The key to an efficient automotive operation is a successful warehouse system but it needs to be integrated and transparent to reach its optimum efficiency.
Ever since the first Model T rolled off Ford’s production line, manufacturing processes were seen as key to the success of any automotive company, and the vehicle itself, with its increasing bells and whistles, the sexy part of the industry. Logistics, and particularly warehousing, was treated like a second-class citizen, shoved in the metaphorical closet and never discussed in public.
But without a good warehouse operation behind it, OEMs and suppliers wouldn’t have any idea how much stock they had, where it was stored or how to get it to the production line. And without visibility of inventory and the right processes in place to store, pick and deliver parts to the assembly lines, production would grind to a very expensive halt.
In fact, good warehouse organisation underpins the entire automotive operation–and in order to achieve the optimum use of space and most efficient storage and picking systems, an appropriate warehouse management system (WMS, or plural, wmses) needs to be in place. There are a number of WMS vendors on the market who cater for automotive clients. However, because suitable wmses have not always been available, many OEMs, suppliers and 3PLs developed their own software.
“Wmses have improved a lot in the last 10 years,” points out Jeff Hurley, senior vice president, automotive for Ceva Logistics. “We developed our own system, ‘Matrix’, to support supply chain activities, but now we have a strategic alliance with Red Prairie in Europe and Manhattan Associates in North America and Asia. By developing a strategic alliance, our partners understand our personality and our management preferences. We can obtain customisation quickly where necessary, and speed up the implementation process.”
DHL also favours Red Prairie in the UK and Ireland, although it uses a number of WMS packages, some of which are provided by customers. UTi Automotive uses customerchosen wmses in customers’ own facilities, but prefers its in-house system, ‘Unity’, for its own warehouses. Ryder System developed the Logistics Center Management System to support its warehouse operations, while Gefco’s in-house WMS, ‘Geolog’, grew out of the company’s work with the PSA Group, and was therefore designed specifically for the automotive sector.
Companies that add wmses as they grow, and as customers require, often end up with the problem of using too many disparate systems. Panalpina is just one company that has decided to review its multitude of systems with a view to reducing the number of wmses it employs. “We expect to have just a handful of wmses,” says Michael Weber, global head of warehousing and distribution. “We are evaluating requirements for the vertical markets for which we work and will pick the most suitable solutions for each.”
All wmses have the same basic functionality: receipt, put-away, storage and pick and pack. There are, however, a number of variations within each functionality, with different industries and different companies preferring different methods of operation.
“Receipt and put-away must be driven by the way in which stock is delivered to the OEM or, in the case of aftermarket, the dealer,” emphasises Stuart Robinson, vice president, strategic development at DHL UK & Ireland. “We design the warehouse to create efficiency, based on the 200 parts most used, with the larger parts fitted in around that.”
Put-away can be in bulk storage on high racks or arranged so the most used parts are near the end of aisles for easy retrieval. Small parts are usually placed in bins on lower racks, and cross-docking is becoming increasingly popular. “We used to see about 10–15% of inbound stock cross-docked,” says Valerie Arnaud, UK logistics manager for Gefco. “Now it’s 40%.”
UTi Automotive handles a ‘significant’ amount of crossdocking. “We could receive parts from 200, 300 or 400 suppliers for one OEM,” explains Jameson McBeth, vice president, strategic solutions for global automotive. “These parts are intended for, say, half-a-dozen plants. They are pooled in a cross-dock facility, where we break them down into deliveries for each plant.”
The WMS has to support this type of operation. When goods are scanned on receipt, the software knows where in the warehouse it should go, be that a storage location or crossdock area. When the delivery is being organised, goods are scanned again and the WMS will alert the user if the wrong item is being put in the wrong pallet or tote for delivery.
“But the software has to be able to monitor cross-docking at part level,” says Tom Kroswek, director supply chain excellence at Ryder System. “It must be able to deal with multiple dock doors and cross-dock to multiple zones. It must support production, rather than logistics.”
