A theme of ‘centralisation’ runs through both our features this summer. Along with the Toyota feature on integrating North American inbound logistics in Automotive Logistics, the latest issue of Finisehd Vehicle Logistics features executives from Renault Nissan, including vice-president of Alliance Logistics Europe Colin MacDonald, discussing the impacts of having a central logistics team for both carmakers (read here).
Four years since uniting the allied carmakers’ planning and operations, Renaults, Nissans and Dacias now share port terminals, vehicle compounds and logistics providers – sometimes even the same truck. Each OEM’s backhauls are being filled with the other’s volume. In Russia, new Alliance production in the Volga region will even allow the OEMs to balance distribution both east and west.
Finding shared flows takes a team with full access to OEMs’ forecasts – and perhaps some good network engineering software – but this alone isn’t enough. Things like IT systems and commercial agreements can stand in the way of even the most obvious savings. Technical constraints kept Renault and Nissan at different ports in the northeast of England for years rather than sharing Nissan’s facility at the port of Tyne.
While Alliance Logistics cannot simply undo these legacies, over time it has created new contracts and worked with the right people to bridge incompatibilities. In Russia it now uses a hub, for example, that plugs carriers into both systems. [sam_ad id=6 codes='true']
The integration that Alliance Logistics brings to Renault and Nissan raises questions about what so-called 4PLs, in-house or outsourced, could bring to OEMs. It’s a relevant topic today given Gefco’s new role between GM and PSA. We might also wonder how great the multiplier effect is – if putting two OEMs’ logistics together saves money, how much more could come from combining three or four?
It’s too early for detail on the Gefco project (read here), but the Alliance example is a reference point for it, as well as for wider OEM collaboration. Renault and Nissan have had 14 years of financial and strategic ties, yet sharing logistics is not as simple as aligning routes on a map. It takes work with other departments, from finance to IT and purchasing. Doing that with even more OEMs might compound these problems rather than bring savings.
Overall, whether the team in control is in-house or not is less relevant than how well it works across internal and external supply chain players. Alliance Logistics proves how difficult such integration is, but also that it can be done and, crucially, that it works.
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