The year of Automotive Logistics solutions

Loading densities can mean cost savings Michael Druml of Magna Steyr was the first speaker in the lean logistics session of Day 1. His presentation concentrated on how new business models are adopted in the automotive industry and the resultant impact on lean logistics. Druml identified key trends that are affecting the automotive industry: increased customer demands and variety of models and specifications, decreasing number of car producers, individualisation,implementation of new technologies and changing relationships between OEMs and suppliers.

In Graz, Austria, Magna Steyr is producing seven different vehicles, each with a different business model. On the one hand, the company gets consigned material and on the other, Magna Steyr has procurement responsibility – thus there are different business models for different car lines. OEMs mainly concentrate on high volume production and know that one model will be followed by another – contract manufacturers do not have this certainty, and this makes lean supply chains critical.

While OEMs have one main system for logistics supply, Magna Steyr has several. Lean supply is important, but Druml warned that concentrating too much on inventory can hide other inefficiencies in the logistics process. Focus on the customer Kevin Wall, Director: MP&L Jaguar and Land Rover outlined some of the ways that the Ford Production System has revolutionised production and supply for the PAG Group in the UK. He said that while lean principles of supply are important, carmakers should not lose sight of the reason for doing this: the customer. “We all know what lean is. We have got the metrics and a basic understanding of what we have to do to lean out our logistics supply chains. I would like to bring out some of the things we actually miss in terms of giving good service to the customer and giving good information to the supply base that I deal with.”

Wall has a complex model in the UK, with sites in Halewood, Liverpool, Castle Bromwich, Solihull and Gaydon, a concentration of manufacturing plants with a tight radius, with 12 car lines to service, 150 markets and over 55,000 parts, which is high compared with a usual car assembly plant, certainly within the Ford system. And Jaguar and Land Rover produce relatively low volumes – this year they will produce in the region of 300,000 vehicles. “Lean logistics, what is it? To Jaguar it is a lean model that we look at from product development to finished delivery. The strategy is quite simply that we have a partnership with our LLPs. It involves a collection service all the way to the point of fit. We don’t have distribution centres as such, we try to bring everything into our production facilities. We do encourage our suppliers, where possible, to manufacture their product on site and we extensively sequence,” he explained.

Wall’s team produces a plan for every part, Euclidian mapping, the actual paths and congestion paths. This is a tool they use to improve flow of material from the point of receipt in the plant though to point of use. Wall discussed the implementation of kitting on the new Jaguar XK, which has been made possible because of the relatively low volume of production. “We take away all the operator walking time to collect materials. The principle is about a lean footprint, single piece flow, and a forklift-free environment. We don’t allow any forklift movement within the assembly hall and have a zero part mindset – we don’t want to store any parts lineside for this particular car. The material used to build the trolleys can be easily adapted for a change of parts. This is a model we are particularly proud of. ”

New ways to save logistics costs

In the LSP session, Christian Zbylut from Gefco and Åke Niklasson from Volvo Logistics discussed the major challenges facing the industry from an LSP’s perspective. Zbylut, Executive Vice-President of Gefco, tackled the issue of globalisation head on. “When you talk about global sourcing, it makes us logistics providers happy – can you imagine, moving pieces from China to Europe, from China to South America, from Eastern Europe to Western Europe, that means more transport and more activity for us. But in reality, it’s different because manufacturers and suppliers are realising that it is not only the value of the piece that matters, but all logistics costs. Moving a piece from China to Europe takes between five and seven weeks, whereas moving a piece from Romania to Western Europe takes two or three days, and we have to take this into account.”

Special Forum Identifying common areas for cooperation

Gefco’s recently appointed Executive Vice President of Automotive, Vincent Rambaud, outlined how carmakers can work together to make the industry more efficient. “Our industry has been facing tough competitive pressure, forcing the industry to take dramatic cost-cutting action in recent years. The industry has been looking at many different ways to reduce costs, such as the use of better technology, but one that has not been used is strategic cooperation.” Why is there so little cooperation between carmakers, particularly given the potential cost savings? Rambaud suggested that there are two levels of cooperation that carmakers could consider – the first is to try and harmonise logistics moves, legislation and logistics tools.

The second level, which is more problematic, is logistics optimisation, but this should be viewed on a global basis, and not just by carmakers. It is also crucial to take a strategic, long-term view. “The first thing is to work on the harmonisation of the maximum dimension of loaded trucks within EU member states. If you have different rules in different countries for the loaded trucks and you want to transport a car from one country to another you choose a truck that meets both countries regulations, but within each country it won’t be optimised.

New quality of cooperation ahead “Over the last few years, Daimler Chrysler has tried to develop a strong culture of collaboration with all our suppliers,” Egon Christ commented, “not only because we believe this is the key to becoming more successful, but we see a big opportunity for stronger collaboration with our colleagues from other OEMs. Collaboration and cooperation is always to key to finding and identifying potential cost savings.” He continued, “Over the last five years, we had to integrate internal DCX volumes from Chrysler, from smart, for a certain period with Mitsubishi, this was the fist wave of integration we had to realise, but I am convinced this OEM spanning approach definitely makes sense and my feeling is that there is a new quality of cooperation coming.”

On the grapevine…

“We really want our conferences to be more solutions focused. Let’s actually try and get things done.”
Louis Yiakoumi, Publisher and Conference Director, Automotive Logistics

“Logistics is really simple, isn’t it? It’s just moving parts from A to ~B, but in reality it is just not that simple, we are all moving air, and what does that mean? It means we are paying more to produce our product.”
Ake Nikklasson, Volvo Logistics

“From a European point of view, no, European industry will never be able to compete with China on wages but if increasing logistics costs may enable us to compete on landed costs, maybe that is the positive branch of those thoughts.” Karl May, BMW

“In my side of the business we don’t pay enough attention to the fact that we actually have a customer at the beginning and end of this process, looking for a quality of event – this is all important, and the closure of that event is critical.”
Kevin Wall, Ford PAG

“The supply chain has to be in the exact same cadence as the assembly plant. If the assembly goes faster, the supply chain goes faster, and it is all about being in tune.”
Tom Jones, Ryder

“We have recently appointed a lean logistics manager within our structure because this is a need for our customers. They have to have people within our organisation who understand precisely what their needs are.” Christian Zbylut, Gefco

“Don’t take packaging into account at the last minute. The sooner we are involved, the better for all. We are a long way from standardisation. We can improve logistics performance by sharing. Sharing, sharing, this is my only message.”
Rodney Salmon, Linpac.

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