Part of the equation

5 mins read

Laura Cork looks at how manufacturers are sewing up the issues of supply chain integration to ensure the right parts arrive at the right time.

Not so long ago, few outside the automotive sector would have dreamed of spending hours poring over supplier delivery schedules to ensure parts arrived at the right line at the right moment. Today, however, that has all changed. Automotive may have been the birthplace of JIT, but it has long since spread its wings beyond the car markers and their suppliers. Indeed, so well ingrained is JIT in the industrial core that today another industry has sprung up on the back of it - the 'emergency logistics provider', whose role is to provide 'just-in-case' solutions to bring wayward parts to the line before production grinds to a halt and the penalties begin to mount up. At present, this service is targeted exclusively at automotive, but it seems likely to be attractive to others in the future, particularly in the new lean world that many inhabit. Emergency logistics can bring peace of mind to those running lean operations, says Brad Brennan, MD of one such emergency logistics firm, Evolution Time Critical (ETC). To make lean really work, he says, there must be caveats in place, particularly when it comes to logistics. "Within a production environment, factors that influence lean processes may be only metres apart, but in logistics - specifically in relation to parts delivery - they may be thousands of kilometres apart." And it's the capability to handle the 'what-ifs' that defines the efficacy of a logistics operation. "Emergency logistics has evolved from a knee-jerk, almost panic activity to one that is seeing itself specified more and more at the design stage of production and logistics processes," says Brennan. It's not limited to the OEMs and their tier-one suppliers, either: "Many OEMs are making this service available lower down the supply chain to ensure that tier one factories are kept supplied." What emergency logistic providers offer is the ability to step in when delays occur and arrange high-speed alternative delivery methods at very short notice. Depending on the situation - and the location - this could take many forms, ranging from aircraft charter, helicopters and personal on-board couriers, to rapid road transport or, in ETC's case, its own aircraft night freight service. For example, ETC has been able to identify and remove key parts from trailers which were stranded at border crossings, and it has shifted 28 tonnes of wheels and tyres from the US to the UK with one day's notice. As a manufacturing principle, lean "requires an almost ruthless degree of conformity to make it work", adds Brennan. "If everything always works perfectly, then there is no need for contingencies. But this is not the perfect world..." He likens emergency logistics services to a car journey. "Would you set out with exactly the right amount of petrol to reach your destination? Probably not. But if you did, would you keep a small extra tank in the boot, just in case?" It's an interesting proposition and, as more and more sectors get further into their lean journey, they are likely to follow automotive with the need for this type of contingency planning. Of course, there is one way to remove the possibility of logistical failures holding up production - bring your suppliers on site, as is the case at Nissan in Sunderland. The motor manufacturer has been working hard to 'reinvent' its Nissan Integrated Manufacturing System (NIMS) over the last three or four years. This refocus on NIMS is driving production efficiencies and is resulting in closer involvement with suppliers, according to Nissan's senior VP for manufacturing, purchasing and supply chain management Trevor Mann. When WM visited the plant last summer, Mann told us: "We need to integrate more closely with our suppliers - NIMS gives us the opportunity to do that." How? By designing smaller, more flexible production lines with a 'fishbone' supply structure, space is freed up around the lines. "This fishbone effect reduces time to manufacture and reduces the space required," said Mann. This system was first employed for the Note model and has subsequently been driven by high demand for the Qashqai. "Smaller lines mean there is room for suppliers to come on site," said Mann. At the time of our visit, four suppliers were located on site, with more planned. But this isn't about Nissan renting the floor space to suppliers - it's handed over, free of charge. "We give them the space to manufacture here," says Mann. "This means our suppliers reduce their overheads and we benefit from a price reduction." Different approach Another manufacturing organisation that is forging strong ties with suppliers is international construction equipment manufacturer JCB - yet here, the approach is quite different to that seen at Nissan. JCB is enjoying huge sales success -30% year-on-year growth for the past three years. But success on this scale brings its own challenges, as group purchasing director Trevor Latham explains: "We are running out of space in our assembly plants to cope with this increased volume. So we're adopting an approach with third party logistics to create more space in the plant, which will allow us to concentrate on building machines, rather than on storing parts and building machines." This approach sees JCB moving parts and components out six of its UK factories to free up more manufacturing space. And the organisation is working with NYK Logistics to help it achieve this goal. Vision of volumes The relationship between JCB and NYK began at the end of 2006, when the logistics services provider was appointed to manage the goods-receiving operation at a JCB plant in Cheadle. "At that time, we could see where the volumes were going. We knew that not only did we need more space, we also needed to bring more order to the build operation. "We looked at the market to see who had a reputation for running line-feed operations, and NYK appeared to prove a potential solution," says Latham, who is based at JCB's headquarters in Rocester, Staffordshire. The work at Cheadle brought some quick wins, so the relationship was extended early last year. NYK has won a bid to transport products from JCB's fabrications plant in India, as well as to store them on arrival here. And the changes are continuing unabated. "Also last year, NYK tendered for a contract at our Rugeley factory, where we manufacture the machine cabs," says Latham. In the past, this plant focused solely on making steel frames for the cabs: the cabs were then fitted with dashboards, linings and glass at other JCB sites. Last year, however, the Rugeley site was extended to allow the fit out of cabs to take place on site. NYK won the contract to manage this business and is now responsible for offloading supplier vehicles and for delivering components to the line, in accordance with JCB schedules. Allied to this, NYK also stores the finished cabs and picks them for JIT delivery to other JCB plants. It's clear that this is one customer-supplier relationship that is going way beyond the arms-length contact seen in traditional, more distant relationships. Latham's own background is automotive: for him, therefore, the move to JIT parts delivery to the line is far from a leap into the unknown. Was it difficult to sell the idea to others within the business? "No, it's been remarkably well received. Most of the senior manufacturing people in JCB are ex-automotive, as are the material planners, so it's a familiar concept to many here." It remains, however, something of a break with tradition: "In this industry, historically, relations with the supply base have been very tactical, certainly not as strategic as I've been used to in the automotive sector. What we're trying to do is change that, to share our growth plans and to share our intentions - we can't continue to grow the way we are without supplier support and their investment in our growth." For some manufacturers, transferring strategic parts and components away from the point of use and into a third party's hands would be a move too far. Not for JCB: "It's not about handing over control, it's about securing benefits," says Latham. "Given our growth levels and some of our supply issues, we are constantly changing build patterns and schedules, so we know we have to do things differently. We'll have more visibility in the supply chain and will be able to react accordingly. "Moving parts out to a third party is a must if we want to bring in best practices and get the most from our assets here in the UK... This way, we can focus on our core competence, which is designing and building machines."