Schnellecke Logistics, Volkswagen Chattanooga’s 3PL, won the Group’s first inhouse logistics award by fixing the foundations before they digitalised

Schnellecke Logistics, the logistics service provider that runs inhouse logistics at Volkswagen’s plant in Chattanooga, Tennessee, was invited to Germany this year to receive the first Volkswagen Group Logistics Awards, which recognises performance, partnership and collaboration among the Group’s logistics service providers. It competed against partners from Volkswagen plants worldwide and won the inhouse operations category outright. Paulo Monteiro, head of logistics at Volkswagen Group of America Chattanooga Operations, put the plant’s nomination forward. It marked a significant milestone in a partnership that had faced a demanding period three years earlier, when the ID.4 launch and the ramp-up to a third shift ran in parallel, placing additional pressure on the plant’s in-house logistics operations.

Riaan Steyn, manager, logistics inhouse at Volkswagen Group of America, arrived in Chattanooga during that period to support the ID.4 launch and moved across into logistics afterwards. He inherited an operation where workforce turnover was making it difficult to build and retain experience.

“We were training and training and training, because every week you had new people,” Steyn says. The US labour market, with its abundance of alternatives, Steyn adds, made movement between jobs relatively easy, while frequent changes in the workforce made it harder to build confidence and experience.

The team looked closely at why people were leaving and identified two key areas to address. There was an opportunity to strengthen the culture that connected people to the operation, in an industry that, as Steyn points out, has a language of its own and can take newcomers time before they feel confident speaking up. New starters had also arrived with expectations that did not always match the reality of the role. “Their perception of what they were going to be doing and what they actually did were very different,” Steyn says.

Today the same operation runs a digital Gemba – the daily shopfloor performance review – across three management levels, treats “automated hours” – the working time it has removed from the operation through automation – as a headline KPI, and moves live operational data between Volkswagen and its logistics service provider on a three-minute refresh. Monteiro has since extended Schnellecke’ s contract for a further five years. How the operation moved from where it was in 2023 to where it is today is a journey both organisations believe the industry should pay attention to.

Standards before systems

Steyn had worked alongside Jacques Dixon in various forms before and found that he was running Schnellecke Logistics operations a few hours away in Alabama, so he asked him to get involved. Schnellecke handles receiving, warehousing, sequencing and outbound logistics at the plant, and Dixon, director of operations for Schnellecke Logistics USA with responsibility for Tennessee and Alabama, became his counterpart on the provider side.

The pair then spent a year focused on documentation and consistency. “For 12 months, we were building standards, standardising work instructions and standardising work packages, to be able to change people’s minds,” Dixon says. The need for greater consistency was evident on the floor, where workloads could vary between areas. “We had areas where some people were running wide open. They were working extremely hard in one section, and then in another section you had people who weren’t as busy.” Standardising job functions and capacities, he says, helped both the hourly workforce and supervisors understand that following a standard work instruction was the best way to deliver consistently against the customer’s expectations.

The second change began before anyone reached the plant. Schnellecke had been using a third-party firm to hire its people, so Schnellecke set up a “Schnellecke Logistics training academy” and brought recruitment in-house, with access to company benefits from day one and training built around the same boxes, the same scanning and the same visual environment a recruit would encounter at Volkswagen’s site.

“People knew before they got on site: this is what I’m going to do, this is the job I was hired for, this is the process I’m going to follow, and I’ve actually trained for this process,” Dixon says. The retention measure both organisations watch is the share of the hourly workforce with more than a year of service, which currently sits at 68%. Steyn saw the results of the shift within a couple of months. “People who started working with us wanted to stay with us.”

Turning a wish list into strategy

The move from stabilisation to improvement came through the team leads, who kept returning to the same phrase when they talked about the information and tools they did not have.

“I wish I had. I wish I had. I wish I had,” Steyn recalls. “And then I said, the wish list we’re talking about is a strategy.”

