While visibility in the supply chain is a goal for all logistics managers, for many at automotive tier suppliers it is often more of a mantra than an existing management tool – repeat it enough, and hopefully its meaning will seep through to operational reality.
That is because many suppliers lack an integrated IT tool for tracking and planning the myriad and changing costs of supply chain management, including transport modes, inventory, customs, containers and pallets.
There are many reasons for this: incompatible systems across suppliers and freight providers, a lack of EDI connections across smaller suppliers, poor communication or forecasting from customers, and much else besides. However, Germany’s Benteler, which builds chassis, engines and exhaust systems, has made effective use of a ‘supply chain cockpit’ with significant benefits for planning, managing disruptions and making sourcing and transport decisions.
Speaking at the BVL Congress this past autumn in Berlin, Dr Klaus Hauschulte, director of global supply chain management for Benteler Automobiltechnik, gave a snapshot of the complexities that a global tier supplier faces in the supply chain.
He revealed, for example, that the axis modules produced by Benteler in Duncan, South Carolina for X5 and X6 models at the nearby BMW plant in Geer, have a supply chain pedigree that varies from locations as far flung as Raufoss, Norway; St. Ursanne, Switzerland and Puebla, Mexico; to closer locations in Goshen, Indiana and Opelika, Alabama.
Such geographically dispersed supply chains, together with increasingly global vehicle platform manufacturing, have created more challenges in visibility at a total supply chain or enterprise level, according to Hauschulte. “In some cases, Vo l k s w agen has production on one global platform in ten locations at the same time,” he said. “This makes it difficult to monitor inventory and cash flow.”
See better, act better
The company has therefore developed a tool that helps supply chain managers monitor the control of material, finished goods inventory and logistics flows across its 74 plants. Benteler can use it to monitor demand and inventory across the supply chain, managing bottlenecks in production and in transport, and tracking forecast accuracy. Delivery call-offs are loaded into a KPI system, which provides week-to-week comparisons of the deviations to forecasts.
Benteler is also using the system to track and monitor logistics with its provider, Hellman. An important part of this tracking is to monitor potential supply chain disruptions. “Sometimes we have problems at sea, for example, whether it results from a hurricane, slow steaming by a container line or problems with customs clearance,” s a id Hauschulte. “All of this gets tracked and integrated with our systems.”
n important part of the system is also used in helping to fulfil another supply chain mantra: calculating total landed cost implications in the supply chain. Using a SAP interface, for example, Benteler can pull together the data from its customers, suppliers, plants and logistics providers to understand supply chain costs better. Expedited and premium freight costs, for example, can be tracked down to the plant level. On the whole, costs and inventory levels can be tracked in close to real time, as opposed to waiting for monthly or quarterly financial reporting.
“We can see our inventory on a daily basis, whereas our financial reporting is always at least a month behind,” Hau s chu lte said. “With such a system we are getting real-time alerts.”
With more central data storage, Benteler is always able to simulate the impact that potential supply decisions or changes might have on the complete supply chain network, again helping the company to make better landed cost decisions.
And what if the system reveals that certain sourcing decisions might be having a negative impact on total cost? A good IT system might not necessarily be enough to break through the management barriers to override decisions. In this case, the power concentrated in Benteler’s supply chain management organisation is another benefit. While budget responsibility is still held regionally in the company, Hauschulte’s department can trump local management where necessary.
“While budget responsibility is still with regions, SCM can overrule them. My position is at the same level as the regional heads,” he said. “And if we’re in conflict over a decision, the CEO can make the final decision.”
