In- & Outbound Auto Logistics - Current & Future State · PDF fileIn- & Outbound Auto...

In- & Outbound Auto Logistics -Current & Future State

Matthias HolwegGeoff Williams

CCCDDD333

June Conference 2000

Outline

• Inbound– Different levels of integration

– Key performance indicators

• Inbound Logistics in 3DayCar Scenario– What are the key constraints?

• Outbound– Key performance indicators

• Outbound Logistics in 3DayCar Scenario– What is the cost of 24-hour delivery?

CCCDDD333


Auto Inbound Logistics

PlantRDCSupplier

Supplier

SupplierOverseas

Parts

Load Efficiency,Frequency

CollectionFrequency,Inventory,

Load Efficiency

How long does the system need to

respond to change?

Non-Integrated

Semi-Integrated

FullyIntegrated

Call offNoticegiven

5pm,day beforepick-up

2 weeks Hours,On-line

ResponseLead Time

Call-offs

1 day 2 weeks < 1 day

ResponseLead Time -Framework

1 day? 2 weeks 1 month

Trailer-TruckRatio

3:1 2:1 2:1

Delivery Lead Time

Call-off - Plant

36 hours 12-18 hoursav.24 hours max

16 hours,

0.7 days stock(incl. WIP)

Inbound Key Performance Indicators I

Non-Integrated

Semi-Integrated

FullyIntegrated

LoadEfficiency(Trunking)

85% cubic 85%floorspace68% cubic

80-85% cubic

CardboardContent

50% 25%, plus 5%due to lack ofemptystillages

N/a(est. 10%)

No ofContainer

SizesStd / Non-Std

277containers,10% standard

N/a 120containers,60% standard

Inbound Key Performance Indicators II

Inbound Logistics Process - Example

Mon MonFriTue MonWeek 1 Week 3Week 2

FriFri

Release of orders

RouteGeneration

….

Feedback to Plant to

achieve loadefficiency.

Pick-upSheets arereceived at vendors &

carriers

Start splitinto deliveryroutes for

W3

PUS received

at depots, some viacourier

UKStart

Collection

Consolidationin Europe

Deliveryto Plant

UK: CollectionGenerally daybefore delivery

StartDelivery to

Plants

LastDeliveriesto Plants

...Change Lead Time: 2 weeks!

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CROSSDOCK

COLLECTION ROUTESUPPLIERSPARTS DELIVERIES

VM

LINEHAUL ROUTE

JIT

COLLECTION DETAILSAPPLIED TOSCANNINGEQUIPMENT

SCAN PRODUCTAT THE POINTOF COLLECTION

VARIANCESCOMMUNICATEDTO CONTROLLER

ASN

Host

RAN’s

CROSS DOCK DATA

Integrated Logistics - Example

12

8

6

4

3

21.66

0.97 0.9 0.79 0.75 0.72 0.7

0

2

4

6

8

10

12

86 87 88 89 90 91 92 93 94 95 96 97 98

Day

s

Total Quality Benefit

Actual

Financial Benefits

Note:- Figures shown also include work in progress (W.I.P.)

Progress to Date Optimum InventoryScenario

1

2

3

4

Safety Stock at Timeslot

Deliveries from Partner

Stoc

k Le

vels

(Hrs

)

Integrated Logistics -Inventory in the Pipeline

CCCDDD333


Problems in Current State• Information reliability:

– Short term changes occur due to:• Call-off change by VM• Lack of empty stillages

• Packaging and containers– Lack of standardisation, loss of efficiency (stacking)– High cardboard content

• Supplier opening times– 60-70% shut on Friday afternoon

• Inflexible delivery windows at the plant• Competition with VM fleets, impact on efficiency

