When it comes to collaborating on innovations in logistics, the automotive industry is good at confirming the merits of its own success but, at the risk of seeming conceited, is less good at looking beyond the sector at solutions from other industries, something that is causing it to lose ground in logistics developments and continue to nurse well-documented inefficiencies.
At this week's ELUPEG group meeting, hosted at DHL's state-of-the-art Innovation Centre near Bonn, Germany, speakers recognised the fact that the automotive industry has traditionally led innovations for supply chain efficiency and continues to hold itself up as a best practice benchmark. ELUPEG is a European cross-industry organisation dedicated to achieving sustainable logistics through collaboration and Prof. Dr Sebastian Kummer, from the WU Vienna University of Economics and Business, was just one attendee who recognised from his own experience how the sector has collaborated with its transport providers well in meeting the needs of the most strict inbound supply demands.
However, according to other members, the automotive sector has started believing its own publicity to the extent that it is missing out on opportunities for collaborative innovation, those that other sectors, including fast moving consumer goods (FCMG) and hi-tech, are now using to put themselves out in front.
"My experience of automotive is that they are fabulous at talking to each other and busy confirming in their own minds their current paradigm," said one speaker. "[But] one of the beauties of this organisation is that you have lots of different examples from lots of different industries and it provokes you into thinking 'could I do that a different way'.
According to delegates, that failure to look for a different way means that there are some areas in automotive logistics that are crying out for improvement. Low-capacity utilisation in finished vehicle movements, empty and circuitous return legs on inbound shipments, and an intractable attitude to overcoming anti-trust issues were just some areas highlighted from the automotive-specific breakout group, one of five which were a feature of the day's meeting. Contributors heard that early progress made at ELUPEG on the subject of shared aftermarket deliveries stalled because contributors refused to countenance the movement of competitor parts within their own liveried vehicles.
That said, the whole effort at collaborative enterprise depends on a shared level of efficiency, noted Brian Bolam, deputy chairman of ELUPEG, and president and founder of OmPrompt, a B2B integration provider. "The more efficient you are yourself the easier it is to collaborate," he said. "You have to do everything you can in-house first to get lean, and when you run out of leverage, you have to go outside and get some more to drive your costs down to the next level."
Bolam used the example of Ford as a carmaker partner that had "a slick supply chain" but noted that some may be less keen to collaborate fearing a loss of face when a partner failed to come up to standard.
But an insular attitude was also contributing to fractious relationships between carmakers and transport providers within the sector, especially in the finished vehicle side, with one side complaining they are penalised by poor pricing and the other that inefficiencies in areas such as capacity utilisation need to be addressed.
"One of the ways to take the heat out of the situation is to look at the supply chain as a means to an end rather than a competitive weapon," said Bolam.
There have been some successes from discussions held at ELUPEG in the past, such as the development of shared inbound milk runs between major OEMs. Discussions around the CO_ project, designed to encourage structural breakthrough in the competitiveness and sustainability of European logistics by stimulating horizontal collaboration between European shippers, proved that the initiative has born fruit. However, the automotive contenders who have benefited have failed to return to share the details of their success said Bolam.
Delegates highlighted the fact that there was room for improvement and ELUPEG, as a body of collaborative logistics experts, offered the opportunity for working together toward those improvements. However, to back up Bolam's point, at Tuesday's meeting there wasn't one representative from the automotive industry in attendance, despite the fact ELUPEG has several automotive members; something the organisation was keen to rectify by its next meeting in Amsterdam in November.
See the next edition of Automotive Logistics magazine for more detail on the discussions from May's ELUPEG meeting.
