Management of Finished vehicle yards by 3PL Providers. by Prof. Akhil Chandra

Management of Finished vehicle yards by 3PL Providers.

 Finished  vehicle yards in India are growing rapidly  in their capacity  ranging from 10000 cars to 30000 cars and beyond as car maker Companies like Maruti Suzuki, Hundai and Tata Motors and many others  are planning to set up huge Finished vehicle yards country-vide covering  the states like Tamilnadu, Maharashtra , Gujarat and Haryana. This advance planning is in line with the Sales Forecast for the financial year ending 31^st March,2012 expanding to 3 million light vehicles being manufactured in India and  further  by 2015 to have almost doubled to just shy of 6million units  , with an increase to 8million  units by 2019 and 10million units  by 2024.Growing appetite of Indian consumer for light vehicles was also  evident with the successful Auto Expo 2012 currently staged in New Delhi with almost every Auto manufacturer wooing the Indian customer with the new launches of cars each eager to have their market  share in the growing Indian pie of finished vehicles.

The huge expansions in vehicle yards are however associated with new challenges for the third party Logistics providers and shippers due to associated complex sets of problems which can be solved only by introduction of suitable technology ranging from information and communication technology and process control and Automation.

In this article, we shall look into how 3PL providers/shippers in Automotive segment could solve the complex problems of managing huge vehicle yards with  mammoth size comparable to several football fields.

In order to keep their bottom line intact and growing, 3PL Service Providers have to keep three things in mind to manage their finished vehicle yard efficiently viz visibility in their inventory of finished vehicles , optimization of space utilization in the vehicle yard and integration with their customers ( dealers and vehicle manufacturers). Easier said than done, this requires to take first a holistic view of major pain areas in a large vehicle yard managed manually and then solve them through technology available.

a) Time waiting inside the yard is unknown.

b) Vehicle Location in the yard is unknown to the yard manager who is responsible to quickly unload the vehicles and the time waiting of the Trailer causes delays.

c) No visibility in loading and unloading and the departure time at the distribution centre.

d) Checkout delays, errors and wrong trailers.

This leads to a very lengthy process to solve other associated real time and pressing requirements in the yard which are as under.

• What labour do I need?

• Which cars are blocked?

• How much capacity do I have?

• Where in the yard is damage occurring?

• Which cars are to be loaded to train and which to truck?

• How did we do last month, and can we do better?

• And more.....

Visualization armed with yard monitor through information and communication technology can give better insight…. better understanding.

Efficient equipment yard inventory management requires the ability to automatically track how much inventory is on hand, where and to whom it is being delivered, how long it has been outstanding, and how often it is used. Existing manual equipment inventory management methods can sometimes work, but as the volume of equipment or activity increases, the need for automation is paramount to running an efficient and profitable operation.

How is it really done?

1.      Vehicles are tagged with RFID tags. With the help of these tags, vehicles will be tracked automatically as they move in and out of the yard.

2. RFID readers are installed at key entry and exit points and at locations within the yard. These readers provide instant visibility to what is leaving and entering the yard. As well as its location.

3. RFID badge tags are provided on the drivers. This allows to track driver’s movement and to ensure the correct association of driver with the associated vehicle. Further whether for security reasons or to ensure proper delivery and accountability, tracking authorized repair crews to the correct vehicle and equipment contents on the vehicle is essential for effective utility yard management aided by such Badge tags.

4.      Such RFID sensors and readers are connected to a Wi-Fi local area network connecting them to a warehouse management system (WMS) server.

5. Yard monitor placed in the central control room provides for vehicle yard management provides real time inventory visibility, vehicle locations within the yard and control of outgoing and incoming vehicles at the gate.

By integrating with WMS systems following benefits are derived.

