SUPPLY CHAIN STANDARD SEPTEMBER 2008
www.supplychainstandard.com
doesn’t envisage manufacturers moving out of established
markets like the UK entirely but plants will be fed
increasingly globally. “The migration of manufacturing to
Eastern Europe has now been overtaken by developments
in places like India or China. At the same time, there’s been
a move away from the ‘supplier park’ model (whereby
suppliers set up plants at or near major car plants) in
favour of a more globalised supply chain.”
There has been talk in the industry of the ‘five day car’
for some time now, says Paul Nurse, chief executive of
supply chain software specialist, ProAct International. The
true five-day car is still probably some way off but there is a
definite move to push sub-assembly work either further
back up the chain to suppliers or downstream to dealers or
3PLs, he says, and this, together with more dispersed
manufacturing capability is making the industry much
more flexible.
“To get to the five-day car, you need smaller, more flexible
manufacturing plants,” he explains. “Almost it amounts to
making cars to order on a production line.”
Huge plants churning out tens of thousands of identical
cars have probably had their day, or at best will be in lowcost
countries, though many of Europe and North
America’s car makers will have to go through some painful
processes to reach that point. Massive volumes are no
longer the answer to the industry’s problems. Inbound
sequencing into car plants needs to be slicker and on a
more just-in-time basis.
ProAct offers car makers the ability to stitch together
the outbound supply chain, which in the past has often
been quite fragmented. “At the moment, there are a lot of
different carriers passing information to each other and if
there is a break in the supply chain, that information can
often get lost.
Destinations
“One service provider might not know of problems
further down the chain – and also, these days,
manufacturers often want to change the destinations of
cars while they are still at sea,” says Nurse.
The supply chain itself will have to become more flexible
and better at moving smaller batches of vehicles. Shipping
specialist Wallenius Wilhelmsen Logistics’ chief executive
Arild Iversen called at a recent conference for more
“intelligent” ocean transport with ships designed not only
for greater fuel efficiency, but also more cargo flexibility.
Often, in the car industry, it’s a matter of improving
performance indicators such as delivery accuracy from, say,
98 per cent to 99 per cent – no easy task, says John
Hammann, business development manager for
manufacturing at SAP UK & Ireland. Currently, a lot of the
effort is going into making the use of systems more
intuitive, allowing operatives to focus on the real job in
hand rather than wrestle with an IT system. “There’s also
more use of mobile technology and also things like sensors
in drums of fluid than can re-order automatically,” he
explains. “At the same time, there’s more emphasis on
accuracy of delivery to the lineside – bear in mind, car
plants can be over a mile long.”
Car makers will continue to tweak their supply chains and
look at new ways of doing things, particularly in new
markets or where new technology is involved. “For instance,
in some of the eastern markets they increasingly import as
much of the basic car as possible but do as much
configuration as late in the process as they can.” Novel
technologies will probably increase the amount of
outsourcing to even greater levels than today, which in turn
will drive greater precision in areas such as synchronisation
and sequencing. The need to share information with
partners effectively will become imperative.
The automotive industry can be likened to a pyramid
with a single OEM – a BMW, or a Ford, say – at the top
with Tier 1, Tier 2 and Tier 3 suppliers producing
components and assemblies of decreasing complexity.
Lean practices and electronic systems are gradually
percolating through the industry, though it is taking time
to reach the smaller companies, particularly those based
in the developing world.
Part of the problem is a tendency to over-complicate
things and for designers’ complex ERP systems to try to
scale them down for smaller enterprises. The results are not
always satisfactory, says of Martin Blackburn, group IT
manager at the Magal Engineering Group - four UK-based
small companies supplying a range of parts to the
automotive industry, with two French-based engineering
and production facilities, and one in India.
After a false start with a larger, more complex ERP
system, Magal finally selected WinMan business software
supplier SSL began which not only could provide all the
core functions needed in a Windows environment, but
also virtual kanban. What the company needed was a
lean-based business software solution that also offered
flexibility, affordability, order traceability, and
manufacturing-focused functionality, which is essentially
what they got with Winman SSL.
“Kanban systems are essentially very simple systems, but
finding an ERP system that will support it is surprisingly
difficult,” says Martin Blackburn. What Magal needed was a
system that could be used by people on the shop floor
without the active intervention of IT specialists.
“The more complex systems do have their place,” adds
Blackburn. “But some of them are so complex that the tail
can end up wagging the dog.” ●
SCS:AUTOMOTIVE LOGISTICS 23
The sudden surge
and continued
volatility of oil
prices have also
had a profound
effect on the US
car market, more
so than in most
other parts of the
world. Smart cars
are becoming a
common sight,
unthinkable
when gas was still
under $2 a gallon.
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