While logistics is the most common part of the supply chain for manufacturers to outsource, the balance between in-house and outsourced management and control functions is different depending on the OEM.

One carmaker that in recent years has developed a strong central logistics management organisation is Porsche, which concentrates considerable internal power for logistics within the plant, and has also created its own subsidiary for spare parts logistics.

Spare parts – warehouses in, packaging out

In 2008, the company spun off Porsche Logistics to manage Porsche’s spare parts warehouses. Jürgen Wels, head of logistics, is also the subsidiary’s chief. Currently, Porsche Logistics handles a portion of the packaging and picking operations in the warehouses, with the rest outsourced to service providers. But this summer the company is planning a change as it consolidates its warehouse network to a central location in Sachsenheim, Germany, about 20km north of Stuttgart.

This August, when another 72,000m2 of space becomes operational besides the existing 40,000m2, Sachsenheim will replace five existing warehouses in Germany to become Porsche’s global spare part hub, serving 650 dealers as well as 10 regional warehouses located throughout the world in major markets for Porsche such as the UK, US and China.

Porsche Logistics will take control over warehousing operations, including picking and inventory, while outsourcing all of the packaging operations to a provider. It will also perform services for regional warehouses.

“Our philosophy is to outsource only those things which are not our core logistics operations, such as packaging,” said Wels. “However, some of our suppliers are not really able to establish a professional packaging process in their plants, and we had to take this over. In the near future this will be handled by our providers.”

Wels noted that Porsche Logistics offers a competitive advantage in terms of sustaining the quality and training of its staff, while maintaining special “home tariff” rates as a direct subsidiary.

“At least one kick of this concept is that we bring several organisations under one roof, with the essential advantage that we optimise all the processes together and do not have breaks in the chain,” he said.

New concept for inbound

The control of warehousing echoes in some ways Porsche’s in-plant logistics concept at Zuffenhausen, where Porsche logistics staff manage all responsibility up to assembly, including quality control, to ensure parts arrive at the line in the right condition and damage free.

“There is a strong interlink between quality and logistics,” said Wels.

For Porsche production in Leipzig, by contrast, in-plant logistics has been outsourced to Schnellecke since 2002.

Wels said that it has not yet been decided finally if Porsche Logistics’ activities will eventually extend to other parts of the supply chain. This is particularly so because Porsche has recently established a standardised and highly efficient inbound logistics network with Wincanton Logistics for its production in Leipzig, which has been also rolled out at Porsche’s new engine plant in Zuffenhausen.

This new logistics concept moves single parts from suppliers to shared crossdocks close to the plants, where they are consolidated and then assigned just-in-time delivery windows to the assembly line. While modules have already been delivered this way, the new concept is unique in that pallets containing as few as 15 parts–and as basic as screws–will also arrive just-in-time, further reducing the need for inventory.

For these operations, Wels is convinced that Porsche has found the right balance between in-house control and outsourced partnership. It supplies Wincanton with a rolling production schedule and delivery windows that range from just a few days up until a full year, allowing it to plan its milkruns accordingly.

“There is a very high level of shared information so that our partners know what is happening as we go forward,” Wels told Automotive Logistics. “The main issue for Porsche is to have a strong overview and control.”