1. Reduced yard operations costs and increased productivity due to a high level of automation.
2. Easy traceability of vehicles within the yard by way of real-time tracking through a visual interface. Vehicles such tagged with RFID tags will be tracked automatically as they move in and out of the yard. RFID readers located at key entry and exit points and at locations within the yard provide instant visibility to inventory leaving and entering the yard, as well as its location. In addition, RFID tags have on-board memory so you can store a complete history of the asset (e.g. life, usage rate, etc.) directly on the tag.
3. Real time visibility of the yard and vehicles. RFID tags automate the receipt of vehicles in the yard and reduce the manual intervention. Whether due to peak periods or as part of a bulk delivery, equipment often get missed at check-out. Manual equipment check-in/check-out procedures are prone to errors and delays. Equipment is sometimes “lost” in the field due to not knowing where or who it was delivered to. An automated gate check solution can significantly increase accuracy and prevent loss of equipment.
4. Customized MIS report generation for better analysis and planning.
5. Ranking of vehicles in order to reduce rework costs.
6. Recommendation of a suitable parking location for each vehicle on the basis of the available slots and the parking settings defined.
7. Visual damage tracking mechanism in order to enable yard jockeys to effectively communicate the location of damage to workshop Mechanics.
8. WMS has an activity management module that identifies the activities that need to be performed on each vehicle, and schedules a time for the performance of the activity. This streamlines the workshop process and ensures timely dispatch of the vehicle from the yard.
9. Yard view management software integrated with WMS graphically can display for example say rectangles to represent trailers and their locations, color-coding them to indicate their status - empty or loaded, waiting to be loaded or unloaded, or in the process of being loaded or unloaded

By integrating the above local area network with the customers through internet, complete visibility is provided to the customers and manufacturers with warning alarms and alerts sent through E-Mail. 

Summary

RFID managed yard management systems are already in vogue in developed countries. Such web based yard managed systems provide real time location system capabilities to manage the trailers and vehicles in the ever growing complex and large yard environment and complete visibility of the inventory to shippers and third party logistics service providers. It is imperative and a must that Indian shippers and 3PL providers  also embrace such technological solutions without delay to remain competitive in the present cut throat competition in Automotive domain due to fresh arrivals of Automotive multinationals in the country.

Written by

Prof. Akhil Chandra

Consultant – Logistics and Supply Chain management

choosing your automotive logistics provider, An Article by Professor Akhil Chandra

Automotive manufacturers and  choice of their  better half, 3PL  service Providers 

Manufacturing in Automotive sector in India is growing rapidly and the time is just ripe for third party logistics providers to integrate their logistics operations both inbound and outbound into the supply chain of the automotive manufacturing companies to create a win-win situation for both the parties to maximise their ROI  through cost optimizations and improvement in service levels to their customers and dealers. Consolidations of strengths in the Logistics arena in India are now already taking place   which is evident with the recently announced joint venture of 3 PL Logistics service provider Mercurio Pallia with foreign French Logistics multinational logistics firm GEFCO.

Manufacturers in India are faced now with the new opportunity to outsource their Transporation and warehousing operations end to end to the new emerging strong third party logistics providers .My advice to Indian Automotive Manufacturers is that Third Party LSPs ( Logistics Service Providers )  can play a very vital role in running your Inbound and Outbound Logistics Operations and can  prove to be your life line. Call them your partner or your Better Half ,  choose them judiciously to make it a long lasting and fruitful partnership.   Globally such strong relationships have helped Companies like Toyota, Ford, Chrysler and many more with their 3 PL  partners like DHL, Ryder , Schneider Logistics , GEFCO and VASCOR ltd etc evolve cost optimizations in their inbound and outbound logistics  increasing  their profits and customers/dealers’ delight .   

The stage for tying the knot for Automotive manufacturers with 3PL service providers  is already set in India as Currently, around 30 multinational automobile majors have a presence in India, including international luxury automobile manufacturers such as Bentley, Porsche, Ferrari, Aston Martin, and Harley Davidson. Time is now ripe for Automotive manufacturers to outsource both of the functions of transportation and warehousing to their 3PL service providers including setting up  cross-dock, stockyards or Logistics optimization centres coupled with value added services and a seamless integrated logistics network with end to end logistics solutions.  Due to global cut throat competition, Automotive  manufacturers in India must look to larger scenario of Supply Chain by introducing  third party Logistics service providers in their value chain instead of merely outsourcing transport function.

Further consider the following facts.

·          Logistics in Automotive industry is the  most important function after product development   as there is a significant volume of goods movement, both inbound (components and material sourcing) and outbound (vehicles distribution).

·         On the inbound side, 3PL service providers ensure timely delivery of materials in the required quantities to meet daily production schedules and can play a major role  in your order processing.

·         On the outbound side, they play a significant role in satisfying Automobile dealers as last mile activity by ensuring timely consignment delivery to automobile dealers increasing responsiveness to Dealers providing them a safe  and reliable service. They also play value added logistics functions such as packing, labelling , quality checking and pre-inspection activities.

