Volkswagen has been undergoing trials at three group consolidation centres in Europe as it aims to shift from a regional system of freight forwarding to running a network of crossdocks. The group is now in the process of tendering for more consolidation centres in the coming years.
According to Thomas Zernechel, head of group logistics for the VW Group, the carmaker has established consolidation centres used across the group so far near Stuttgart and Kassel, Germany, as well as Bratislava, Slovakia. The purpose of these centres has been for VW to widen the rollout of its Neues Logistikkonzept (‘new logistics concept’, or NLK). The main thrust is in the current phase is to change from VW’s traditional system of regionally-organised freight forwarding and carriers–Gebietspedition, in German–to a network of centralised crossdocks that will synchronise parts flow across the group and further back from the assembly line.
The NLK was first introduced several years ago in plants as the group updated its production system, with Audi the first to implement it. The first stages were based around reducing the distance that assembly line workers walk to collect material. The next step was for a change in production first from that of a weekly production plan, than to a daily, and now to a sequence orientation, according to Zernechel.
The implication is that suppliers will match Volkswagen by producing in smaller batches and deliver it to the plant more frequently. For this to work the carmaker must adhere to a stable production schedule, fixing the specific sequence six or seven days in advance of production and providing a supplier with a precise snapshot of what it needs to supply. If the supplier adheres to the programme and adapts the same processes, considerable inventory can be taken out of the supply chain.
“The most important building block for that change is stable production,” Zernechel told Automotive Logistics. “We aim to strengthen that process further and drive down inventory, with the goal being to notify suppliers six or seven days in advance for the material they need to deliver. We always say that we can ‘replace inventory with reliability’.”
According to Zernechel, the next step is the rollout of group consolidation centres beyond the three already established. “We are bang in the middle of the tendering process for that rollout,” he said.
He adds, however, that educating providers on these types of services has been a challenge for VW, since the scope of the operation and particularly its scale is something new for most providers in Europe. “In Europe there are seasoned logistics providers but not any who have handled the kind of volume that we generate,” he said. “For that reason, we need to run these trials first.”
The NLK is not only a European project. In North America, for example, where Volkswagen opened its newest plant in Chattanooga, Tennessee the carmaker built the logistics network with crossdocks already in place. Meanwhile in China, Zernechel says that ideas are actively being shared with plants managers there. In June, for example, VW held its sixth ‘Group Project Day’–this time in the Czech Republic–which gathered together 160 logistics managers from across the group globally, with a particular focus on progress of the NLK.
For an exclusive interview with Zernechel, read more here