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2 [ AFRICA AMERICAS ASIA EUROPE OCEANIA ] HANDLE WITH CARE TEXT AND PHOTOS: VESA ESKOLA When you ve supplied as much equipment for as many years as Wärtsilä, the number of components and parts in operation at any given moment is of course of staggering dimensions. When centralising the logistics for all those parts you also need a state-of -the art warehouse with an inventory of 180,000 different parts Twentyfour7. 17

3 MOVING THE PARTS WAS NOT ONLY A MATTER OF LOGISTICS BUT A MASSIVE CHANGE MANAGEMENT EXERCISE 18 Twentyfour

4 If the right-sized box doesn t exist, there is a carpentry shop. [Left and opposite] It is mid-december The Wärtsilä Central Distribution Centre (CDC) in Kampen, the Netherlands was inaugurated just over a month ago. For a year before, it had been steadily taking delivery of parts from nine existing warehouses, each handling a specific product line. SOMETHING OLD, SOMETHING NEW To centralise Wärtsilä logistics in one place is the same challenge as moving house. Only the scale is different. The CDC is Wärtsilä s biggest single investment ever. First you make an inventory. Then you try to predict what you ll need. There are quite a few ships sailing the world s seas with a Wärtsilä engine, and not all those ships are new. A spare part for something built 50 years ago? You never know when it might come in handy This was the scale of the challenge in moving Wärtsilä s entire parts inventory under one roof. Moving the parts was not only a matter of logistics but a massive change management exercise, as Petteri Saares, manager of the 24/7 Parts Programme explains: Before the parts could be moved, all the organizations in each of the eight countries involved had to be fully prepared to use the new CDC. This was a massive exercise in new responsibilities and ways of working. In Finland, where about half of the parts volume was, the physical move lasted around three months, but the preceding change management activities took almost nine months. The move itself was organized around product families. By moving the inventory one family at a time, Wärtsilä s capability in ongoing deliveries was never disrupted. The CDC also stocked up on some fast-moving parts prior to the move, to ensure availability. To organise everything, two aspects had to be taken into account, Saares continues. We needed to separate the physical move and the change management. The move had a direct impact on about 500 employees in seven countries. The actual warehouse work was carried out by the local warehouses. Data played a big role in the move. In working practices, we needed to create a new process to ensure consistency of planning and availability of data across the different warehouses. Between December 2010 and December 2011 over eight million kilograms of material was moved on 464 trucks around the Europe. Everything had to be monitored and recorded Twentyfour7. 19

5 Tiny sundews abound where the Rhine meets the sea. The CDC is north of the delta. 24/7 Now it s done. Finally the whole inventory is at the CDC, from the tiniest gasket to the giant cylinder liners of two-stroke engines. The parts, the records and the data have been harmonised into one system. Building a state-of-the-art distribution network and centre with such advanced automation was a first-ofa-kind project for Wärtsilä. To have all the parts at one address has obvious advantages, as Carsten Eisenkrämer, Vice President of Wärtsilä Global Logistics Services, points out. The CDC will improve parts availability at all times throughout the world. Centralisation also makes our own operations more efficient. Kampen is an old Hanseatic port, situated on the river Ijssel. The CDC has its own quay. The Ijssel is a branch of the Rhine, so there are excellent routes to the waterways of Europe. In the other direction is the Atlantic Ocean. The CDC at Kampen is also on the European road network. And Schiphol, Amsterdam s international airport, is only 90 minutes away. The CDC is the new heart of parts delivery. Its different logistics chains are its arteries. THE CENTRAL DISTRIBUTION CENTRE IN NUMBERS Inaugurated: 7 November 2011 Plot size: 108,000 m 2 Building area: 37,000 m 2 Lowbay area: 10 m high, 15,000 m 2 Ground storage area: 15 m high, 10,000 m 2 Mini-load area: 20 m high, 2000 m 2 Pallet warehouse: 20 m high, 9000 m 2 Mini-load: 60,000 bins with 152,000 compartments Pallet warehouse: 60,000 pallets Number of different parts: approx. 180,000 Employees: approx. 200 BIG, BIGGER, THE BIGGEST Uilke Bosma, the manager of the Centre, gives us a tour of the facilities. When we were looking for a location, the Netherlands was a natural choice. Kampen is located almost in the centre of our operations. About 70 percent of our spare parts weight is shipped within Europe. Wärtsilä bought an 11-hectare plot, where the Central Distribution Centre was built. The CDC covers an area of 37,000 square meters. If it is impressive outside, it is even more amazing from the inside. There are packets, parcels and crates everywhere. Inside the Centre the scale of things is enormous. Everything is big, except the smallest of the parts, of course. Can you imagine 180,000 different items whirling away from loading bays into the depths of the warehouses and back? Items arriving from suppliers must be unpacked, repacked and stored. Barcodes are scanned. Data is saved. The challenge of packing alone is formidable. The smallest parts are put into plastic sleeves. Larger ones have cardboard boxes. Even bigger parts go into crates. Different parts have different packing instructions. This side up, handle with care, fragile If the right-sized box doesn t exist, there is a carpentry shop. At the moment the CDC employs about 200 people, divided on two shifts plus a small night shift for express deliveries and emergencies. 20 Twentyfour

