As the UK prepares for a referendum on EU membership and Europe feels the pressure on its borders from a potential collapse in the Schengen protocol, it may appear heresy to start talking about greater federalism in the Eurozone.
I therefore choose my words carefully and would like instead to use federalisation as another expression for the harmonisation or ‘coming together’ of commercial supply chain standards – a one size fits all approach. This federalisation describes the optimisation of those standards across the globe, rather than simply Europe, so as to avoid any confusion or draw criticism from either the Europhile or Eurosceptic camps.
Choosing my words carefully also means focusing upon words such as ‘collapse’ because many supply chains suffer as a result of such an emotive term. I am talking of course about the use of materials, such as cardboard, that lack the rigidity and robustness to maintain the sustainability and integrity of high-octane automotive supply chains and certainly cannot be stacked or re-used more than once for fear of collapse. Yet, the industry continues to use and reuse those materials probably because it is a cheaper ‘one-trick pony’ in the short term.
However, I would argue that the automotive supply chain could save millions in the medium and longer term by the wholesale adoption of more standardised robust containers and pallets. Those that are as much at home in labour-intensive environments as they are in high-bay totally automated warehouse facilities or distribution centres serving plants and production lines on every continent, either just-in-time or supplied-in-sequence.
Customised, recyclable and returnable transit packaging (RTPs) would increase value for money because larger quantities of goods can be transported faster, smarter, more safely in them. RTPs would also reduce transport costs and the industry’s carbon footprint. Not having to decant product from one size pallet to another and one type of packaging to less durable containers such as cardboard means getting it right first and every time. The logistics benchmark figures for ‘on time in full’ (OTIF) and measurable customer satisfaction would also be improved as a result of clever and sustainable plastic packaging.
Health and safety is now hard wired into supply chain thinking. For example, the new Utz Industry Pallet, UPAL-I with the footprint of 1200 x 1000mm, which we are introducing into the automotive supply chain during 2016, have been designed with this long life in mind. They even have the capacity to be reinforced with steel to prevent common accidents and avoid the potential to injure, as well as damage expensive components that could halt a production line because they cannot then be used.
The savings created by longer-term investment in reinforcing supply chain material handling equipment more than offsets the cost of their introduction not to mention that many of the plastic containers and pallets can be made from high quality secondary raw material so that the manufacturing process is kinder to the environment and will reduce the CO2 emissions by nearly 50%.
This in itself is a key message for many automotive companies and tier 1 and 2 suppliers under pressure to boost their greener credentials to customers and shareholders. It is not simply about producing more environmentally friendly vehicle technologies, but the whole lifecycle of that platform and the supply chain serving its manufacture.
It is no longer heresy to suggest that federalisation equates to the optimisation of the supply chain. Indeed, it is boxing clever economically by reducing time and increasing efficiency, and also ticking the boxes of health and safety, while reducing environmental impact by getting it right first time, every time.