Customer orientation

”Everything has to be planned with precision”

Part two of the market segment series. In the automotive industry, efficient processes are decisive for the cost of the car. A look into an industry between price pressure, innovation and upheaval.

2017-08-04

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“Between 200 and 300 tons of material come in and out of our plant every day,” says Clemens Fath, Supply Chain Manager of Vauxhall’s Vienna site. The some 1.2 million parts each year do not, however, leave as individual parts, but rather as engines or transmissions. Fath’s plant produces about 50 different types of engines alone. “All this has to be planned with precision,” explains the 40-year-old: “The arrival of the individual parts, their correct distribution via conveyor belt, their interim storage and even precise planning in the event of bottlenecks.” – A logistical and intralogistical challenge that demands a fleet of 70 industrial trucks. This includes forklifts, tow tractors and tugger trains.


The spearhead of experimentation

Logistics has always been vital in the automotive industry: an industry whose finished products cost several thousand euro, yet has to keep a watchful eye over costs and prices and is always looking for ways to optimize or streamline processes or reduce production costs. “Our industry means extreme competition and cost pressure,” reveals Fath. Particularly in Europe, where labor costs are higher than in other parts of the world. “If we want to compete with other continents, we either need to be faster or more innovative – absolutely staying one step ahead wherever possible.”


From the perspective of providers such as the KION Group, this is a kind of paradox. “Many producers are eyeing cheap prices and yet at the same time want to be innovative,” says Lars Schürmann, Head of National Key Account at Linde Material Handling. “At first glance, these seem to be polar opposites, but in fact they are often the spearhead of experimentation with new technologies and ideas.” Because the major producers and suppliers are also corporations, they can afford to make capital expenditures that will pay off in the long term.


A not much loved process

For many producers, logistics is an unavoidable, but not much loved process. “Logistics does not always add value,” professes Schürmann. Or, as Fath put it: “If a tow tractor driver drives even a single kilometer, that’s actually wasted time. They cannot do anything else in this time other than sit.”


No wonder, then, that the large automotive companies employ whole armies of staff who are tasked with optimizing logistics processes. And one area in which the logistics experts and supply-chain managers have become particularly interested is automation. “Productivity, operational safety – and the knowledge that we are not being left behind by this trend,” says Fath, listing the three reasons why he is involving automation in logistics. Here, too, is the familiar combination of cost pressures and willingness to innovate. From June 2017, the Vauxhall plant in Vienna will be equipped with autonomously driving tugger trains, driving from the goods warehouse to production or assembly.


“We know that our competitors in Japan are already investing heavily in automation in material provision,” reveals Fath, who is keeping an eye on developments. The bottom line is always whether an innovation is actually financially viable. “There are plenty of attractive innovations and new technologies on the market – but do they actually pay off?”


An attractive vision for the future

That said, the way in which the tugger trains are coordinated with one another is an area in which Fath is very interested: networked data. “If we can combine the different systems, say if there was a warehouse system that could tell me where I could find any part at any time...” ponders Fath, leaving the rest of the sentence to the imagination. The conclusion is already clear: anyone looking to optimize and requiring as much information as possible would see networked data as an attractive vision for the future.


“In principle, all companies in the automotive industry are contending with the same questions,” states Schürmann – not least because the sector is facing various possible upheavals: trends such as electric mobility or automated driving threaten existing business models, necessitating multipronged planning while still without any forecast regarding when the trends will become commercially successful. This demands flexibility. “Automation is a factor that saves costs, but also stops the qualifications of employees from going to waste,” says Schürmann. “Many companies are constantly desperately searching for good plant employees, and they don’t want them to drive the tow tractors.” The question hanging over all of this is, according to the most precise plan, whether in future everything will still be transported to exactly the right place.


Efficiency and versatility

The speed itself is practically immaterial, Fath explains: ‘Just in time’ does not necessarily mean breakneck pace, but rather exactly at the right time. Speed is a factor in planning – less so in delivery. Efficiency and versatility are driving the industry, speed is less and less important. “Delivery times for cars are already very, very short,” says Fath. “The customer has his vehicle in a matter of a few weeks.” The discussions about same-day delivery which are currently dominating other sectors worry him little. At least for now: “Until drones can deliver a car – we are still some way away from that.”


The challenges of the automotive industry

For decades, the industry has been dominated by extreme price pressures and competition in a very concentrated market. Future issues such as electric mobility, automated driving and lightweight construction are causing upheavals within the industry, though how exactly they will develop is not yet clear. At the same time, trends such as automation and industry 4.0 offer opportunities to increase efficiency, but require capital expenditures. The companies are therefore faced with two challenges: They must make complex plans and actively push innovation, all the while questioning whether everything is economically feasible and actually forward-looking. So what does this mean for the KION Group? The balancing act between price-based competition and innovation competition means that the KION Group finds itself in a good position: Well-thought-out concepts around, for example, automation that optimize not just individual trucks but a plant’s entire material flow stand a particularly good chance of attracting the attention of automobile manufacturers. The KION Group’s acquisition of Dematic serves well in this regard: working together with the automation experts allows new, comprehensive intralogistics solutions to be developed.