 Having established now the need to outsource your transportation and warehousing functions let us see what could be the criteria to  choose  3PL partners who are  reliable, secured and affordable.

1.      Scalability

Choose a partner for your scalable operations. You should study their capabilities for technology up-gradations and their expansions plans for both inbound and outbound Logistics. A thumb rule is to at least consider a 5 year ahead scenario.

2. Customization and Flexibility

3PL providers should be flexible in accommodating your emergency and contingency requirements. Study their back-up plans including manpower, routes and network resources. Look at their customer reference list where they have customized their operations for large Automotive Corporate. Find out whether he can continuously get involved in for continued process improvements that control costs and ensure ongoing efficiency. See how much you can leverage resources of a 3PL saving your investments and improve your service level. The Mantra in outsourcing is :  focus on your core competence and reap the benefits of third party infrastructure by outsourcing to parties who have specialized expertise and experience in these areas.  

3. Resource strength in terms of his manpower and network resources.

Study the strength and weakness of your 3PL partner ranging from his network strength, his manpower resources in terms of their motivation level. Look into 3PL’S   personnel    and their professional development programs. Remember that in a service segment in which Logistics providers operate, 4 Ps unlike in marketing mean people, people, people and people.

As such 3PL’s manpower’ skill set is important consideration .Find out how much spent is on training of their by 3PL provider and compare them with the industry standard.   

4. Industry knowledge and expertise

Find a company that has relevant experience with your type of product, technology integration, geographic area and their routes, and other specific needs.

5. Commitment to tight delivery schedules and safety of your products

Stock-out is a dreaded word for manufacturers and dealers and it can only be avoided by commitment of 3PL partner to time schedules for end to end delivery, safety and reliability. "To be more efficient find out how much velocity your 3PL partner can provide to inbound parts and smaller shipments picked up and delivered more frequently to keep inventory low. Logistics is a key foundation of the automotive our production system as such if your 3PL Partner does not move material efficiently and in small lots then automotive manufacturers might lose many of the benefits their lean  production systems requirement.

6. Technology resources

This should cover his information system capability, Automation and ICT capabilities and his accessibility to technical knowhow through Tie-ups, foreign collaborations. Find out whether he has widely embraced technology  covering  mobile solutions that enable surface and airfreight operators to communicate while shipments are in transit; route optimization and navigation software; and customer-facing solutions offering tracking and tracing capabilities, have become commonplace. Technology should not be used merely for technology sake. Find out how much he has been able to create enterprise-wide visibility, control conformance to shipping instructions, and monitor carriers' performances in pickups and deliveries.

7. His operational strengths

Choose a partner that can serve multiple product markets where compliance, safety, and cargo security are required. If one logistics provider can meet the needs of a diverse base of customers, each with its own challenges and industry requirements, then the chances of a successful partnership greatly increase. Ask about certifications that are aligned with your supply chain and industry-mandated protocols. In a present globalized scenario see his capability to handle inbound and outbound multi-modal logistics involving domestic and foreign vendors. His access and proximity to sea port and airports and material handling capabilities, his fleet strength are important considerations.  Find out whether he can tackle expedited deliveries. Whether he can run Milk runs to help optimize transportation and production? Manufacturers and Logistics provider both can operate efficiently by increasing the frequency of runs to multiple suppliers, which reduces the lot size of each move, allowing the transporter to fill trucks.

8. Your chemistry with him

See whether he is able to work together to resolve the mutually defined goals and objectives. Would he remain true to your company’s identity, expectations, and needs? Chemistry is important to build up a long term and sustained relationship

Summary

Ensuring a smooth flow in the supply chain is the primary challenge faced by Automobile manufacturing companies.. In addition, Indian automobile companies need to ensure safety of their goods in transit and at the warehouse, as well as deal with the inability of majority of the LSPs to provide end-to-end solutions (either in transportation, warehousing, or integrated activity).With the emergence of strong and qualified third party logistics providers in India supported by foreign and tested knowhow, it is imperative for Automotive Logistics provider to derive maximum benefits by outsourcing their inbound and outbound logistics operations to serve their end customers and dealers better with improvement in efficiency, quality and responsiveness through innovative technology and knowledge source of logistics service providers.

Written By

Professor Akhil Chandra, Institute of Logistics and Aviation and

Consultant Logistics and Supply Chain Management

9810223277 ( M) , 011-29210562, akhilchandra06@gmail.com