II Redesign Concept for Logistics of Volkswagen Commercial Vehicles in Hannover
Ole Nyhuis 2013.TEL.7796 Delft University of Technology
August 14, 2013
Executive Summary
Since 1956 the Volkswagen Commercial Vehicles plant in Hannover produces Transporters. Over time the plant grew increasingly complex, and today roughly 13,000 employees produce 600 T5, 120 Amarok, and 40 Porsche Panamera bodies per day. It is the Volkswagen Group’s declared goal to become the world’s leading automotive manufacturer, which also sets goals for the brand of Volkswagen Commercial Vehicles. This thesis focused on the order-to-delivery (OTD) process and its sub-processes of sales, planning, supply, production, and distribution. Its goal was to investigate the just-in-sequence production (JISP) concept and to provide a concept proposal to create more stable and robust logistics processes and to harvest the economic potential of JISP and just-in-sequence supply of components.
Within the OTD process there are a number of issues that were investigated using the Delft Systems Approach to find their causes. These issues are the large stocks of JIS components at the third level logistics provider (3PL), the large inventories of finished vehicles in distribution, and the rather low internal delivery reliability.
As root cause for the large stocks at the 3PL, the analysis identified the inaccurate information of JIS suppliers and a lack of knowledge of JIS suppliers about the supply process at Volkswagen. The large inventories in distribution are caused by a lack of information of the distribution department and the corresponding inability to plan. Moreover, the low internal delivery reliability is caused by process disturbances and negligence of differences in throughput times for certain characteristics of orders. These characteristics include non-standard roofs, double-layer paint, and painting of the vehicle on painting line 1. Together these root causes lead to the research question of how to improve the logistics processes and process communication without interfering with the current production process to improve efficiency and effectiveness in logistics. For mitigation of the identified problems, three approaches were investigated: transfer of additional data and coaching for JIS suppliers, transfer of additional data for the distribution department, and the integration of scheduling and sequencing with sequence-shifting.
In the first proposal, JIS suppliers shall receive the planned assembly sequence rather than the body construction sequence. Moreover, coaching workshops shall be used to foster knowledge about the supply process and the information content of transferred data. Additionally, the workshops shall be used to optimize the component production scheduling and supply process per supplier to stabilize the logistics chain and create a greater security of supply. Experts from both suppliers and the logistics planning department of Volkswagen validated this proposal. Calculations were conducted to assess the solution for German JIS suppliers outside a 90km range of the plant. For these suppliers, the greater security of supply means the safety stocks van be reduced from three to somewhere between one and 1.6 days. This lead to a reduction of the total stock volume at the 3PL of 20% to 28%. Financially, it provides an annual surplus of €1,000 to €4,600, which does not include savings for less capital employed or the possibility to procure additional parts as JIS components.
Redesign Concept for Logistics of Volkswagen Commercial Vehicles in Hannover III
Ole Nyhuis 2013.TEL.7796 Delft University of Technology
August 14, 2013
The second proposal implies the transfer of sequence-related production data to the distribution department. This way the planning of vehicle shipping by truck is possible prior to vehicle completion, which reduces the average inventory times of vehicles. An expert of the distribution department validated this solution, and assessment shows a reduction of inventory by 22% for a reduction of the inventory time from 2.19 to 1.5 days. The annual savings are estimated at €13,700 for area reductions only and the investments required are expected around €12,900, yielding a payback period of approximately one year. Moreover, area reductions for distribution are imminent due to the construction of an additional pressing plant, which supports the decision to implement this proposal.
The third proposal comprises the integration of scheduling and sequencing to make rolling wave sequencing and thus sequence-shifting possible. This sequence-shifting denotes the practice of starting the body construction for vehicles with prolonged throughput times early to match the plan sequence in assembly. An expert of the program planning department validated the solution and assessment shows its positive impact on the delivery reliability. The delivery reliability in itself, however, neither reduces the costs directly, nor are positive effects on the other two proposals expected. Nevertheless, with the higher delivery reliability, the possible service level of the ASRS for assembly becomes significantly higher. In a situation without sequence restrictions, the service level increased from 85% to 95% for an ASRS with 289 dedicated resorting cells. Investments required for the implementation of scheduling and sequencing, however, are expected around €310,000, while the annual savings are expected to be a mere €8,000. Regardless, the significantly higher service level in assembly due to sequence-shifting provides a cornerstone for the future implementation of a long-distance JIS supply process.
Consequently, the final improvement concept includes the information and coaching of JIS suppliers, as well as the provision of additional data for distribution. In the current situation the implementation of sequence-shifting is not cost-effective. Moreover, the thesis also provides a rough overview of the steps necessary for implementation as a basis for a more elaborate implementation plan.
In conclusion, the possibility of sequence-shifting shall be kept in mind and investigation on possibilities for its implementation without the integration of scheduling and sequencing should be considered. Finally, the improvement concept proposal is beneficial for the efficiency and effectiveness of the OTD process and its implementation is therefore strongly recommended.
