Supply chain digitalisation
Magna Steyr’s vehicle assembly plant in the Austrian city of Graz is not a typical automotive factory; the site, which in 2018 brought its cumulative total production tally to 3.5m vehicles, produces vehicles under contract for OEMs such as Daimler, BMW and Jaguar Land Rover. Efficiency is important in any automotive operation – but for a contract manufacturer, it is the life-blood of the business.
So perhaps it is no surprise to discover that the plant was an early adopter of industry 4.0, a term coined by the German federal government in 2011 to refer to a clutch of new manufacturing technologies that are expected to usher in a fourth industrial revolution.
Big data and advanced analytics, the internet of things, robotics, digital modelling, 3D printing, and computer-integrated manufacturing are not only included in industry 4.0, but are combined to make a whole much greater than the sum of its parts.
Within the 100-year-old Graz plant, explains Alfons Dachs-Wiesinger, its director of logistics services, industry 4.0 has been rebadged as ‘Smart Factory by Magna Steyr’. Automated guided vehicles, collaborative robots, big data, knowledge management and intelligent racks are all part of what he terms “a holistic strategic approach to digitalisation, in order to be prepared for future challenges”.
That said, the most recent addition to the Smart Factory toolbox, the Magna Steyr Intelligent Arrival Trailer Tracking (MIATT) initiative, was prompted by very much a current challenge: the need to quickly develop better visibility into certain vehicle flows heading to the plant. The flows in question related to new model launches commencing in 2017 and 2018: initially, the BMW 5-series, then Jaguar’s E-PACE and I-PACE models.
With most previous models that Magna Steyr had built, explains Dachs-Wiesinger, the plant had been able to rely extensively on its network of local suppliers, mostly located within 20km and supplying it on a just-in-sequence or just-in-time basis. For these new models, though, the sourcing decisions of the marques in question instead reflected the respective OEMs’ pre-existing sourcing preferences and relationships, resulting in much longer just-in-sequence transit distances.
“The suppliers were no longer close to the plant, but 400km, 600km or 1,200km away and, in a couple of instances, even further,” he notes. “These were still just-in-sequence flows, so the monitoring of those shipments was essential, which posed a challenge for us. On the one hand, you could argue that monitoring the shipments was the responsibility of the logistics service providers in question, but in the real world we knew that this wouldn’t work 100% of the time. So we were looking for a smart way to achieve this monitoring.”
The solution, reached after some consideration, was to equip all the plant’s incoming and outgoing trailers with GPS communications, so that real-time location and status updates would be available. After researching the market for such capabilities, explains Dachs-Wiesinger, Magna Steyr selected the ghTrack modular data-as-a-service (DaaS) and software-as-a-service (SaaS) system from Danish firm GateHouse Logistics (acquired in December 2018 by cloud-based logistics platform provider project44), which had a proven track record of unifying data from hundreds of different tracking systems and technologies across millions of assets, such as trucks, trailers and containers.
“The sole impetus behind the MIATT initiative was the need to support long-distance, just-in-sequence deliveries with the required level of visibility and control. But that said, we had always wanted to digitise our inbound logistics flows” – Alfons Dachs-Wiesinger, Magna Steyr
GateHouse’s role has been that of a neutral data mediator, bringing the data together from various logistics service providers and systems, partnering with Cargobull Telematics and other providers in a systems integrator role, and providing Magna Steyr with not only the desired track-and-trace capability but also the ability to proactively optimise routes to reduce fuel consumption and CO2 emissions, as well as improve on-time delivery performance and reduce the need for expedited shipments.
The realisation that the desired level of visibility and digitalisation was both possible and cost-effective was something of a watershed moment for Magna Steyr, admits Dachs-Wiesinger.
“The sole impetus behind the MIATT initiative was the need to support long-distance, just-in-sequence deliveries with the required level of visibility and control,” he says. “But that said, we had always wanted to digitise our inbound logistics flows and MIATT was to be an important step towards that. With MIATT, we were starting with the time-critical and high-volume logistics flows first, where the business case was strongest.”
Work carried out during 2016 saw the project gradually take shape. Carriers were brought onboard, transport routes and schedules crystallised, equipment and software sourced and delivered, and ‘key user’ training undertaken. An initial test saw the wrinkles ironed out and documentation refined. By the fourth quarter of 2016, the MIATT system was ready for deployment – a process that took place over a four-week period.