Metering also has to be accommodated by the WMS. Metering involves receiving product once a day or once a week–but delivering it to a plant several times a day or week. The frequency of receipt and delivery can be changed at short notice, but the amount of stock delivered to the factory is always smaller than that received.
Again, the WMS is programmed to monitor and control this process. Say, for example, seat belts are received in bulk once a week, but then delivered to the factory daily. Now the OEM is launching a new model and wants to get it on the market by a certain date. Seat belts may still be received weekly–but delivered twice a day. The WMS, once programmed, will alert the user that the second delivery is due in an hour–or even that sufficient stock has not been received to fill twice-daily deliveries.
Rapid and efficient order picking is dependent on an efficient WMS that knows where goods are stored and can also optimise the picking routes, in the same way vehicle scheduling software optimises the collection/delivery routes for a driver. It is said a warehouse worker walks an average 5–10km a day, so anything that can reduce wasted footfall has got to be good.
Most wmses accommodate a range of picking systems. The most common methods used in general are batch or bulk picking and pick to order. In batch or bulk picking, the WMS tells the user to pick 500 bumpers or 1,000 spark plugs. If necessary, the bulk picks are then split down into orders for different customers. For example, out of 500 bumpers, maybe 200 are going to one plant, 150 to a second and 150 to a third.
Although widely used in other industries, this type of picking system is really only suitable for milk runs or aftermarket parts, where a large number of items are needed at once. Aftermarket requirements can be a little unpredictable, especially when supplying dealerships, rather than retailers, but it is still possible to pick a large number of one part and then split it into deliveries for different regions or individual outlets.
Pick to order is becoming more popular in automotive. Red Prairie has even developed a ‘build to order’ system for its tier one supplier customers. Delphi uses it to supply customerspecific wire harnesses (the main car body harness) to a plant in Germany. Because of the labour-intensive process required to make wire harnesses, Delphi moved production to facilities in Poland and Romania. Red Prairie’s WMS verifies the order to ensure each is unique, checks that the production sequence, container sequence and slot sequence are correct, and allocates orders to lines.
The WMS then takes the finished harness and ensures the correct items are packed for each customer, loaded onto the correct vehicle and shipped to the correct address. When the truck leaves the production plant, Red Prairie automatically tells Delphi’s ERP system how much material it used, so it keeps control of inventory levels, and provides the information necessary to create an invoice for the OEM.
But Red Prairie’s build to order is really a form of sequencing, something most good wmses should be able to handle. “The WMS supports sequencing,” says Don Kulhanek, group director for Ryder System. “Every cell or rack has to be in line with the assembly line, so the operative just picks up the next part on top of his tote or other container.”
“The software has to tell us how many of each item to send, in which colour and in what order,” emphasises Anthony Trewin, IT director automotive for DHL UK and Ireland. “We may need one yellow wing mirror, then one black, two red, etc. Sequencing isn’t as challenging as one might think, though. The customer gives us an order in sequence and we just have to make sure the WMS is programmed to give out picking instructions in the same sequence.”
Kitting is another heavily-used picking system. “Kitting involves delivering material to the plant in sequence–but it is done so that all the parts for one vehicle are picked and delivered together,” Hurley explains. “The problem with kitting is that you may have ten parts to go in a kit, and you have part numbers for each, but don’t have an overall part number for an entire kit. We have to create one for the WMS ourselves, so that it can identify which parts are in which kit and which kit goes to which OEM, and when.”
Warehouse systems have to monitor and pick vendormanaged inventory, too, but the principles of storage and picking are exactly the same as for OEM-managed inventory. The only difference is that the supplier monitors the stock by linking into the OEM’s or 3PL’s WMS and delivers new stock without being asked.
None of the put-away or picking systems essential to smooth operation could be done without barcode scanning. “The system is linked to handheld devices,” Kroswek points out, “which give operators a step-by-step guide on their journey around the warehouse. Scanning picks up errors: if pieces are picked out of step in sequencing, or the wrong things are bundled together in a kit, the system alerts the user. We can stop staff doing something wrong by locking any device if, for example, the user has scanned the wrong part three times in a row.”