The first thing they built off that list was a KPI redefinition of hourly measure of how many parts each running fork truck needed to pick against how many it actually picked. Digitalised, it immediately exposed who was overloaded and who was not, which in turn drove part slotting and work balancing across the warehouse. It ended up doing two jobs, Steyn says, one balancing load and one measuring performance. “This was really our first footprint into a digital world.”

Its more important output was credibility. “It built trust with the operators and the team leaders and supervisors,” Dixon says, “because they started to believe that we’re doing the right thing to make everybody’s life easier inside the plant.”

Steyn is clear about the important role first-line leadership plays. “Being a team lead or supervisor in automotive can be a challenging role, because you’re managing the issues that come from the team while also responding to the pressures from management.” Building trust with first-line leadership meant asking them what tools would make their jobs easier, and then giving them the space to identify where technology could help. “We are not going to develop a system and impose it on them, and then six months later it’s not going to be there,” he says. By the start of 2025, the conversation had begun to shift. “Then the questions started coming, is there not an easier way of doing this? And that’s when I said, now we’re cooking.”

Dixon sums the approach up as a rule. “We listened to the people. It wasn’t a top-down approach. We had the overall strategy and we listened to the people, and that’s when everything started pulling together.” The operation now works to what he calls a 1-3-1 principle, taking one problem, asking whoever raised it for three things they would do differently, and developing the one they favour with them.

Ideas that go somewhere – an idea management platform

Listening only has real value when an idea has a route into action. At Schnellecke Logistics, that route starts with a QR code that any employee can scan on a personal phone or a supervisor’s device. Suggestions then go to a cross-functional committee spanning safety, quality, HR, engineering and operations, which works with the originator to explore how the idea might be put into practice. “It doesn’t need to be perfect,” Dixon says, meaning an idea does not have to arrive fully worked out. The example he gives is a request for a magnet to pick up loose screws rather than scooping them by hand, prompted by something an employee had seen online. “It’s not a developed idea, but they felt the openness to be able to share that idea with us.”

Recognition is an important part of the process too. Accepted ideas are celebrated on Gemba screens across the plant and score points for the submitter’s team under an internal engagement programme in which self-named teams compete for a monthly cash incentive.

Safety has been approached in a similar way. An app allows any supervisor or team leader to issue on the spot, replacing what Dixon describes as a paper-based process that ran through quality and HR before reaching the employee. Positive tickets enter a monthly draw, and the programme tracks days without an incident.

“It’s human nature,” he says. “Once people see they get celebrated, they want more.”

Simple solutions, improved again

What came out of that approach was often strikingly simple. Truck drivers arriving from across North America used to wait in their cabs until someone walked out, sometimes in the rain, to fetch them once paperwork and trailer checks were complete. Asked to find a better way, the clerks, forklift drivers and team leaders on the dock considered options including bells and handing out phones at the gate before settling on restaurant-style pagers. “[The technology is] cheap as old chips,” Dixon says. The team was also recognised for the solution in front of the plant.

“It’s difficult to reinvent the wheel,” Steyn says, “but if someone has invented it and we can use it, let’s do it.”

The same instinct produced “Pie in the Sky”, a Schnellecke Logistics engineer’s response to the heavy freestanding poles used at the inbound docks to keep forklift and pedestrian traffic apart, which clerks had been moving between laydown areas. Wheels were considered but proved less stable, while proposed lighting solutions were seen as more elaborate than necessary. The result is a rope-and-pulley status indicator that a clerk pulls when an area is clear, signalling to forklift drivers that it is ready. It costs around $20 a unit to manufacture in-house and won a Smart and Simple Kaizen award.

The solution has since been improved again following feedback from the clerks, with the indicator moved to the front of the process where they finish their work. That small change saves around 20 steps of walking per container.

