A medium-sized automotive supplier bundled production materials and finished products for the global supply of production facilities and automotive customers in three goods distribution centers. However, the premises and processes did not meet the requirements for optimal handling in a distribution center with global connections. The company had therefore already requested a quotation for an outsourcing concept for distribution logistics. The interim manager was commissioned to examine which solution would be the most effective way to reduce costs: by optimizing the processes in-house - possibly including the construction of a new distribution center - or by outsourcing the logistics.
During initial discussions, it became clear that the existing offer did not take all requirements into account. On the other hand, it became clear that the personnel resources assumed in the offer and the calculated technology would not be able to meet the requirements. In order to gain final clarity, the company management commissioned the interim manager to develop two feasible models.
Practice-oriented comparative model with detailed process flows developed
The first model was a practice-oriented comparative offer with detailed process flows, use of materials and standard market rental conditions at a new location. For the new location, the change in transportation costs for delivery and shipping was calculated on the basis of actual values and included in the evaluation. The interim manager also took remanence costs into account and evaluated the vacancy rate in the previous properties. The second scenario assumed the optimization of processes at existing locations.
Recommendation for optimization of own locations and construction of a new logistics centre
Based on these model calculations, the interim manager recommended optimizing the company's own locations and, in a second step, operating two of its own distribution centers instead of three (including the construction of a new logistics location managed by the company itself). Determining the optimal location for a "main distribution center" led to a second project to evaluate the group's transport management.
After the decision to optimize the company's own management, the interim manager took over project controlling. He also brought his extensive expertise to bear on an operational level. During an initial site inspection, he identified the first potential savings that could be implemented quickly and which were exploited immediately.
Restructuring and digitalization ensured during ongoing operations
One of the particular challenges was that the ongoing logistics operations could not be disrupted by the restructuring. Previously, the company had ensured the high quality required for the OEM by deploying additional resources. Bottlenecks and peaks were managed with a large number of temporary workers without fully utilizing the company's own resources. In addition, former production employees with extensive protection against dismissal had been transferred to logistics. They sometimes showed little motivation for the new tasks. These circumstances drove up costs unnecessarily. While the processes were being optimized, it was important to maintain a high level of quality.
Solutions for a number of weaknesses developed and implemented
In order to meet all requirements, the interim manager initiated a project team with the heads of the logistics locations and key players from the distribution centers. This was followed by an intensive inventory of the distribution centers in terms of requirements, key figures, personnel deployed, shift times, traffic routes, space planning and technology.
The detailed analysis revealed further weaknesses, such as:
- Supplier errors (e.g. missing goods labelling, incorrect VDA labels, incorrect deliveries, incorrect quantities) and express call-offs from the plants to stock (lack of quality in production planning and parts scheduling) were corrected at the expense of logistics costs.
- Preventive, not absolutely necessary inspection and labeling processes in goods traffic with third countries and in passive processing traffic led to disproportionately high logistics costs.
- The same recipient plants were loaded from different goods distribution centers on the same days with low truck capacity utilization.
- The goods receipt and control of incoming trucks was carried out without sufficient planning and control.
The corresponding countermeasures were transferred to a project plan. The solutions were developed together with the project team with the help of the interim manager. The interim manager was also responsible for project controlling and reported on the progress of the project to the company's central logistics management.
Obvious potential, such as bundling goods movements, avoiding empty runs and adjusting shift schedules and times, quickly led to significant savings and improved efficiency. The gradual introduction of a digital solution to control processes in the hub also made a significant contribution to this.
Logistics quality improved and logistics costs reduced by two million euros per year
In total, the interim manager's suggestions for improvement made a significant contribution to reducing logistics costs by two million euros per year. For example, the bundling of plant deliveries and better utilization of loading units and containers reduced transport costs by 34 percent. In negotiations with suppliers and through a bonus-malus system for delivery quality, the interim manager was able to successfully implement further potential savings.
By dispensing with temporary workers, new shift models and the internal transfer of employees with the consent of the works council, personnel changes were implemented quietly. A clear allocation of tasks measurably and visibly improved employee motivation and efficiency.
The introduction of a scanner system and the optimization of internal transport routes and space utilization led to an acceleration of processes and thus to a reduction in personnel and operating costs.
The client was so impressed by the interim manager's performance in this six-month mandate that he commissioned him for further projects at the automotive supplier.
