Automotive manufacturing, what are the options for ‘shared risk - shared rewards’ billing solutions?

14th July 2010

Creating a contract which provides the balance between a flexible manufacturing solution and minimising costs is always difficult for any automotive producer outsourcing a part of their ‘on-site’ logistics operation.

Cost Plus, also known as open book, is where all expenses are transparent and the logistics provider works on a percentage margin of the costs incurred, which means there isn’t any incentive to cut costs.

With Fixed Price Per Vehicle, the customer knows exactly what they will be paying over a given period for a specified volume build. However the risk is that the 3pl will cut costs to the point where the quality of service slips to protect their profit margin.

The final option is Activity Based Costs, this means it is directly proportional to the work carried out, (i.e. per pallet movement or similar activity).

The secret is to mix and match
Certain aspects of production logistics suit Fixed Price whereas others are more effective if delivered on an Activity Based Schedule. Cost Plus is a great way to get a feel for a contract in the early stages so that more effective solutions can be implemented based on fact.

As the pioneers of ‘Activity Based Cost’ in the UK automotive sector, Rudolph and Hellmann Automotive operate very differently to our 3pl competitors.

For a start, we are the only providers of dedicated on-site production and reverse logistics for the automotive sector in the UK – which means our entire focus is on production manufacture.

This specialist knowledge enables us to work with you to develop the contracts relevant to the operation.

If only it was as easy as ‘right part, right place, right time’
Production logistics is an easy formula – right part, right place, right time. The difficulty is that a little inefficiency here and there is hard to spot and the costs are generally well hidden.

This is why you need a specialist automotive ‘on-site’ logistics company, with sector experienced people, and expert management skills to make decisions dynamically every 15 minutes based on good information systems delivering micro KPI’s.

No other company operates a more transparent, ‘shared risk - shared rewards’ billing solution in the UK automotive manufacturing industry.

Lean decision making means we can share more of the risk
Because we only focus on production logistics, limited to a handful of automotive manufacturers, our directors are pro-active in reviewing the performance of each management cell. This drives continual process improvement through better understanding and lean decision making.

The Rudolph and Hellmann Automotive business model is designed to operate: 

• More transparently
• Be more flexible and responsive
• Share more of the risk

Can you see a constant evolution towards a more dynamic cost base?
There have been few times more challenging, or requiring greater change in the automotive sector, than those of the past two years.

However it is now, during economic recovery, the lessons learnt are embraced or ignored.

Operating under a non-disclosure agreement we are able to provide a discreet assessment of your current process and identify improvements. This is a ‘no obligation’ service because we believe in the power of demonstration.

Here’s how the 360 onsite logistics audit and assessment works!

Put us to the test, what have you got to lose?

Contact us for a FREE ‘on site' logistics audit – carried out under a non disclosure agreement - our findings will be reported in full confidence and will provide a detailed analysis of where savings and improvements can be made.

_{There’s only one condition - you must be UK based and be operating in the automotive sector, with a head count of around 25 - 30 or more operating in logistics roles.}