6 europe and the united states may have their debt crises but china s economy shows little sign of flagging. The Oriental Pearl towers over China s financial and commercial hub in Pudong, Shanghai. [Right] Mitten crabs, the local delicacy. [Below] South Lingyan Road, on Line 6 of the Shanghai metro. Get off here for meat, eggs, vegetables and embroidery in Sanlin Market Twentyfour7. 21

7 DANCE OF PALLETS The CDC is divided into several areas. These include inward and outward bound logistics, a technical quality control sector, heavy goods storage for parts up to 50 tons and automated miniload and pallet high-bay storages. The two automated warehouses are breathtaking. The mini-load storage area alone has 152,000 compartments. The pallet store can hold up to 60,000 pallets. The mini-load and pallet warehouses are 20 metres high and stacked all the way up to the roof. There are millions and millions parts in stock. The pallets are stored and received by constantly moving automated cranes. Only the computer knows where they all are. There are no people present in the mini-load or pallet high-bay storages. There are some 50 kilometres of piping in the CDC and 130 kilometres of cabling. The computer can handle up to 1000 shipments a day. That s almost one for every operational minute of the Centre. The logistics of the CDC were outsourced and implemented by Swisslog, using its own software products and warehouse control systems. The storage floor operations are run by CEVA, one of the world s leading logistics companies. Wärtsilä personnel man the offices, running the Centre together with CEVA. Quality checks of the parts are done by Wärtsilä as is the handling of the more restricted goods. These are counted as core competence services, not to be done by anybody else. The inventory is so large that it would be impossible for an outsider to handle the quality checks. Having all the logistics in one place also has an important impact on quality control. During the average day some 200 parts are inspected by the quality control team. This is part of Wärtsilä s aim to improve its services. The team uses the latest tools, such as for measuring the dimensions of engine parts. BUSY BEE The CDC is busy, never mind where you are, but perhaps the most hectic area is around the unloading and loading areas. During a 24-hour period trucks arrive and leave. There are trucks of several size docked at the bays as we pass through. They are unloaded and loaded by forklifts of various sizes. The smallest of them are motorized pallet jacks, the biggest can lift up to 10 tons. Wares are constantly rolling in and out. A shipment of over 30 crates is heading for Manaus in Brazil. A taxi leaves with an urgent delivery to Amsterdam airport to catch a flight for Asia. Outgoing courier and express shipments can be tracked online. At any given moment the customer can see exactly where his parts are. Because of the CDC, the supply route from the parts supplier to the customer is now much shorter. This is not only more efficient, but also more environmental friendly. Less time on the road means lower emissions. To handle the whole inventory is a challenge, of course. The smallest items weigh only a few grams. To lift the biggest you need one of the two overhead 25-ton cranes. 22 Twentyfour

8 Kampen In each 24-hour period, trucks arrive and leave. Pallets are received and stored by constantly moving automatic cranes. Lifts carry items off into the depths of the CDC. [left] THE CENTRE POINT The Netherlands was a natural location and Kampen is almost in the centre of logistic operations. The warehouse is on the River Ijssel, which connects with the Rhine and the Atlantic. Amsterdam airport is 100 km away Twentyfour7. 23

9 Bright lights on the Nanjing Road, one of Shanghai s busiest shopping streets. 24 Twentyfour

10 PARTS IN STOCK RUN INTO THE MILLIONS. THE COMPUTER KNOWS WHERE EVERYTHING IS Twentyfour7. 25

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12 The biggest parts are stored in the ground storage area, perhaps the calmest place in the whole Centre. It reminds me of the secret government warehouse in the Indiana Jones movie. But here there are no secrets. IMPROVING QUALITY NO SPARE TIME JOB The work to perfect Wärtsilä logistics will not end here, as Benedict König, General Manager of Materials Management, points out. We will take an even stronger customer focus in our operations. This means installing specific resources to serve our key customers. A pilot for this is already running. Based on how it works, we will gradually intensify our operations. The CDC has a key role in customer-focused operations. It not only brings the spare parts inventory under one roof; it also helps Wärtsilä to combine its efforts, Benedict explains. Material Management is an aid to building relationships. It helps us to anticipate future spare parts needs and will also simplify our supplier, sales and purchasing chains. This doesn t happen overnight, of course. As soon as we have reached the right level of performance, we will start to improve lead times and service. All this will help us to achieve excellent customer performance in a cost efficient way. The smallest items weigh a few grams. The biggest need overhead cranes. [Left and top] 1.12 Twentyfour7. 27