Take a page from the automotive industry’s playbook.
Take a page from the automotive industry’s playbook.Few markets have been as effective at transforming processes, eliminating waste and driving continuous improvement as the automotive industry. It started after World War II when the Toyota Production Systems (TPS) introduced the concept of just-in-time production and steps to eliminate waste.
Since then, “The Toyota Way” has evolved and been adopted by major automotive manufacturers around the world. Many components of TPS are in place today, supported by key logistics principles that drive efficiency from the assembly line to the showroom floor. The scaffolding that supports this platform are the Lean principles that eliminate waste resulting from overproduction, waiting, unnecessary parts/product movement, and excess inventory. The attributes of industrial supply chain varies from automotive in the sense that they have a more dynamic demand, customized product, and typically have less robust supply chains.
The good news? While the durable goods and automotive supply chains are different, many of these proven principles and practices can be transferred from the automotive realm to industrial manufacturing.
Five automotive concepts you can apply to your supply chain:
1. Improve planning and data management by creating standard requirements for suppliers
Extend these standards to cover shipping and standard pack requirements, container labeling, packaging adherence, and shipping data updates in the form of an Advanced Shipping Notice (ASN). These are all foundational requirements for the other concepts.
2. Plan everything: parts, demand and logistics
In the automotive world, supply chain managers have “a plan for every part,” that aligns demand planning and forecasting with logistics plans for suppliers and parts. Elements include ship dates, standard pack quantities and packaging. All inbound parts and components are linked to demand, transportation cost, and transit time to the production facility. The plan flows from two key components:
- Bill of Materials: a listing of all materials required to assemble or manufacture a product
- Line back philosophy: to eliminate waste, the supply chain is designed from the line back to the supplier. For example, shipping product in a container used on the line eliminates the need to repack the product.
3. Use planning data to optimize routing
Want to boost supply chain velocity and reduce costs? This optimization can be done with a weekly plan or daily plan executed in a TMS System. Both are enabled however by having solid packaging data and a demand schedule. Share your demand schedule with the team responsible for planning/optimizing routes electronically to integrate into optimization tools. To further reduce transportation costs, consolidate shipments with other suppliers, plants or even competitors.
4. Get visibility into inbound shipments
Have the information you need to create an effective master plan and schedule jobs? What about reducing excess inventory, keeping production schedules running and fulfilling customer orders? With visibility into inbound transportation you know the status and delivery date of every shipment, can make more informed decisions, and carry less “safety stock.” By integrating a logistics plan, the network can now be managed by exception.
5. Manage inbound transportation by exception
With a demand-driven network, you can use demand data to position inventory effectively, plan manufacturing capacity and execute shipment orders. The key is access to real-time, network-wide data and visibility into inbound transportation to execute and manage exceptions and create contingency plans for handling unplanned or unbudgeted events.
These five practices help make automotive supply chains among the world’s most effective. While industrial manufacturing supply chains face unique challenges – fluctuating demand, globalization and more end item customization – these practices are likely to help lower costs and improve service levels. Could you benefit by applying these principles to your supply chain?
Written by Mark Spieles, Director of Customer Logistics, Industrial & Aerospace Segments, Ryder Supply Chain Solutions
Mark Spieles currently serves as Director of Customer Logistics for Ryder. In this role, he has leadership responsibility for Industrial, and Aerospace customers. Mark Spieles joined Ryder in 1995 as a Logistics Manager supporting General Motors. During his time at Ryder, Mark has launched and managed various logistics optimization centers supporting General Motors. He also has worked within the Tier One Automotive team supporting multiple clients. Most recently he has taken on a leadership role in the Industrial and Aerospace sector. Before joining Ryder, Mr. Spieles worked for Technicolor in support of Walt Disney Corporation, and previously worked for Dayton-Hudson in its Central Distribution Center. Mr. Spieles holds a Bachelor’s degree from Central Michigan University and a Masters of Business Administration in Finance from Wayne State University.
