Smart logistics

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Located in the Stuttgart-Frankfurt-Strasbourg triangle, DaimlerChrysler’s Global Logistics Centre (GLC) in Hatten, serves both as the worldwide spare parts warehouse for Smart, and as the European central warehouse for Mopart (Chrysler and Jeep). It is a fine example of how DaimlerChrysler has expanded its parts storage capability by combining the product ranges of other makes.

Spare parts logistics does not follow the same rules as production logistics. DaimlerChrysler guarantees that it will supply spare parts for any given model for at least 15 years after it has discontinued production of the model.

Whereas systems for production logistics only ever have to deliver one specific configuration for the current model to the assembly line, more and more model versions are added to spare parts logistics during the life of any model series. An original number of 6,000 spare parts can quickly grow to 15,000 parts, with demand being highest immediately after the end of production; it then decreases exponentially. And whereas the parts turnover in a production warehouse is calculated at 30, this is considerably lower in spare parts warehouses. A-parts, such as mudguards in winter, are turned over seven or eight times, but the overall turnover for all parts is between two and three.

Another difference compared with production logistics is that from Monday to Friday there can be a variation in demand of about 30 per cent. And that is without the impact of special influences. You won’t be surprised that demand for body panels increases dramatically when it has snowed. The logistics system, and specifically its hardware and software, must have the capacity to deal with such peaks in demand.

Storage racks are increasingly burdened by ever shorter model life cycles. Whereas twelve years used to be the standard, five to seven years is now the norm and manufacturers are trying to lower this to no more than four years.

In the meantime, model updates, face-lifts and different model versions are common practice. ‘The spare parts volumes explode as a result,’ says Hermann Konz, senior technical service manager for global warehouse planning at DaimlerChrysler, Germersheim.

A good management system for parts which are becoming obsolete is especially important. This includes the possibility of stocking parts under the purchase conditions for production, without stocking so many parts that this activity is no longer profitable. There are distinct differences between European and American philosophies in this respect: profit contribution is the main consideration in the USA, whereas car manufacturers in Europe also want to offer drivers of older models optimum service for as long as possible.

With these factors in mind the GLC was conceived. After an extensive analysis, Hatten was selected due to its proximity to the production plant in Hambach and within an hour’s drive from the Global Logistics Centre (GLC) in Germersheim. ‘This enables us to consolidate shipments, if required,’ says Konz. Of course, this calls for the right IT management solutions. Mopart parts (for Chrysler and Jeep) are supplied from a central facility in the USA or directly by their European manufacturers. Smart parts come directly from the producers.

At Hatten, 100,000 sq m have been reserved for the first phase, but expansion has already been planned as capacity utilisation is already 100 per cent. Arnd Heimbach, head of warehouse planning & development in Germersheim states, ‘We have managed to start up this logistic centre in a very short time.’ Work started on the project four years ago and went live in April 2004.

GLC Hatten has a total of 177,000 storage locations, 44,000 of which are for pallets however, the majority of space is given over to the 128,000 small parts storage locations. The total goods inventory consists of some 100,000 different items with an average of 4,000 order lines delivered every working day. Planning is based on transport capacities of 1,800 tons.

Within the new warehouse 37,000 sq m has been reserved for Smart, the rest is available for the Mopar parts. In order to save space and increase available floor area large sections of the conveyor system have been installed high up, just under the ceiling.

The logistics centre was designed on the basis of existing business data. Turnover, the extent of the range, service requirements and distribution structure had to be considered – without forgetting, as Konz says, that ‘the rear-view mirror is every designer’s crystal ball’. But the ambitious objective of offering the highest possible degree of service to the sales departments of workshops has the strongest influence. Between 98 to 99 per cent of the necessary spare parts have to be available within 24 hours. The higher the better, although a score of 100 per cent is not economically feasible. Again, the quality and speed of making the parts available depends on the logistics concept. DaimlerChrysler does not go for a single concept, but uses a multi-level approach with different concepts to suit the various levels. And since the GLC serves 2,500 Mercedes dealers as well as dealers of other car makes, this is the only way to be able to effectively supply the market with parts.

The materials handling and warehouse management systems at Hatten were installed by Vanderlande Industries and day to day operation of the site is run by a 3PL. In addition  to a minimum fixed compensation, the service provider is paid on a performance basis.

According to Heimbach the main advantage of this operational model is ‘concentration on the core business.’ But DaimlerChrysler wants to keep the initiative: ‘We continue to take care of the management and control functions.’ The service provider only takes care of operational logistics. An integrated approach in which targeted intervention is possible at all times has deliberately been chosen as past experience has proven that leaving the entire logistics to a service provider and only checking the result does not produce the best results.

Outsourcing experience has shown that it is better to integrate the control tasks as a fixed element into the company structure. ‘Although we maintain these networks, we do not operate them as a rule,’ says Konz. That is why external service providers work with integrated IT systems. And they have to be very stable.

The GLC operation is carried out by the logistics service provider Striebig, which has 300 employees working in Hatten in a multi-shift operation. The border area has its advantages as qualified staff can be found on both sides of the river Rhine. But one does have to consider two different languages. This was no problem for Vanderlande Industries’ systems architects: as operators can call up a French interface by pressing ‘F7’ on the keyboard of the warehouse management computer.

The logistic centre’s high performance is mainly due to its powerful warehouse management system and its integration into the companywide IT network.

Inventory control is fully automatic. Goods receiving and goods despatch have been designed in accordance with the customary criteria and their details are highly comparable to projects of a similar size.

The prime objective is high availability, and this is the responsibility of the general contractor, Vanderlande Industries. Hermann Konz explained, ‘Of course, we have made use of the system builder’s experience.’ To enable optimum flexibility in the GLC, the entire logistics system was designed ‘make-neutral’. Heimbach emphasised, ‘The load carriers were the decisive elements.’

To comply with the stringent requirements, Vanderlande Industries created a flexible warehouse management system. The Autonomous Warehouse Control System can optionally be operated as a satellite system under a WMS or ERP or it can be used completely autonomously using control codes.

Efficient goods turnover is guaranteed by shipping buffers and consolidation and priorities control. Extremely high data reliability is necessary to enable the data stored to be used as required. This data can be displayed in detail to enable the DC logistic service provider to intervene if required. It can also be analysed using the ‘Vision’ statistics tool and self-defined statistics can be called up.

The processes in the goods receiving and despatch departments are structured and transparent, so that an inexperienced worker can understand the system in no time. The plausibility of all manual actions is checked by the WMS computer and mistakes, whether due to overfull totes, illegible barcodes or faulty destination input, are displayed immediately. The relevant tote or load carrier is fed out to enable the mistake to be corrected.

Lots of spare parts never make it as far as the racking area, because they are needed for urgent orders. Cross-docking totes are routed directly to the despatch stations or the despatch buffers via dedicated fast tracks.

The sorting criterion for the despatch department is the trip planned. If the trip has not been released yet, the goods are stored temporarily in the despatch buffer from where they are retrieved when required. The totes are made available in front of the goods despatch locations on special accumulators. However, the WMS computer is always involved in the control of the system to make sure that the desired delivery quality can always be achieved.

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