Efficiencies shoot up at Jaguar Land Rover’s inbound operation following DHL’s introduction of new supply chain model
Jaguar Land Rover brought in DHL Supply Chain to boost the efficiency of its pan-European inbound logistics operations. The DHL team examined the inbound function with special collections for parts, fixed logistics costs and high inventories and developed a more effective model, with the result that inbound supply chain efficiencies shot up more than 12 per cent.
The automotive manufacturing giant deals with more than 500 component suppliers based in 17 European countries, and delivers up to 980 full or partial loads each week to sites in Castle Bromwich, Halewood and Solihull.
DHL’s automotive team had previously rolled out a UK parts collection service for the manufacturer in 2008 and set to work in early 2009 to scope the pan-European project.
Laurie Cogger, vice president (LLP Automotive) at DHL Supply Chain UK, says: “While we’d successfully implemented a robust UK-wide collection service without any disruption to supply, the challenge to roll out an inbound logistics solution across Europe took the lead logistics partner concept to a new level. While the increase in volume of product types and part numbers was a matter of scale, the step up required to seamlessly source parts from so many European countries was the real test.
“This has been a hugely complex project to implement in a very short timescale – just four weeks from project approval to implementation – but one that has paid great dividends already. Our implementation of the control tower ethos, where we act as a 4PL, brings best practice and supply chain innovations, and has worked really well. This has been a real partnership between ourselves and the JLR team.”
While inbound parts had previously been handled via a rigid supply chain model, using full and partially-full truck loads, DHL suggested a fresh approach that also used cross-docking, to help improve efficiencies.
“While this robust model was fine when part numbers were highly predictable and in large numbers, the global downturn in the car industry had created some real issues for the supply chain. What was needed was a responsive model that could flex up and down with volume and also cut out unnecessary cost without sacrificing quality and certainty of delivery.
“However strong the pressure is to cut costs from the automotive supply chain, this desire must not compromise the manufacturing process. For instance, a part not arriving line-side and potentially halting production, is simply unthinkable,” says Cogger.
After some in-depth supply chain planning and sensitivity analysis on the various options available, the DHL team developed a sophisticated solution that used full truck load, milk round and groupage service as part of an integrated supply chain. DHL acted as a central 4PL, and was able to determine and negotiate the most competitive carrier rates available in the European transport market. Meanwhile, its freight control tower in Veghel, Holland, manages and procures the most appropriate carriers, leveraging synergies with other DHL contracts operated in Europe.
“Control of the whole supply chain has been kept centralised and independent. Our control tower operation is effectively the brains of the inbound operation, specifying transit times, overseeing quality and ensuring agreed KPIs are adhered to at all times. Before the new regime, transit times were dictated by volume, meaning that deliveries were less predictable and inventories were therefore higher. This all added significant hidden cost to the operation.”
The company reckons using a single partner to manage groupage and trunking from Europe was a good tactic. “We realised that using a single supplier to deliver this vital part would eradicate the problem of parts going missing, and transport companies blaming each other for the loss of parts,” says Cogger.
DHL is now looking for ways in which the three services – full truck load, groupage and milk rounds – can work together to reduce empty running, and further improve cost savings and drive efficiencies.