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3DayCar Requirements I

24 hour Delivery and Pick-up

• Flexible delivery slots• Electronic signature• Secure drop & pick location at supplier• Reduce cost through multi-franchise or

cross-sector consolidation

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Overlap of UK Suppliers

VM A

VM C

VM B7%

16%

27%

4%

14%

21%11%

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3DayCar Requirements II

Real-time Visibility

• Integration of route-planning and supplyconstraints into VM scheduling system

• Dynamic processing (not over-night!)• Transponder technology

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3DayCar Requirements III

Modular Load-Building Ability

• Standardised containers– Minimum individual containers and cardboard

• Centrally controlled stillage return process• Transponder technology

OutboundLogistics -The Current State

Auto Outbound Logistics

DealerDC /Compound

Plant

LocalDealer

Import/Export

Visibility &Load Building

Load &Backload Efficiency

Outbound A Outbound B Outbound C

Load Consolidationin Plant

0.9 days on average

Factory-CompoundActualDelivery Time

5 min 1-12 hours N/a

Compound-DealerContracted DeliveryTime[days]

2.75 2.75 2.67

Compound-DealerActualDelivery Time[days]

1.94 2.4 2.0

% outsidecontractedDelivery Time

8.5% 3.6% 1.5%

Dealer Drops 2.63 3.5 3

DamageLevel

0.6% 0.4% 0.8%

Outbound Key Performance Indicators

Outbound A Outbound B Outbound C

DataProvided

Monthly +Weekly f/cDaily call-off

Monthly +

Daily (f/c)Hourly call-off

Monthly +Weekly f/cDaily call-off

Total Volume MonthlyWeekly

MonthlyWeekly

Volume per Model /Body

MonthlyWeekly

DailyWeekly

Volume by Market Monthly MonthlyWeekly

Market by Region Monthly

DailyWeekly

FeedbackGiven Delivery

Vehicle Status

VolumeDeliveryVehicle Status

VolumeDeliveryVehicle Status

InsufficientPlanning

Data

InsufficientPlanning

Data

Data Exchange VM - Logistics

CCCDDD333


Example: 2 UK Plants

Forecast v Actual Volumes

0

500

1000

1500

2000

2500

3000

3500

Jan-99

Feb-99

Mar-99

Apr-99

May-99

Jun-99

Jul-99

Aug-99

Sep-99

Oct-99

Nov-99

Dec-99

Jan-00

Feb-00

Mar-00

Apr-00

Plant 1 - F/C

Plant 1 - Actual

Plant 2 - F/C

Plant 2 - Actual

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Forecast Error range from +60% to -100%

Forecast Error in %

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80% Plant 1 - VariabilityPlant 2 - Variability

CCCDDD333


Main Issues• Unreliable forecast and schedule information

– No collaborative planning other than load-building– No input into production scheduling

• Only one contracted time, regardless of order&volume• Backloading required (average 60%)

– ...but no formal process– Contributes to 3 days load building time

• ‘Panic shipping’ - Overstocking or express to port• Dealer Opening times

– Dealers can’t always take allocated stock

The Future State ofOutbound Logistics

CCCDDD333


Problem

How to deliver vehicles

• In 1 day within the UK• At the same cost as the current 3 - 4 day situation• Without significant environmental

impact.

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Assumptions

• 2.0 million UK sales per annum

+ 0.5 million road-trunked exports

• Excludes current rail trunking

• Based on 11 car transporters

• No increase in volume fluctuations

• Reactive scheduling

• Loss of efficiency in back loading

CCCDDD333


Cost and distance situationCost p.a. Truck

Distance p.a.Current £150 million 125 million

kilometres3DayCarwith currentmethods

£ 200 million 160 million

Increase 33% 29%

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Cost situation

• Current Cost: c. £60 per vehicle

0.6% of retail price of vehicle

• Excess cost of transport of 3DayCar is £20

+ 0.2 % of vehicle price

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Solutions

• Co-operation between manufacturers andlogistics companies– Multi Franchise– Backloading

• Mix of smaller transporters

• Planned Logistics

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Multi - Franchise History• 1960’s : Totally single franchise

Transporters identified by franchise Very little backloading opportunity

• 1980’s : Transporters identified by Logistics Company Multi- franchise in remote areas.

i.e. North of Scotland.

