The Supply Chain Conference: Debating what North American automotive supply chains need to be faster, smarter and tougher25 May 2016 | Marcus Williams
At the end of the first Supply Chain Conference in Atlanta, OEM and logistics decision makers discussed complexity, the supply chain mindset, environmental standards and the culture of change required to stimulate innovation
As the recent years of rapid growth begin to ease off, carmakers, tier suppliers and logistics providers operating in the US are finding greater opportunities to make the delivery of materials more efficient and sustainable. That breathing space is affording more time for innovation in solving the complexity in the supply chain, both at home and as part of a global inbound and outbound network.
At the end of the first Supply Chain Conference in Atlanta, representatives summed up some of the more salient points that arose during two days of discussion, and looked ahead to the forthcoming challenges they will face in making automotive supply chains run more efficiently.
(pictured right to left)
Christopher Ludwig, editor, Automotive Logistics Group
Wendi Gentry-Stuenkel, head of inbound logistics and auto transportation, Fiat Chrysler Automobiles
Paulo Monteiro, inbound logistics manager, Volkswagen Group of America
Helmut Nittmann, global director, parts supply and logistics, Ford Customer Service Division
Darcee Scavone, vice-president and general manager, Automotive, Aerospace and Industrial Supply Chain Operations, Ryder
Kevin Wade, senior staff administrator of transportation, Honda of America
Louis Yiakoumi, publisher and conference director, Automotive Logistics Group
The comments have been edited for clarity and brevity.
How will increasing complexity change your business in the coming years?
Wendi Gentry-Stuenkel, Fiat Chrysler Automobiles: Our focus here is on NAFTA and one of our major changes in complexity is expansion overseas and sharing more parts globally. Managing parts complexity in the supply base and the transport networks that go along with that is continually a challenge.
Paulo Monteiro, Volkswagen Group of America: We are about to launch a new model, and our supply chain is going to grow significantly. We currently have a couple of suppliers in Shanghai and we will grow this significantly to 20.
Helmut Nittmann, Ford Customer Service Division: There are two big challenges right now. The first is to increase our share of the market, especially in service parts. I don’t think we are competitive on the revenue from this and there is a high level of aftermarket spare parts. We need to expand our business and support dealers.
Secondly, from a logistics standpoint, the big challenge is globalisation. Cars are being imported and exported everywhere, whether going overseas from the US, or coming in from elsewhere. We also need to get a consistent bill of materials.
Darcee Scavone, Ryder: We are seeing many OEMs with significant investments in Mexico centralising procurement and planning in the US, but the communications don’t work well and organisational framework hasn’t changed in the way it should; there is a lot of back and forth. We are all trying to reach consensus on a seamless flow between the US and Mexico, but we’re not there yet.
Kevin Wade, Honda of America: In Mexico, once we have established suppliers supporting Honda, it’s not just about picking parts: lots of analysis is needed on getting parts directly with our limited density. We are making extensive studies and comparing the results on supplier density to find out whether it is best to keep with them, rather than pulling parts out of Mexico. It is taking time to confirm that data.
Does your company and do your suppliers have a supply chain mentality?
Kevin Wade, Honda: At Honda, the supply chain terminology has taken off. We have different groups taking a more holistic view about how we move parts to the factories, starting with measuring our supply chain with KPIs and supporting with transport.
Helmut Nittmann, Ford: There are LSPs that do an ok job with visibility, but I don’t know of a provider that knows the supply chain end-to-end and we don’t need that because we need to manage the supply chain. At the same time, with disaster situations, there is more the OEM could do in giving more responsibility to the provider.
Paulo Monteiro, VW: Logistics is not seen as something that can add value, just something that has to be maintained. We need to add value from a supply chain direction.
Wendi Gentry-Stuenkel, FCA: We have seen improvement in people moving cross-functionally. The transport group is focused on just that and can see variability, but don’t know where it is happening. I’ve been able to come in and give advance warning.