The largest gain came from applying the same collaborative approach at scale. The team printed a blown-up layout of the warehouse and the 110 pieces of equipment operating in and around it, from stand-up lifts and forklifts to tuggers and AGVs, put it in a team room and invited people to mark it up against heat maps built from recorded safety incidents. Redirected drive aisles, opened doors and one section rotated diagonally to create through-aisles produced more than 12% additional storage capacity within the same footprint. “To be able to get 12% just by collaboration and making it transparent for everybody was huge,” Dixon says. The work was recognised as a global kaizen winner within Schnellecke.

Steyn puts the flow work in context. The warehouse was at max occupancy in 2023, effectively full, averaged 85% at peak and is running at roughly 72% today with lower volumes and launch activity. Joint optimisations saved more than $1m in a single year, which he notes is unusual on a contract five years in, and many of the ideas were developed proactively rather than requested by the customer. “Some of these optimisations came out of us sitting around the table having a discussion, and then they would test it and come back to me and say, yes, this works, let’s go.”

That is the kind of partnership Steyn envisioned. “I always say to them, I need someone pushing me, not an anchor.” When he compared notes with other plants entering the same Volkswagen Group award assessment, the idea of a provider proactively bringing forward optimisation measures prompted genuine surprise. “They came to you?” he was asked. “I said, yes. That is the expectation.”

Choosing what to digitalise

With standards in place and ideas coming from the floor, the question became which processes were worth automating. Steyn describes a two-part test, in which repetitiveness identifies the processes worth examining and the reduction in process steps determines whether the saving is meaningful.

The worked example is inbound. The plant offloads 140 trailers a day and the contract requires Schnellecke Logistics to document how each load was shipped and how it arrived. That once involved a digital camera, a walk to a laptop, an upload, transcription into Word and Excel, and individual emails to each recipient. It now runs through the provider’s own mobile app, where a clerk photographs the load, selects from predefined dropdowns and presses send, with the report then emailed automatically to the required Volkswagen recipients. Six process steps became two for a task performed roughly 50 times a day.

“As an organisation, we are measuring automated hours,” Dixon says. “It’s one of our key KPIs, and that’s what’s driving this innovation.” On current numbers the fully automated trailer report accounts for 147 automated hours a month, with an automated inbound discrepancy report adding a further 26.

The centrepiece is the digital Gemba, developed between Schnellecke Logistics’ head office in Germany and its developers in Mexico, hosted in the company’s digital control tower and surfaced through SAP Analytics Cloud and Power BI. KPIs were once printed and placed into sleeves on a board, where they remained until the next morning. Level 1, 2 and 3 Gembas, running from plant leadership down to the shopfloor, now run on touchscreens, with red and green indicators flagged automatically and green items skipped to save time. Problem-solving runs through PDCA within the same platform and escalates as needed, so an issue raised at level 3 by the hourly workforce can pass to supervisors and specialists at level 2, and upward again if it cannot be resolved there.

“This revolutionised the way we talk about performance,” says Dixon, who had already checked Tennessee’s Gemba from Alabama on the morning he spoke with Automotive Logistics.

Reporting evolved in the same direction. RPA bots now extract and translate the information behind the top five KPIs that steer the business, refreshed every three minutes and reachable by an hourly clerk with a single click.

“I walk between different areas in the warehouse, and I can see at a glance whether that operation is healthy or not,” Dixon says.

Two sets of “Whiz Kids”

Volkswagen’s own logistics organisation in Chattanooga has been running a parallel programme, which Monteiro set out on stage at Automotive Logistics & Supply Chain Digital Strategies North America in June. Taking his cue from the Whiz Kids, the wartime statisticians later hired by Henry Ford II to bring data-driven management into the company, he assembled a team of digitally curious employees from across his department, which led to automating more than 80 processes in a single year using tools the organisation already owned.