GEOFF WILLIAMSGroup

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Multi - Franchise History• 1990’s : Example of multi- franchise from

one portLogistics company co-operation tomaximise backloading opportunity ( now c. 60 % )

• 2000’s : Big PR opportunity for manufacturers to work together toincrease cost and distance efficiency of transportation

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Multi - FranchiseFrom Port

Multi -Franchise

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Multi - FranchiseFrom Factories

Multi -Franchise

Direct delivery quicker and cheaper near to factory

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Multi - FranchiseProblem of Dogleg

Multi -Franchise

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Multi - FranchiseRegional Compounds

Multi -Franchise

More work required

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Backloading

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Cost Savings per unit :Co-operation

• Excess 3 DayCar cost £20Savings• Multi- Franchise * >£3• Backloading £5

Total Savings >£8

Additional Savings required <£12*More work required on compounds

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Mix of Lower CapacityTransporters• Cost saving - £9 per unit

but• Further kilometre increase of 9% compensated by ?:

– Axle weight– Fuel consumption– Emissions– Physical size

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Cost Savings

• Excess 3 DayCar cost £20Savings• Co-operation >£8• Mix of transporter size £9BUT Combined saving only £14 More co-operation = Less need to use smaller transportersAdditional Savings required £6

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Planned Logistics

• Immediate visibility of 3DayCar orders inhourly production schedule

• Production sequencing to assistscheduling of long distance zone

• Reliable production• Optimised hourly delivery planning

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Planned LogisticsOpen to All Parties : Current

MANUFACTURER

LOGISTICSCOMPANY

��

��

��

DEALER

ZZZZZZ ...

WHERE’STHISCAR

???

RED CARSTODAY

SORRY, SIR

COMPONENTSUPPLIER

CCCDDD333


Planned LogisticsOpen to All Parties - Future

MANUFACTURER

LOGISTICSCOMPANY

��

��

��

DEALER

IT WILL BEHERE IN THREE

DAYS, SIR

I WILLHAVE IT INTWO DAYS

IT’S JUSTBENG

PAINTED

COMPONENTSUPPLIER

CCCDDD333


Feasible Solution

• Consolidation of imports at 4-5 UK ports• Consolidation of selective regional zones

to factories/compounds• Optimum backloading• Smaller mixed fleet of transporters• Planned Logistics

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Cost Savings

• Excess 3 DayCar cost £20Savings• Co-operation >£8• Mix of transporter size £9• Planned Logistics £4

Combined saving £21Savings £1

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Solution Effects

Transportation Cost Saving £1Deletion of Distribution Centre £20

Minimum Saving Potential £21

• Kilometre increase of 14% on current

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Cost and Environment conflict:Example

L ow c os t v e rs us be s t e nv ironm e ntal option

70

80

90

100

110

120

C urrent low cost 3D C low km 3D C

Nu

mb

er

of

kms

pe

r ca

r

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Impact on Fuel less thanKilometres - Regional Example

Difference in kilom etre and fuel im pacts

100%

105%

110%

S S cot Y orks N E ast

Regions

Per

cent

age

incr

ease

Km increase

Fuel increase

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Other Areas of Efficiency Gain

• Variable delivery periods on differentcustomer segments: I day - 3DayCar

3 day - Demonstrator• One delivery date throughout supply chain• End of life vehicle recycle• 24 hour delivery to dealer

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24 Hour Delivery to Dealer

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24 Hour Delivery to DealerProblems• Local authority restrictions on access to

dealer

• Requirement for dealer availability toinspect on receipt of vehicle

• Security of vehicle on overnight delivery

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24 Hour Delivery to DealerSolution• Only insure and inspect for major damage within 24 hours• Joint allowance in warranty per vehicle to

cover minor damage and “factory quality”• Split allowance between Logistics and

Service on basis of periodic sampling• Secure delivery compound at dealers for

overnight delivery

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24 Hour Delivery to DealerAdvantages• Reduces congestion• Reduces lead time or Improves capacity utilisation• Potential savings on insurance and

inspection

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Conclusions

• 3Daycar feasible with no increase in cost BUT depends on co-operation between

parties• Good PR for manufacturers to operate on

multi-franchise basis with logistics comps.• Further research work required

What about direct delivery to customer?

Thank you for your attention!

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