How high on your agenda is ‘green logistics’?
Helmut Nittmann, Ford: On the service side it is a smaller part of the spend in terms of CO2. We do look at the carbon footprint and work with providers to reduce the impact on the environment, including packaging. But it is not in the top five priorities. Safety, quality and efficiency are the top priorities.
Paulo Monteiro, VW: We have a contest between the plants on an employee basis, and have a deal with a non-profit organisation on wood recycling. We have also concluded a project on the migration of warehouse fleets. They are now electric and have a faster recharge. We are investing in several different areas and I have met with Georgia State to talk about CNG-powered trucks.
Wendi Gentry-Stuenkel, FCA: We have a private fleet of 300 tractors being converted to CNG and are encouraging providers to adapt to CNG by offering them our facilities to fill up at.
Kevin Wade, Honda: Our logs groups have an environmental report and we are looking to reduce the overall number of miles. We are also investing in CNG tractors, with between 65-70% of tractors going to CNG. We’re working through some of the issues but on target for saving 1m gallons in fuel.
Darcee Scavone, Ryder: We highlight the reduction carbon in our sales offer and we have several hundred units on the road now powered by CNG; the interest will grow.
Has the automotive industry embraced change, or is it scared to collaborate and lacking innovation?
Wendi Gentry-Stuenkel, FCA: There may be some of that as you go through rapid acceleration. We were fighting through the crisis for a while and that may have hampered some innovation. But now, with the flattening out of sales and production, we have the opportunity and are getting things in a steady state, meaning we can focus on innovation.
Paulo Monteiro, VW: Our responsibility is to our shareholders. We can’t spend just for the sake of being innovative; it has to make business sense. We have a couple of truck contracts and have tested self-guided vehicles on the road. The technology is advancing fantastically and where it makes business sense we will adopt it.
Helmut Nittmann, Ford: We have an innovation mindset and are looking at a range of things such as autonomous driving. We also have shared services on outbound. The priority is to the customer, but where we can leverage other OEMs and collaborate on innovations we will.
To what extent are other industries looking to learn from the automotive industry when it comes to supply chains?
Darcee Scavone, Ryder: They are a lot more receptive than they were even two or three years ago. There have been a lot of people within the automotive logistics business that have taken jobs in the industrial realm and they have walked in and seen a lot of low hanging fruit everywhere. So [the industrial players] will give you a call and ask you to look at the inbound to manufacturing and parts presentation in their organisation or the lack of data for instance. There are lots of opportunities and a lot more receptiveness at present. Our industrial protocol is growing by leaps and bounds for that reason.
Wendi Gentry-Stuenkel, FCA: One of the things that the automotive industry has the opportunity to do is educate students on the complexity of our industry and what a fantastic challenge supply chain management is. If you can educate them on what a fantastic problem-solving opportunity you have every day in your life, it’s really going to help us recruit the brightest and best rather than have them go to the West Coast hi-tech companies.
Where do you see the next generation of supply chain experts coming from?
Helmut Nittmann, Ford: Database management is probably one of the key areas we are looking at being able to understand, and extracting information from data is key. Similarly, we have a very robust succession appointing process with our HR organisation looking at least two layers deep at individuals that have the capability for leadership attributes.
Paulo Monteiro, VW: You cannot rely on a single person. It is not only having the knowledge, you have to know what to do with it. There is risk management assessment, and when the time comes you have to take decisions that in some cases are worth a couple of million dollars. So you have to have a huge background on the area and anyone just out of university won’t have that.
It is our job to coach our teams.
Wendi Gentry-Stuenkel, FCA: I would be hard pressed to think that it is going to be an 18-year old hacker that ends up leading the organisation. Not that that is impossible but it really comes down to leadership. Good leaders may or may not be able to do the quantitative physics, but usually it involves some psychology and understanding what drives people and how to move the organisation ahead.