Demands for service and efficiency in the automotive industry are more intense than ever before. Trey Lyda, vice president of corporate services with Comprehensive Logistics, lays out the challenges and some solutions.
Q: What are the big pain points for automotive industry supply chains today?
Lyda: It’s the just-in-time market, the complexity and dynamics that go along with that. A lot of people believe the automotive industry is a straight line, making the same products all day, every day. But just think of all the things within your automobile: the steering wheels, seats, colors, carpets. Maintaining a level of consistency and error-proofing, to ensure that the right part gets to the right location just in time, every single time, is a challenge for any automotive supplier.
Q: Distance is a huge issue. You're bringing stuff from oversees as well as What about the need to have supplier campuses in proximity to the factory? How do you coordinate those things?
Lyda: Ideally, in the just-in-time market, you want to be within three to five miles of the plant’s location. Any time you can cut out distance, you're going to reduce cost. You get better utilization out of equipment, tractors and drivers. You can also reduce lead time and keep inventory levels low by having the last location of warehousing parts within proximity of the location. A lot of OEMs these days are building their own locations closer to the assembly plant.
Q: When we talk about “just in time,” are we really minimizing inventory, or just shoving it further upstream to vendors of 3PLs?
Lyda: At a high level, we are cutting it out of the supply chain. But we are pushing it upstream to some extent. When does the automotive manufacturer actually purchase and have on its books those parts? The longer the lead time, the better the cash flow for the OEM. It allows it to carry lower levels of inventory on their books.
Q: What's going on in the warehouse today? There's such a need to synchronize so many different types of functions. What are some strategies being deployed today?
Lyda: Most manufacturers and 3PLs are layering in their own warehouse management systems to help manage those processes, and make sure that the right parts is delivered to the right location at the right time. Technology is huge these days. You need to know exactly where every part is from the moment it hits the receiving dock, until it’s shipped.
Q: It seems as though there’s virtually no function within a warehouse or assembly line that can’t potentially be automated. Is there still a place for people in this whole mix?
Lyda: As we drive more and more towards automation, one would think that people will eventually go the wayside. But there will always be a business case for people. There's only so much investment that an organization can make in warehouse or transportation systems. There will always be a need for that final check or audit. In the automotive industry, you need flexibility. If a shift is cut, or you need to add capacity, you can't do that rapidly with technology.
Q: Give me some best practices for error-proofing and training those human beings who are still in the loop.
Lyda: I lean towards warehouse-management systems. There are barcodes and labels with finger scanners on the assembly line. We use cameras and vision sensors. We’re constantly looking for Six-Sigma or world-class quality within any organization, especially when we're talking about safety standards for critical components like headlights and suspension parts.
Q: Unemployment is very low right now. Turnover and talent retention can be a problem. How do you keep trained crews in place these days?
Lyda: What’s being deployed these days is a transition from temporary labor to full-time, direct-hire employees. Which gives them a full array of benefits, and the satisfaction of coming in and working for the organization. In the automotive world, we’ve looked at using absentee replacement organizations, or AROs. You have a cross-training matrix as well. All individuals are trained in the different components, so if somebody is unable to come to work that day, another individual can fill that role.
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