Your latest MHD article: Auto challenges solved

Your latest MHD article: Auto challenges solved

The automotive industry is a powerhouse

The automotive manufacturing industry is one of the most important global economic sectors. Having grown from a nil base at the start of the 20th century to an industry that produced 72.11 million passenger cars in 2016, plus 22.5 million commercial vehicles(1) is remarkable. In revenue this is a global turnover of over €2 trillion(2), which equates to the 6th largest economy in the world, if it were a country. The industry globally employs over 9 million people(2) directly in making vehicles and parts, with each direct auto job supporting another 5 indirect jobs.

But the automotive industry can also top lists in relation to customer quality expectations, variety of products available, and process complexity. It is also an industry that continually must manage change. Since the invention of the modern car in 1886 by Karl Benz, personal vehicles have enabled people to live, work and spend their spare time in ways not possible before.

… and it is here to stay

Today, according to the NRMA(3), private car-based mobility is the preferred form of transport for most Australians. Owning and using your own car is primarily seen as safe, comfortable and peaceful, compared to public transport. This ‘auto mobility’ is so entrenched in the Australian mindset that it can be difficult to see a time where you may not own a vehicle.

The overall vehicle population continues to grow. Registration in Australia has seen steady growth from 14 million vehicles in 2006 to 18.8million in 2017(4).

Even considering some predictions of a tapering off of private car ownership, car sales are not expected to decline in the foreseeable future, with fleet ownership, including car sharing, anticipated to fill any deficit. In a 2017 NRMA report, Matthias Mueller, CEO Volkswagen outlined: “In the future, many people won’t own a car. But they can all be a customer in one way or another, because we will serve a much broader concept of mobility than today.” (3)

The future of automotive aftermarket looks bright

Within the general automotive industry, the aftermarket and spare parts sector can be identified separately and treated differently, and currently it is experiencing steady growth.

Revenue for this sector in Australia stands at $5.2 billion with annual growth of 2.5% in the five years to 2018, and the industry is expected to outperform the overall economy over the ten years to 2023. 5. The global aftermarket industry should reach $722.8 billion by 2020. (6)

One contributor is the increase in the average age of cars on the road. According to the Australian Bureau of Statistics 2017 car census(4), in Australia the average age is 10.1 years, with campervans the only category to record a decrease since 2010. In the USA, the average age of passenger vehicles is 11.6 years, which has continually risen. As people keep their vehicles longer and are placing more importance on preventative maintenance to maximise vehicle life, demand for aftermarket parts is increasing, making it important for spare parts suppliers to become smarter and more efficient with their supply chain and stock management. (7)

Why the automotive aftermarket logistics is unique

The automotive aftermarket sector is a very different industry, with unique logistical and stock management characteristics.

One such characteristic is the massive variety of items that are stocked. Parts can vary from replacement parts, lubricants, accessories, cosmetic improvement items, tyres, tools and repair equipment. The required SKU can be both small and large, from a bolt to a door panel; can be both simple and complex, from a floor mat to a clutch assembly; and can be heavy or light, from a short motor to a headlight bulb. This is supplemented by the larger range of vehicle models and options now available, especially with new technologies such as gas/electric hybrids. One single model series of a premium German automobile brand can reach over 1,000 possible automobile variations. (8) The number of distinct SKU handled by the automotive aftermarket has grown enormously: operators can have anywhere from 60,000 to 125,000 SKU in their supply chains. (7)

As well as a massive number of SKU on hand, each can have different stock turnover rates. Some SKU turn over fast, while others might only be ordered annually. Not only is keeping the right parts in stock an issue for the automotive aftermarket DC, but they also need to consider storage options, which make fast-moving SKU easier to access and handle.

Automotive aftermarket industry members have also recently managed the introduction of fast, easy delivery options for ordered parts, and the growth of the online retail market for parts and accessories. All this paints a picture of the automotive aftermarket industry as being one dealing with significant growth and change, and one that needs to be nimble, adaptive and have flexibility built into their DC and logistics management practices. Automotive supply chains need to become more responsive and flexible to remain competitive.

Solutions from an industry specialist

SSI SCHAEFER is recognised worldwide for delivering customised solutions that offer maximum efficiency, no matter the complexity. SSI SCHAEFER has been a partner to the automotive industry for many years and has delivered countless world-class solutions for some of the biggest industry names both in Australia and globally. The comprehensive range of its industry-focused products and solutions provides total logistics systems for automotive spare parts DC operations, which can be tailored precisely to each site’s requirements and focused on those attributes of particular industry importance.

For flexibility to cope with growing demand and changing SKU ranges, SSI SCHAEFER offers an extensive and diverse range of racking, shelving and mezzanine systems for all storage tasks for automotive SKU; from small parts storage to tyre, bumper bar, glass, and exhaust systems to name a few. Every solution is optimally and individually configured to meet specific requirements and can include a large variety of accessories to meet all storage needs. Highest quality, modular configuration, diverse combination options and the greatest flexibility are key features of SSI SCHAEFER solutions.

The R3000 shelving system developed by SSI SCHAEFER is ideally suited to small parts storage. It is a boltless shelving system that can also be used to build multi-tier mezzanines up to four levels high. This fully integrated and customisable product is complemented with a full range of accessories designed to provide almost unlimited options for the automotive industry.

SSI SCHAEFER’s plastic shelf containers are designed with the R3000 shelving system in mind. They create order, no matter the size and complexity of the operation and product range, and the RK series shelf containers achieve maximum cube utilisation within the shelf. Each container can also be separated into multiple compartments with dividers, which can be individually labelled for improved classification of small items. A rear lip is incorporated allowing the container to hang off the shelf for hands-free picking and replenishing.

