Automotive Logistics — 2024-03-20
Automotive Industry
In the opening session of ALSC Europe, Oliver Bronder, managing director vehicle logistics at VW Group Logistics, talked about the benefits of having one group logistics function with governance a governance role for the whole organisation able to manage the different rules and regulations on trucking and equipment cross-regionally and across all brands globally. Bronder said in relation to the development of a complex end-to-end battery supply chain or the management of capacity for finished vehicle movements, VW Group Logistics combines all sources of information into a single channel of information at board level, facilitating decision making and problem solving.
Lessons were learned during the crisis in semiconductor supply that followed the Covid pandemic and Bronder said that VW Group Logistics is driving process improvements across all different parts of the company, including manufacturing and purchasing, and identifying where to send critical parts to where they were needed in the network and organise capacity where it was needed at VW Group’s plants to support production and gain profit.
Bronder said that what is very important to the company now is quickly getting familiar with critical situations and to tackle them with calmness and precision. Doing so will help VW Group become more resilient to an industry for which disruption is the new normal. Bronder pointed to using taskforces to gather information at every level of the organisation, including shopfloor management, to enable more effective and faster decision making.
“This is a topic we have to focus on and find a new normal to be more resilient in future situations,” said Bronder.
Bronder said that transparency is important in that decision making and played its part in forecasting transport capacity constraints and that collaboration and partnerships in every part of the business supported that transparency. That also includes providing better production forecasts for its suppliers and establishing longer-term transport contracts with logistics providers where it made sense, beyond the typical three-to-five year tenders.
“We want longer contracts, and to give out bigger bundles to suppliers, [meaning] more than one transport lane but a whole area so it is more convenient and better to organise for our suppliers.”
Another important topic for VW Group is greater sustainability in transport. The company is looking at increasing the number of battery electric trucks, with pilots already in place and plans for a supporting charging infrastructure. VW Group also pushing further its use of rail, despite current restriction in Germany at the moment, especially for the movement of heavy lithium batteries and electric vehicles. Bronder said as a high-volume carmaker partnerships were important to gain additional capacity on rail and increase the volume of parts and vehicles moved by that mode.
Sustainability in ocean ro-ro is also a focus area for VW Group Logistics. To secure capacity at a time of constraint in maritime logistics VW Group has chartered its own ships and is using LNG to power them, reducing CO2 emissions by 25%. Bronder said that was just the starting point and biofuels would be used to make the fleet CO2 free, with a long term view to use synthetic C02-neutral fuels.
Sabine Isenbort, manager of inbound logistics, Ford Europe, Iza Kalinkska, lead of logistics and distribution, JLR and Sónia Santos, vice-president of worldwide manufacturing, Bosch spoke to a packed room at our first Empowering Women event at ALSC Europe.
Speaking to an audience that included young women and students, the women shared their personal and professional experiences in the automotive and logistics sectors.
Ford’s Isenbort advised that being able to shadow a female leader in an organisation provided the opportutnity to become more visible to them and the organisation.
She added: ”The learning curve is never over. You need to think ’I can do it” and be there and be ready for the next step. Keep up to speed with networking, both internally and externally.”
Kalinska from JLR highlighted the importance of taking chances. “If you are being pushed out of your comfort zone, you grow. As a leader, it’s important to create that pyschological space and provide a platform for the person to show what they are capable of.”
Santos at Bosch added: “We need to start bringing women in before they go to university. It’s important to have women in logistics, not just in HR or marketing. Be authentic, have your values and keep putting yourself in the driving seat.”
Levent Yuksel, freight operations director at JLR, told the audience of ALSC Europe about the ‘win win’ opportunities available by collaborating in the supply chain.
Having spoken at last year’s ALSC Europe event with Étienne Jacob, global supply chain director, Plastic Omnium, the two comapnies were able to identify some gaps in their supply chain opportunities for efficiency and sustainability, and as a result, collaborated to figure out solutions.
