Jaguar Sprints Forward

Transcription

1 Case Study Jaguar Sprints Forward Company Jaguar Cars Ltd / NYK Logistics (UK) Manufacturing and Retail Ltd Location: Halewood, Merseyside Fleet: Accessible Fleet Pool of 400

2 Disclaimer: While the Department for Transport (DfT) has made every effort to ensure the information in this document is accurate, DfT does not guarantee the accuracy, completeness or usefulness of that information; and it cannot accept liability for any loss or damages of any kind resulting from reliance on the information or guidance this document contains. This publication has been reproduced by Freight Best Practice and the information contained within was accurate at the date of initial publication (2004).

3 1 Introduction Manufacturers such as Jaguar Cars Ltd receive numerous deliveries from a range of different suppliers each day. Significant cost and environmental benefits can however be achieved by altering their logistics systems. This is possible by proactively managing transport from suppliers rather than allowing deliveries to be supplier-led. This operational change has already been implemented with huge success in an automotive contract between Jaguar and NYK Logistics (UK) Manufacturing & Retail Ltd. After a tender process, the contract for a new logistics system for Jaguar s Halewood operations was awarded in August 2000 to NYK Logistics, part of the Japanese NYK Group. Whereas suppliers were previously responsible for arranging the delivery of components into Halewood, NYK Logistics now manages the entire process of collecting components from the suppliers and delivering into Halewood. Delivery by NYK Logistics does not end in a vehicle park or warehouse, but goes right through to the production line. Within Halewood there are 90 delivery routes to the point where the component is fitted. The new system gave Jaguar the opportunity to reengineer its supply chain from a demand push situation to a lean system where the supply chain pulls product in. NYK Logistics is fully integrated with Jaguar and its computer systems, and is seen as a full partner rather than just a supplier. Changes at Halewood The Halewood plant was built in 1963 and had been a production facility for many Ford models, most recently the Ford Escort. Jaguar, which is part of the Ford-owned Premier Automotive Group, took over operational responsibility for Halewood in 1998 and Escort production was phased out during the summer of Moving from the principles used to manufacture Ford Escorts to those adopted for the Jaguar X-TYPE demanded both a physical and a cultural revolution at Halewood. The fundamental process change for the production of the Jaguar X-TYPE was the creation of a supply chain capable of supporting lean manufacturing processes. These use just-in-time principles. This ensures that production materials are received, where and when they are required, in the right quantities. Minimum inventory levels and short leadtimes are key factors in the process, together with reductions in handling, improved quality and quick response to change. The introduction of lean manufacturing at Halewood required collection of components from suppliers. These were delivered (as required) to the point on the assembly line where they are fitted, in a disciplined low-cost process. Jaguar continually seeks to minimise any adverse impacts on the local community from its operations at Halewood. A new railhead, which opened in May 2001 to transport the finished vehicles, offers environmental as well as logistical benefits. It allows 70% of X-TYPEs to be shipped from Halewood by rail, removing over 45,000 lorry journeys from the road (equating to a reduction of 8.7 million road miles every year). Vehicles destined for markets outside Europe are transported by rail to Southampton and are then shipped to their final market. Vehicles bound for continental Europe are taken by rail through the Channel Tunnel to the Volvo terminal at Esdic in Belguim. Tips Deliver components direct to the point where they are to be fitted to save money and reduce vehicle movements Clearly define roles and responsibilities and adopt a no blame culture Streamline your organisation s logistics operation 1