For the larger items that are a natural part of the auto-parts product range, SSI SCHAEFER offers a variety of sturdy, robust, safe, and expandable pallet rack systems that include pallet racking, cantilever racking and drive-in racking storage as a starting point.

Improving picking productivity

Picking is central to warehouse logistics. SSI SCHAEFER has developed a range of picking systems that incorporate conveyor and software solutions. SSI SCHAEFER’s WAMAS software manages and controls all the intralogistics processes and encompasses efficient and flexible order processing functions. WAMAS is configured and implemented on customer sites by our 1,200-strong global software team, and a highly experienced contingent of Australian-based software engineers.

For more information call +61 2 8799 3600 or visit ssi-schaefer.com.

 

References

  • https://www.statista.com/statistics/262747/worldwide-automobile-production-since-2000/.
  • http://www.oica.net/category/economic-contributions/.
  • The future of car ownership August 2017 report by NRMA and https://www.bcgperspectives.com/content/articles/automotive-whats-ahead-car-sharing-new-mobility-its-impact-vehicle-sales/#chapter1.
  • http://www.abs.gov.au/ausstats/abs@.nsf/mf/9309.0.
  • IBIS World Motor vehicle Parts retailing in Australia Aug 2017.
  • http://www.v12data.com/blog/a-look-at-trends-and-statistics-in-the-automotive-aftermarket-industry-2017/.
  • ‘The Nuts and Bolts of the Automative Aftermarket Supply Chain – Merrill Douglas 20 September 2013.
  • “Supply Chain Management in the Automotive Industry” from www.advantech.net.au.

 

A few case studies

PM Automotive Group (formerly Preston Motors)

The PM Automotive Group is one of Australia‘s leading automotive and spare parts suppliers, trading since 1912. It operates two DC sites in Melbourne to provide better geographical coverage and customer service, and the new Campbellfield DC was commissioned in 2015.

The new system needed to be designed to grow and still has the capacity to accommodate up to a 30% increase in order output. At this DC, Preston Motors holds 50,000 SKU and handles 2,500 picks per day, including accommodating 200-300 emergency orders per day. Orders are despatched three times daily, with guaranteed same-day Melbourne delivery.

Warehouse manager Lou Micevski explains how the SSI SCHAEFER system caters well for the ebbs and flows of the automotive spare parts industry.

“Winter is a busier time, with more crash orders in the bad weather. One of the appealing aspects is that this new high-end system is efficient and quick, and it delivers significant noise reduction and power savings on the previous system.”

Slotting of items is performed on a dynamic basis. Incoming stock is automatically assigned a storage location based on its dimensions, movement and available storage locations. The system, designed and installed by SSI SCHAEFER includes VNA and selective pallet racking, special parts storage racking and shelving, R3000 shelving and mezzanine, plastic containers, and zone divert conveying and sortation system.

 

Multispares

Multispares is the largest independent supplier of aftermarket truck and bus parts in Australia and New Zealand. Its products are sourced worldwide from leading manufacturers and specialist suppliers. At its 7,000+ m2 facility in Greystanes, NSW, more than 20,000 pick lines and 500 pallets of truck and bus parts are distributed monthly.

The system installed by SSI SCHAEFER was purpose-built for Multispares national and local branch demands. It maximises pick efficiency and was configured to current requirements but allows expansion to support future growth. It also delivers improved operating efficiency and employee safety.

“Our warehouse operations are critical to customer service delivery. SSI SCHAEFER’s broad range of high-quality storage solutions improved our warehousing efficiency and accuracy, giving us the opportunity to allow for expansion in the future,” said managing director of Multispares Geoff Stewart.

 

Volkswagen Group Australia

Facing strong automotive parts and accessories growth for the Volkswagen, AUDI and SKODA brands, the NSW-based NDC for Volkswagen Group Australia constantly reviews its in-house storage capacities to manage the orders for its dealer network of commercial and passenger vehicles.

In 2009, SSI SCHAEFER installed an automated two-storey small-parts shelving system in a new Melbourne DC to manage the Southern dealer network in Australia. This incorporates a conveyor system on both floors, narrow and wide aisle racking, and storage areas. An integral part of the fit-out is the R3000 shelving system that has been built as a two-tier mezzanine for the storage of awkward products and medium volume SKU. The system is designed to optimise storage options while minimising the space required to handle these specialist automotive parts.

With the success of this project, Volkswagen Group Australia has this year chosen SSI SCHAEFER to manage further expansion and development of both the Sydney and Melbourne DC. Both these projects are due for completion by the end of the year.

 

BMW

In the first decade of this century, BMW Group Australia had seen its sales increase by 85% with vehicle numbers nearly doubling. To ensure good customer service, BMW built a new 12,600m2 PDC in Moorebank, Sydney, while retaining its Melbourne Parts Distribution Centre.

SSI SCHAEFER installed selective pallet racking and R3000 modular shelving, configured as a three-tier mezzanine system with integrated lighting, goods hoist and sprinkler systems.

This twin-warehouse strategy with the introduction of the Sydney PDC is a demonstration of the commitment that BMW Group Australia has to its business partners, the dealer network and to vehicle owners. It means that BMW dealers across the country now receive optimum speed of delivery and customer service.

With the success of this project, BMW Australia has this year chosen SSI SCHAEFER to manage further expansion and development of the Sydney PDC. This project is due for completion by the middle of this year.

 

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