Audi continues to grow in both its home market as well globally in India, China and North America, where it is expected to announce plans for a new factory soon. The importance of logistics has never been more evident at the carmaker in supporting growth both from production bases in Germany and Europe and in expanding volume around the world.
Audi’s head of brand logistics, Dr Michael Hauf, speaks to Christopher Ludwig about his current challenges, including implementing the NLK (New Logistics Concept), which seeks to synchronise production and supply across the VW Group through a network of crossdocks and consolidation centres.
Hauf has a doctorate in applied mathematics and statistics from the Munich Technical University (TUM) and joined Audi in 1984 in the logistics sector, where he held various positions before he became head of Audi factory planning in 1997. Dr Hauf took over the logistics department last April following the retirement of Dr Ernst-Hermann Krog.
Christopher Ludwig: When did you first become involved in logistics?
Michael Hauf:My first contact with logistics was in 1982 when I designed a controlling system for an OEM’s pressing plant at TUM.
CL: What do you like most about working in logistics?
MH: What I find very fascinating is the flexibility this area demands. However, I also view logistics’ impact on corporate processes as both a challenge and an opportunity.
CL:What is your top challenge currently for managing Audi’s brand logistics?
MH: Given the expansion of our production network, one challenge certainly lies in ensuring the supply of parts. Another aspect is responsible management of resources.
CL: Has it been a challenge, from a supply chain and logistics perspective, to keep your factories running in Germany and Europe at–or above–full capacity?
MH: Audi’s growth demands a stable and flexible supply network. Increasing globalisation raises the threats to supply, as the tsunami in Japan in 2011 has shown. However, having a functional group-wide supplier management system in place makes it possible to steer supply processes despite scarce resources.
CL: How would you describe Audi’s progress in switching from a regional freight forwarding system to the NLK?
MH: In introducing a low-waste, synchronous logistic system organised to principles of cycle, flow, pull and perfection, we have come quite a long way. What we have done was to expand the NLK concept by piloting suppliers who had so far shipped combined or partial loads. Upon successful conclusion of a pilot project, the respective supplier is hooked into the system ‘NLK-like’. This is a great challenge given that we are not talking about just a handful, but about a very large number of suppliers in the Volkswagen Group.
CL: Are you facing any hurdles during this rollout, for example in working with logistics providers or suppliers?
MH: One of the greatest challenges is changing logistics thought and actions, whether it’s inside our own company, with suppliers or service providers. Successful change management depends on involving everyone from early on in design and implementation. Our standardised training concepts help to achieve this. What is also important is to communicate advantages and achievements. It’s especially in the early phases of a project that everyone involved in the process needs to see the upside.
CL: Are there any bottlenecks in the main production and distribution networks in Germany and Europe?
MH: In recent years we have seen a gap between increasing production volume and the lack of transport capacity–trucks and especially rail. The reason for this tightened situation is delayed or missing investment from the logistic service providers. There is still room for improving the availability of flexible railroad rolling stock suitable for carrying higher cars.
CL:With the overall growth of the VW Group, have you looked to more synergies for logistics flows across the entire company?
MH: As part of the global Volkswagen logistics network we are using the global Volkswagen transport network for all our inbound and outbound activities. This includes all transport modes worldwide including the new emerging markets. For example, cars from Audi and other group brands are shipped together in the same vessels, and overseas material is consolidated at a single point in Europe.
CL: Has producing an Audi model in a Seat factory brought new logistics challenges for inbound or outbound logistics?
MH: [As] Audi’s transport flows are part of our group-wide logistics network...we are able to make use of a functioning system for the production of the Audi Q3 in Spain. All we needed to do was establish some new distribution paths into markets in which Seat hitherto did not sell.
CL: Have you had encountered any issues managing outbound logistics, either in domestic distribution or exports such as port capacity?
MH: So far, there have been no shipping delays at Audi caused by lack of port capacity. One reason is most certainly that we use Emden as the group’s strongest shipping port by volume. However, we are witnessing increasing disparities in vehicle distribution as imports shrink and production is moved away from markets. This contributes to a decreasing availability of shipping capacity.
CL: What would you identify as your top goals to resolve or improve upon over the next, say, three years?
MH: Ensuring supply to our factories will certainly remain an issue for us. In addition, we will work on optimising and stabilising our programmes and operations. Another important topic will be ‘green logistics’–especially in the context of our growth strategy.