4 2 NYK Logistics Operations The new supply chain system was designed and implemented by Jaguar in partnership with NYK Logistics over a period of six months. The redesigned supply chain had to fit within the overall framework of Ford s global manufacturing methodology, the Ford Production System, and the required high frequency replenishment and sequenced deliveries to the production line in precise time windows. An orderly phasing out of production of the Ford Escort van also had to be sustained during the transition to lean manufacturing at Halewood and the critical preproduction phase of the X-TYPE. Jaguar expects NYK Logistics and its other lead logistics providers to: Minimise transit times Minimise the inventory in the transit pipeline Provide on-time and scheduled shipments that are damage-free Reduce total costs The aim is continuous improvement of timed delivery, quality of service and total cost. Delivery of the right part to the right place at the right time is vital, as is process identification, definition and control. Service levels of 100% are expected. The successful implementation has been due to clear definitions of roles and responsibilities, with a no blame culture and close communication. NYK Logistics functions as an integral part of Jaguar Materials Planning and Logistics; it attends internal meetings and represents Jaguar at meetings with suppliers and other service providers across Europe. NYK Logistics sets collection frequencies with Jaguar and schedules collections from suppliers such that components arrive to ensure a predictable supply for the production line. Components become usable stock by being checked, entered onto the Halewood computer system, stored (for a very short time) and delivered to the correct point on the production line. The first Jaguar employee to handle the component is the operator who fits it to the vehicle on the production line. The NYK Logistics strategy for delivery from component vendor to point-of-fit at Halewood includes: Europe-wide supply chain with NYK Logistics procuring transport on behalf of Jaguar Collection of 1,500 different parts from 212 separate vendors (100 in the UK and 112 in continental Europe), with 25% of vendors providing parts already sequenced At least weekly collection (37% of collections are collected on a per shift basis, 31% on a daily basis, 27% two or three times per week and 5% on a weekly basis) Between 80 and 100 scheduled truck arrivals per day (75% are for immediate live unloading, of which 58% are full loads, 30% are regular milk runs and 12% are consolidated loads that are cross-docked by NYK Logistics and its sister partners in the NYK Group and by third parties at European distribution centres) Table 1 Roles and Responsibilities of NYK Logistics Inbound Logistics Europe-wide collections from suppliers Sequenced and second tier supply (i.e. from primary suppliers own sub-contractors) Scheduled delivery into plant Issue of documentation Maximised vehicle utilisation Minimised lead time Internal Logistics 1 Receiving goods Management of market places (short-term stockholding areas) Line feed (i.e. production line supply) and sequenced delivery to the point where components are fitted Control of systems Outbound Logistics Return of packaging to all UK suppliers Return of bespoke packaging to Europe Return of rejected parts to suppliers 1 Covers all aspects of the Materials Planning and Logistics Department within the trim and final assembly area. 2

5 Shared strategies and applications across the operation include: Risk assessments and root cause analysis Shop floor metrics and reporting Trade union and worker representation Continuous improvement Specialist expertise for specific projects is drawn from both companies. 3 Benefits The revolutionary supply chain has delivered massive efficiencies and significant improvements in vehicle utilisation, with associated cost and environmental benefits, examples of which are: Minimum fill target of 85% Accurate collections with load checks undertaken by NYK Logistics before departure from suppliers premises Internal supply chain with 90 internal delivery routes to the point where components are to be fitted within the Halewood factory Two-hour line-side stock policy (i.e. sufficient stock beside the production line for two hours activity) with a two-hour replenishment Management of line-side stock Management of empty packaging Improve operational efficiency Track and trace visibility throughout the supply chain To support the operation, NYK Logistics has over 200 employees working at Halewood, excluding drivers. NYK Logistics and its sub-contractors operate transport in the UK, while NYK Logistics partners move the goods in continental Europe. The result is a lean, efficient supply chain that is a huge improvement on the more traditional model, in terms of operational efficiencies and energy savings. The commercial relationship between the two companies is flexible and is overseen by a Joint Steering Group. Payment is based on the number of cars produced rather than the traditional payment methods common to other industries. 3 Reduced stockholding. The increased efficiencies have resulted in a 55% reduction (over three years) in stockholding at Halewood Table 2 Halewood 3 Year Stockholding Reduction Stockholding reduction Index budget budget budget 65 Target for year end Internal performance indicator Reduced waiting time delays. Without the changes to the supply chain, there would have been 340 unscheduled vehicle arrivals per day and five-hour waits to offload at Halewood. Jaguar currently receives arrivals each day - a reduction of 71-77%. Deliveries are planned within 30 minute windows, with a maximum waiting time of 30 minutes either side of this time window. Waiting time delays have, therefore, fallen by 70% Cost savings. In each 24 hour period under the previous system, there would have been a total of 1,700 hours of delay. Now the maximum total is just 135 hours in 24 hours (assuming an average of 90 vehicles with a maximum delivery time of 1.5 hours). Thus, 1,565 hours are saved each day. Assuming that the fixed costs of a 44 tonne articulated vehicle are approximately 25 per hour, then this time saving equates to 39,125 per day. The saving in wasted time is worth 9.08 million per year (based on a five-day working week and a 46.4 working week year)