The core capability delivered by the new system, explains Dachs-Wiesinger, is a visual display on a digital map of each shipment’s progress and location on its route, based on GPS updates every five minutes. For every shipment, an estimated time of arrival (ETA) and an earliest possible arrival time (EPAT) are calculated. Late shipments are displayed on the routes in red, with ‘late’ being when the truck is further away from its destination than it can theoretically drive before the planned arrival time, including a defined buffer period.
Late shipments also trigger email alerts to a defined group of plant personnel, so that action can be taken to mitigate the effects. These could include plant-level measures, such as re-planning, as well as action by the relevant carrier.
Initially, says Dachs-Wiesinger, Magna Steyr’s intention was for these emails to be sent only to its own personnel, on the assumption that carriers would use their own systems to be made aware of a particular shipment’s status.
Upon go-live, though, it quickly became clear that this was not necessarily the case, with carriers complaining that Magna Steyr personnel knew of any delays before their own systems and drivers had told them – putting them at a disadvantage when it came to remedial action. Accordingly, says Dachs-Wiesinger, a decision was quickly taken to share the email alerts with carriers. This not only speeded up reaction times but also reduced the need for interaction between Magna Steyr and its carriers.
Analytics-driven business intelligence is another powerful feature of the system, he says. During the development of the trailer tracking initiative, the firm recognised the granularity and amount of data that would be forthcoming. This prompted a consideration of what Dachs-Wiesinger describes as five “levels of maturity” in making use of the data, stretching from the first level – simple reporting – to the fifth and highest level – actively using it for decision support. In between are department-level reporting, executive-level reporting and trend detection.
Operationally, this translates into a spectrum of opportunities, from basic drill-down capabilities at the level of individual loads and shipments to predictive analytics and the ability to combine trailer tracking data with other data – from Magna Steyr’s ERP and TMS systems, for instance – to see correlations, trends and opportunities to re-plan routes more efficiently.
“Where do we get problems all the time, or get them more often than on other routes? Knowing such things, we can better support our planning and routing processes and look for ways to minimise or prevent these problems – and also improve our environmental footprint,” explains Dachs-Wiesinger. “It’s about consciously taking advantage of the opportunity to take data that is already being captured, which is already available to us, and re-use it for future planning purposes and better decision-making.”
In the longer term, he concludes, the goal is to extend this even further, by integrating within Magna Steyr’s cloud-based Inet TMS (transport management system) the MIATT-derived data with DHL Supply Chain’s Resilience 360 supply chain risk management offering, in order to de-risk transport routes even more.
“We’ve tested the concept, and know that it will work, but the implementation lies in the future,” Dachs-Wiesinger says. “Alerts will be set within Resilience 360, and any triggered alerts will then be checked within the TMS. MIATT and Resilience 360 will both be linked to the TMS, but that is the extent of the integration – they won’t be directly talking to each other.”
Reaping the rewards
But if the broader supply chain risk management benefits of Resilience 360 lie in the future, the rewards of Magna Steyr’s investment in MIATT are very much in the here and now.
As a joint 18-page Magna Steyr-GateHouse case study of the project makes clear, MIATT delivered a 40% improvement in on-time delivery performance in its first two months and is expected to reduce expenditure on expedited transport shipments by a similar amount. Route optimisation has delivered a measurable reduction in fuel consumption and CO2 emissions, and it has also proved possible to reduce the number of personnel engaged in vehicle dispatching and expediting.
Not surprisingly, perhaps, the MIATT project was recognised in the Automotive Logistics Awards – Europe 2018, scooping up the Inbound Network Optimisation Award last year.
Both the MIATT initiative and Magna Steyr’s new iTrace project (see box below) have also added further strands to the company’s industry 4.0-enabled ‘Smart Factory’ initiative, proving technology that could now be rolled out elsewhere in Magna International’s manufacturing network, which totals some 339 plants across 28 countries, adds Dachs-Wiesinger.
“As a business, our goal is to deliver superior value to our customers through innovation and world-class manufacturing. With MIATT and iTrace, we’re delivering on both fronts,” he says.