He encouraged his logistics service provider to explore the same approach at the same time. “I did it in Volkswagen, but I’ve got the team from Schnellecke Logistics in the room,” Monteiro told the audience in Nashville. “I pushed them more or less the same time, and they did exactly the same. Our control tower is pretty much fully automated as of now.”

Jens Kappei, chief operating officer at Schnellecke Logistics USA, saw the same progression in how the workforce responded to the wider technology push. There was understandable curiosity about whether the new tools would make a meaningful difference, and that changed as people began to see how they made the daily job easier and less stressful. Kappei describes the result as a collaborative effort between Monteiro’s whiz kids and Schnellecke’s own, with transparency on both sides, and credits it with helping take the inhouse operation to a different level. He also points to where the benefits extend beyond the warehouse. Three years ago, he says, the operation was often focused on identifying which part was needed next and how quickly it could be delivered, a rhythm that can work for a shift or a week but is harder to sustain over longer periods. Better data now gives material planners greater visibility to plan transport ahead of time, helping reduce demurrage for truck drivers as well as cost.

The right sequencing is the strategy

Steyn is emphatic that the technology works because it came at the right point in the operation’s development. He recalls a former boss’s blunt formulation, that automating a bad process only leaves you with an automated bad process.

“It’s worth spending time with the team members and the first-line leadership deciding what we want, running that for a while, and then saying, we were right, or we got it half right,” he says. The Gemba board that was eventually digitalised looked very different from the one the team built at the start, because two years of daily use had helped identify what people actually needed and what could be left out. Anyone digitalising bad data, he warns, risks simply carrying those problems into the digital environment.

What is distinctive in Chattanooga is how deliberately the sequencing was tied to workforce stability first.

Steyn also rejects the idea of a digital endpoint. “Your vision can’t be, I want everything to be digital. The vision has to be, I want to digitalise processes to make life simpler for my team to do their jobs.” From there the question becomes a daily one about what has to be done every day that could be simplified, and what information people wish they had. “It’s not a single step, manual today and digital tomorrow. It’s a journey. And if you do not bring your team members on this journey, you’re going to be the person trying to impose it on people, and you’re going to get nowhere. There’s no finish line in this.”

One operational team

Both Steyn and Dixon have worked to move the relationship away from a traditional customer-provider dynamic and towards a more collaborative model. “It’s not Volkswagen versus Schnellecke,” Steyn says. “It’s operational logistics. We’re all in the same boat.” The commercial version of the same idea is similar. “The more successful his business is, the more successful my business is.”

His standing instruction to his engineers and leadership is to treat the site as a proving ground. “I want to be known as the testing ground. Not everything we test works. But we learn something from everything we test.” Test 20 things, he tells them, and if 10 work, that is 10 more than you had before.

Dixon describes it as a global mindset rather than a local initiative. “It’s not just driven in the US, it’s driven as a culture around the globe.” The next step is already taking shape, with a system of Bluetooth sensors placed around the warehouse, being used to measure ergonomics, efficiency, downtime and empty forklift travel against an MTM, or motion time management, baseline. One aim is to design layouts in which fork trucks travel loaded in both directions rather than returning empty. Alongside that is digital twin work with a partner focused on making the areas around forklifts safer.

Behind all of it is a view that the industry is changing and that continuous improvement is what keeps an operation ahead of it. “Either we evolve or we die,” Steyn says. “That’s the nature of our industry.”

More than a trophy, what Steyn wants from the award is “for any other plant to call and request how it was done”.

Monteiro, who proudly leads a logistics excellence operation in Chattanooga, sums up what the award represents: “Chattanooga’s recognition came down to a clear principle: standards before systems, people before technology. We moved beyond the conventional customer-provider relationship to build a true operational partnership – aligning strategy, sharing tools, and driving continuous improvement from the shop floor up. The result was over one million dollars in joint savings, a stable and engaged workforce, and a digital infrastructure built on processes that already worked. This is a model that shows what logistics partnerships can deliver when both sides commit to the same journey.”