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Opel tasks Gefco with further cost reduction

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Opel/Vauxhall has renewed its fourth-party logistics (4PL) contract with Gefco for a further four years, starting in January, tasking it with finding further cost reduction measures and intensifying its optimisation and network engineering activities.

Gefco’s 4PL Solutions division provides services for Opel/Vauxhall across Europe and Turkey, including the management of 220 separate logistics providers (140 for inbound and 80 for outbound). Its remit includes purchasing, tenders, contracting and invoicing.

Gefco first began providing services to Opel/Vauxhall when GM Europe handed over the contract back in 2013 but since Groupe PSA bought the division, Gefco has been able to combine services and make further efficiency gains by balancing parts and vehicle flows. This is set to increase as the Opel/Vauxhall plants start making vehicles based on a common architecture and establish a common supplier base.

From 2024, all Opel/Vauxhall passenger car models will be based on joint Groupe PSA architectures, a move designed to bring savings to the group and to assist Opel/Vauxhall in achieving its PACE plan to return to profitability by 2020.

In the first phase of this plan, Opel/Vauxhall plans to achieve a recurring operating margin for the automotive division of 2% by 2020, with a move to 6% by 2026. The carmaker is targeting 7% in cost reductions in 2019 and 5% per year thereafter. Its plan includes achieving greater efficiencies in manufacturing, logistics and purchasing.

In terms of inbound logistics, Groupe PSA intends to cut its supplier numbers in half and bring those suppliers much closer to the plants they are servicing, cutting down on overseas transport. Earlier this year, Gefco’s president and chairman, Luc Nadal, said Opel/Vauxhall’s integration with Groupe PSA would mean shared suppliers in closer proximity to plants, something Antoine Redier, executive vice-president of 4PL Solutions at Gefco, confirmed in more detail last week.

“If you have fewer suppliers, then you will have better efficiency in logistics because you have bigger flows and you don’t have to organise so much groupage; this is a trend we see,” he told Automotive Logistics. “Also, because the suppliers are common, volumes will higher and there will be some repositioning.”

Within the Opel/Vauxhall network, the new Vauxhall Corsa is going to be made exclusively at Opel’s Spanish plant in Zaragoza, including an electric version, while the Vauxhall Vivaro van is going into production in Luton, in the UK, from 2019. Meanwhile, the Vauxhall Grandland X has been allocated to the Eisenach plant in Germany. New product allocations have also been announced for the engine and transmission plants in Tichy (Poland), Aspern (Austria) and Szentgotthard (Hungary).

Dynamic transport plan
One of the challenges for Gefco of this transformation in the supplier network is that it will take place on a plant-by-plant basis as vehicle models are renewed, rather than all at once.

“We will have to have a very dynamic transport plan, which will be in steps so that we can cope with the change that will happen,” said Redier. “We will have not only to optimise but to organise so that step by step, we will always be at the most efficient point.”

To manage this, Gefco is extending the supply chain architecture project it set up for PSA a few years ago, in which the logistics provider redesigned its services in a way that yielded major savings for the carmaker. It has been extending this since PSA bought Opel/Vauxhall and is currently in the process of locating one supply chain engineering specialist in each assembly plant to analyse flows and make proposals to enhance efficiency back to Gefco’s central engineering team.

Savings are also being made on the outbound side of the business as part of the PACE plan. Opel has sold its dealer network in the Scandinavian, Nordic and Baltic countries, for example, and is using importers to handle the business. LänsiAuto is handling imports in Finland and the Baltic States, with Bertel O Steen in Norway and Interdan Bil in Denmark and Sweden. The OEM is planning similar moves elsewhere.

That will reduce business for Gefco’s 4PL Solutions business, but its 3PL operation can still compete directly for work in these areas.

Separate entities
One of the principles of the 4PL service Gefco has implemented for Opel/Vauxhall is that it will remain a separate entity from the rest of the logistics provider’s organisation. In terms of IT, for instance, Gefco’s 4PL operation uses its own tools, which are not accessible to its 3PL operations.

“This was a condition of being able to include Gefco [as a] 3PL in our tenders,” explained Redier. “As you can imagine, we have the obligation to be fully objective, otherwise it could be distorting competition and giving an advantage to Gefco as a 3PL.”

The share of Gefco’s third-party business for Opel/Vauxhall has remained almost exactly the same since the beginning of the contract, however.

Gefco was the first logistics provider to GM Europe and its 3PL operations for the vehicle manufacturer date back to before the 4PL contract – something Redier said was “one of the reasons Opel/Vauxhall trusted Gefco in going for a full outsourcing of the activity”.