Scanning helps provide the all-important traceability, too: because all scans can be recorded, there is a record of what goods were picked when, for which OEM or aftermarket customer, and when they were shipped. Should there be a faulty part, or if the customer reports short-shipping, it is easy to find out what went wrong.
RFID, once hailed as the miracle worker of the warehouse, hasn’t had much impact on warehouse management software. Although there have been some well-publicised pilots with RFID tags on returnable assets such as totes and containers, most companies find the disadvantages outweigh the advantages.
“We’ve done pilots with RFID,” says Hurley, “and found them beneficial. But we can only manage a portion of the warehouse activity with RFID. In one pilot, we could control the picking and shipping of goods in our own warehouse, but the OEM customer didn’t have RFID installed, so we couldn’t get the full benefit of the application and it was not cost effective.”
Weber agrees. “RFID is only interesting if it is used in a closed loop environment. The industry does not yet have the standardisation to use RFID with third parties.”
Ubisense has developed an innovative use for RFID tags, though. US truck engine manufacturer Cummins was faced with the unenviable task of identifying and locating particular engines among the 400-plus that were regularly sitting on the warehouse floor–all red, all looking alike.
“Cummins employed someone just to walk around the warehouse and write down where each engine was,” says Terry Phebey, vice president, sales for Ubisense. “They would note the engine’s identification number and location, and then on the next walk-around, check if that engine had been moved. Now we’ve put tags on all the engines, so Cummins can see on screen where an engine is located: they type in the engine identification number and its location is highlighted. Bar codes can be used to identify an engine, but not to locate it.”
Other new technologies are being used, too. Pick to light can help ensure kitting orders are picked correctly. When the operator scans an item, a light on the shelf comes on to indicate that item goes in the kit being picked.
Voice picking has not yet been taken up in automotive, but is beginning to create interest. “We looked at voice in its early stages,” says Trewin, “but it wasn’t very good because of ambient noise. Technology has improved a lot since then, so we will look at it again.”
Automation has not really hit automotive either, but even a simple straight piece of conveyor can help speed up the flow of goods around the warehouse. The problem is that with such a wide range of part sizes, it isn’t always easy to optimise the size and shape of the conveyor. Conveyors also don’t lend themselves to kitting or sequencing.
Developments like pick to light, voice picking and RFID all require hefty investment, though. “These technologies make sense if you have a stable environment,” says Weber. “But since most customers won’t sign contracts longer than three years, we don’t feel we have enough support to justify the expense.”
Cost–in time and money–is, as always, one of the main barriers to successful implementation of an efficient WMS. In order to do all the things described, and more, the software has to be configured to suit the user’s way of working.
To be effective, the WMS has to be integrated to other systems such as order management, forecasting, accounts and transport company. Integrating two systems is never easy, whatever the IT gurus say, and integrating to legacy systems is even harder, since today’s technology runs on completely different platforms than yesterday’s. But OEMs and suppliers are upgrading their own systems, which helps ease the integration problem.
Once the WMS is integrated with other back office systems, its potential increases significantly. If it is integrated to forecasting, for example, the production forecast drives the material requirements forecast, which, in turn, lets the warehouse system know roughly what parts to expect, when. When it is integrated to order management, the WMS can ensure orders are filled accurately and on time.
Integration also allows users to have visibility of several warehouses, with several inventories. Although multiwarehouse control has been taken up initially by the retail and fast moving consumer goods sectors, it could have value for automotive, too. It allows suppliers to see where all its stockholdings for any particular part are located, so that if an OEM has an urgent order, and the nearest warehouse cannot fill it, the supplier can identify the nearest location with excess stock.
Similarly, an OEM may find it has the part it needs to keep its production line running at a nearby warehouse, when the closest one is out of stock, or want multi-site visibility when serving the aftermarket.
“You can never have too much visibility,” emphasises Ceva Logistics’ Hurley. And it takes a good IT system, in this case a WMS, to provide that visibility. Without it, neither OEMs nor suppliers can maintain efficient supply chains, let alone streamlined, lean ones.