved March 7, 2014.
36. Jump up^ BSR. Retrieved June 27, 2013.
37. Jump up^ AIAG Antitrust Compliance and Copyright Policy, AIAG.
Retrieved March 7, 2014.
38. Jump up^ Joint Automotive Industry Forum (JAIF) China B2B Messaging
Recommendation, Odette Forum. Retrieved March 7, 2014.
39. Jump up^ Odette International Ltd

40. Jump up^ Japan Auto Parts Industries Association. Retrieved March 7, 2014.
41. Jump up^ Verband der Automobilindustrie. Retrieved March 7, 2014.

External links[edit]

Official website

AIAG Twitter account

AIAG on Facebook

AIAG channel on YouTube

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