Joined on stage for the second year in a row with Jacob, Yuksel said: ”We have identified good avenues so that we can work together as a collaborative team to improve our effectiveness, for example, in packaging and more efficient transport operations which would then have a positive impact on our sustainability.”
Jacob added: ”It’s an ecosystem, and we know the sustainability solution is not coming from one single part in the supply chain, it’s a global understanding and a global effort. We see that we have flows in the same region of the world [with JLR] and can work together to find a win win.”
In our final session of the day (ahead of a boat ride and gala dinner along the Rhine river), we heard from Jean-Marc Carlicchi, vice-president of supply chain engineering at Renault Group.
Carlicchi spoke about planning a resilient supply chain and seeing the big picture, particularly after a few years of crisis for the industry.
“Never normal is the new normal, and this is something we have to live with,” he said. ”Knowing this, and adding that we still have to do global decarbonisation, we need to have more customer flexibility and stable industrial planning.”
He said the solution to this lies in having an “end-to-end system approach” with OEMs, tier ones, logistics providers and digital players.
Luiz Solia, vice-president and industry principal at Kinaxis added to this and said: ”Visibility is very interesting but it doesn’t tell the whole story. The digital supply chain needs to go beyond visibility to transparency – so not only seeing what’s happening but understanding the effects of it.”
Michelle Carter, supply chain director for Europe, Asia and RSA at IAC Group, went a step further, as she said we need visibility, transparency and integrity.
”Data needs to have integrity,” she said. “It should be on the balance sheet as well because we make decisions on it.”
Carmakers are looking for supply chain stability after a rough ride over the last four years but while inbound logistics is more secure the capacity shortage in outbound vehicle deliveries continues to test the strategic planning of logistics managers. For Ford one of those coping strategies is to charter its own vessels and secure capacity for ocean-based vehicle deliveries, according to Martina Graser, director of material planning and logistics (MP&L) at Ford Europe, who spoke on day one of this week’s ALSC Europe conference.
As with other carmakers Ford was challenged with major capacity constraints regardless of transport mode but Graser said the focus was now mainly on congestion at the ports and compounds, with knock-on effects for inland and ocean transport.
“Shipping was one of our major concerns right from the beginning [and] it is no secret that we were one of the first OEMs to charter vessels to secure the capacity where we required it,” said Graser.
While quick to qualify that its decision to do so was not dissatisfaction with existing ocean shipping services, which remained of benefit, Graser said Ford had to become the master of its own destiny and support existing contracts with its own chartered capacity.
Part of the reason for tight capacity in ocean services is the increase in vehicle shipments from Asia to Europe. “Carriers will turn vessels around and aim at Asia-Pacific to [bring volumes] back to Europe,” said Graser. “That took out a lot of capacity for European short-sea business.”
Without that capacity, the outbound supply chain can stagnate all the way back to the plant and the last thing an MP&L director needs, according to Graser, is a call from a plant manager informing them production is stopping because the plant compound is full.
“We said we have to take control, worked early on the strategy… and we went for vessel chartering,” she said. While not a core competence for Ford Graser said there was recognition at the management level that logistics was a problem and the support was given to contract a provider to run the chartered vessels.
“We improved the flow and on our journey there are fewer port calls and that means with port and compound congestion there is less delay and better visibility of when we can deliver the vehicle to one of our customers. For us it was a big step.”
While that could be seen as requisitioning capacity away from the sector Graser was keen to highlight that the vessels are not chartered exclusively to transport Ford vehicles.
“The way we set it up is that when there is empty capacity then we are offering it on the market,” she said. “We have someone operating the vessel and managing the empty loads, and putting that on the market with other OEMs participating.”
Grasser described it as an adaptive process and it was important to keep check on what is happening in the outbound sector and how the system is adjusting to it.
“What you see now is that capacity is coming back but the port and compound congestion is still there and the network is not smooth, so there are ups and down and you have to be creative to get over the hurdles.”
Graser said this could be a short-term mitigation action rather than a long-term strategy but it was important to go with the flow, review progress and look at where your company has to adapt.