Hello John!

4th January 2011

Production Logistics: 10 Common areas to assist savings within your operation

John,

Modern automotive or motorcycle manufacturing plants often rely on an uninterrupted supply of material and parts to be delivered to the assembly line. As the amount of stock held locally is pushed to be reduced, the timely delivery of material becomes a more critical issue. The following 10 areas are commonly where focus is required to operate as an effective production logistics supplier within the automotive industry.

1. Lean decision making process:-

Logistics management within an automotive manufacturing environment typically involves multiple decision makers at different levels. Ultimately, logistics problems consist of numerous components characterised by their dynamic behaviour and high interconnectivity. Understanding the dynamics of such problems and solving them is usually difficult enough, without the added complexity of hierarchy and inexperienced management. Utilising and investing in an experienced management team with localised knowledge, and the capacity to make critical business changing decisions at a local level is a vital attribute for any logistics service provider/business unit within the industry. This gives the OEM the confidence to keep optimal performance and not waste time and budget negotiating changes with rigid suppliers.

2. Flexible commercial agreements:-

As automotive manufacturers are finding demand for their products in the market place is becoming more sensitive to economic changes, the greater the need for suppliers to be commercially flexible and breathe with businss. The ability to turn volume related costs on and off at late notice is therefore essential as a risk-sharing successful logistics service provider. It is necessary that 3pl’s invest thought and research into developing not only operational innovation, but also commercial innovation that shares risk and reward in engaging commercial partnerships.

3. The ability to monitor the business real-time:-

As within any manufacturing business, if an automotive line assembly stops, the financial penalties for both the OEM and it’s suppliers can be catastrophic. The ability for a 3pl to consistently monitor its operations on an hour- by-hour basis is essential to its customer. Having the right information at the right time enables management to react and correct any potential stoppages before they affect the client. It also means that supervisory staff have the ability to allocate it’s resource to the right area at the right time in a fluid manner, ensuring the balance between service level and cost efficiency is kept to a manageable level.

4. Robust process engineering and control:-

The complexities of delivering material to a manufacturing assembly line, at the right place, at the right time, in the correct quantities, requires intricate and robust process mapping. The ability to continually re-develop and monitor processes alongside an ever changing manufacturing plan is also essential. The detail within the operating processes is regularly overlooked by management and this can cause operational challenges that are time-consuming to rectify.

5. Investment in training and staff:-

Employees provide the basic foundation within any 3pl’s logistics solution. As with any other asset investment in the form of training and development is key to ensure that the best performance is obtained from every member of staff throughout the structure. Investment in staff and a perpetual training plan or framework ensures that the knowledge, skills, and capability remain within in the business.

6. Operating as an extension of an OEM’s organisation:-

As many OEM’s following a range of manufacturing methodologies, it is important that a 3pl fully understands and embraces the principles to effectively work in partnership, to ensure the logistics process is designed to support the manufacturing framework. A 3pl should be proactive to anticipate changes and be open to commercial negotiations to support its customer’s long-term goals.

7. A specialist approach:-

As automotive manufacturing has a range of unique logistical challenges that rarely occur within other sectors of the industry, it is important that the localised logistics team has a pedigree of experience and a key understanding of the requirements. Many OEM’s utilise logistics specialists from other backgrounds to manage inbound logistics process, without the support of automotive logistics specialists. Although many credible non-automotive logisticians can deliver a service, many are unable to deliver with the cost-effectiveness and efficiency of individuals with the relevant background, due to little exposure to such a rigid cost controlled environment and hour by hour changes in requirements.

8. Flexible suppliers:-

As it is essential that automotive logistics service providers are flexible to OEM’s both commercially and operationally, it is also the requirement that the 3pl builds a portfolio of suppliers themselves that support the overall service ethos. A regular day by day review and communication process has to be managed between 3pl and its resource suppliers on a daily basis to ensure that the end customer receives the agreed service level.

9. Error proofing:-

As changes occur so frequently within the environment, OEM’s regularly require changes to processes and Service Level Agreements. The implementation of new processes at short notice is always inevitable and the expectation on any 3pl involved will be to get it 100% correct at the first attempt, as errors can stop production and become expensive. Therefore the planning of process implementation and re-mapping has to be subject to structured, industry recognised error proofing to ensure mistakes are eradicated before they occur.

10. On-going IT investment and training:-

Accurate stock integrity is achieved through the application of appropriate stock management systems. A number of bespoke and off the shelf IT systems are available in the market place, but not all fit the demanding requirements of a material handling operation to support a manufacturers assembly line. Whilst the selection and implementation of such systems is key, many management teams also miss the importance of training it’s users to a level which gives understanding and accountability on an ongoing basis. Ensuring that IT training is kept up-to-date is a small effort but can reduce costly production stops, and also assists with the development of systems as changes in the operational profile emerge.

For more information call us on 01543 441685 or e-mail jbiddulph@rh-automotive.co.uk to find out how we can help your company now!!

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.}