Project Description
This was a global automotive tier 1 supplier providing products and services to OEM, OES and independent aftermarket customers, with over 100 manufacturing sites worldwide, sales offices, R&D centres, and external warehouses and distribution centres.
The scope of the project included a Europe, Middle East and Africa logistics network design for aftermarket operations including transportation (inbound and outbound), distribution centre locations and internal warehouse logistics engineering. The company consisted of 40000 SKUs (references), over 350 suppliers located in Europe, North America, South America and the Asia Pacific region, more than 3000 customers in the EMEA region and more than 5000 delivery points.
The challenge was to create competitive advantage through supply chain improvements, to increase market share in certain geographical areas and grow sales overall. The aim was also to increase product availability, reduce lead-time from order to final delivery, increase picking efficiency and create accurate forecasts with support of S&OP processes.
Project Steps
Initial Audit:
A quick initial study focused on the current logistics network, location of DCs, inventory level and delivery schemes to the customer, as well as supplier scheduling.
Study Phase:
Value stream mapping was followed by an ‘As-Is’ budget validation. Various ‘To-Be’ scenarios were designed, and associated costs were calculated listing the pros and cons using Six Sigma methodology.
Validation Phase:
A feasibility study was drawn up and agreement reached with all relevant departments (SCM, Sales, Finance and HR) on selected scenarios and on cost calculations, taking into consideration all constraints related to customer service, customer requirements, supplier capacity, 3PL capabilities, internal mobility and infrastructure.
Implementation Phase:
RFI, RFQ preparations to select 3PL(s) for newly designed logistics services was carried out, as were Contract and Service Level Agreement negotiations with selected providers. We provided support on negotiations of the exit conditions for providers with valid contracts in place, and for drafting new processes related to logistics and customs operations. Internal warehouse flows with 3PLs were designed and the progress of work supervised.
Continuous Improvements Phase:
Stabilization of services, monitoring of activities and a search for potential improvements to processes and cost were implemented.
Results
The project resulted in significant delivery time reduction to customers in major markets and an increase in number of sales orders by 15%. There was improvement of product availability for certain markets and at the same time, reduction of inventory. Overall savings of 20% in logistics costs in the first year, on multimillion-dollar budgets, were observed.