6 Improved vehicle utilisation. Under the old system, supply chain vehicles were only, on average, 55% full (in volumetric terms). The target fill at the launch of the new system in 2001 was 70%. Levels of greater than 85% are currently being achieved. Vehicle utilisation has, therefore, improved by 55% Reduced mileage. The improvements in vehicle fill have been achieved primarily through intelligent planning and implementation of the collection service from UK vendors. Road miles within the UK have thus fallen significantly. Under the previous system when vendors operated a delivered-in service, the average mileage run by vehicles delivering to Halewood was 102,590 miles per week. This has now dropped to 56,630 miles per week. Based on a 46.4 working week year, this 45% reduction represents 2.13 million road miles per year saved Reduced fuel consumption. The reduced mileage has resulted in a reduction in derv consumption of 22,980 litres per week (assuming an estimated average fuel consumption of 2 miles per litre, approximately 9 MPG). This represents a saving of some 14,940 per week (based on a derv price of 65 pence per litre, excluding VAT) and equates to annual savings of 1,066,270 litres, worth around 693,000 Table 3 Summary of Benefits (per year) Reduction in stock holding 55% Reduction in number of deliveries Reduction in waiting time delays Improvement in vehicle utilisation Reduction in mileage Reduction in CO 2 emissions Reduction in fuel consumption 71-77% 70%, worth 9.08 million 55% 45%, equivalent to 2.13 million miles 2,883 tonnes 1,066,270 litres, worth 693, Assuming a derv price of 65 pence per litre, excluding VAT. Reduced carbon dioxide emissions. The fall in fuel use has resulted in a reduction in carbon dioxide emissions of 2,883 tonnes per year 4 Reduced road traffic. Shipping finished product by rail (two trains per day) has reduced road traffic by an estimated 8.7 million miles per year and significantly improved customer lead times. Assuming that these road miles would have been undertaken by vehicles fitted with a Euro III engine with a fuel consumption of 2 miles per litre, then around 4.35 million litres per year of derv would have been saved. This use would have resulted in carbon dioxide emissions of some 11,700 tonnes per year 4 Conclusion The successful implementation of the new logistics system has supported: A world-class operation capable of building 100,000 cars per year The global launch of the X-TYPE on schedule and within budget Implementation of lean manufacturing at Halewood which has resulted in standardised work, predictable supply, reduced inventory and reduced waste The transformation of the supply chain and manufacturing process from push to pull, improving both visibility and control An increase in production to meet build plan, which was achieved within budget and timescale (initial 2001 build plan achieved at target logistics cost) A culture of cost reduction Final Ford Escort van orders completed and phased out on schedule Reduced site congestion Reduced fuel consumption leading to considerable cost savings and reduced environmental impact 4 Assuming 2.68 kg carbon dioxide emitted per litre derv consumed 4

7 The intelligent collection service used to support Jaguar s Halewood operations now collects material for all Jaguar and Land Rover (also part of the Fordowned Premier Automotive Group) sites from the UK and the continental Europe supply base. The following key principles are applied to all collections: Collection timeslots are generated, checked and then confirmed to the supply base 24 hours in advance of collection each supplier receives reconfirmation of collection intent Collection is made within agreed timeslots Processes such as stop-call-wait (where, for example, the driver stops at the gatehouse, makes a call to despatch and waits to be called forward for loading) ensure that the correct components are collected in the correct quantities (excess shipments are tolerated only in exceptional circumstances) The component supplier issues an electronic confirmation that a collection has taken place Delivery is made to the final production line location within agreed timeslots Application of these principles has ensured that discipline is maintained throughout the supply chains while maximising assets, maintaining inventory at world-class streamlined levels and achieving total lowest cost. NYK s role is to be proactive in taking the lead to initiate changes likely to result in greater efficiencies. There is a constant drive to improve and to innovate due to the flexibility built into the partnership. This does not detract from the need to constantly drive supply chain discipline. This ensures that, as far as possible, the supply chain is standardised and that variability is driven out. The culture is to deliver the expected on time, every time, at the expected levels of quality and cost. Cost and Environmental Benefits at Jaguar Cars Ltd As a cornerstone in Jaguar s growth strategy, significant investment was made at Halewood in preparation for the worldwide launch of the Jaguar X-TYPE in Implementation of best in class logistics was a key part of the transition of Halewood to a centre of lean manufacturing excellence. With a worldwide supply base of over 200 suppliers, it was important to manage the correct balance between cost, quality and critical delivery from a supply chain perspective. Our collaborations with our lead logistics providers NYK Logistics (EU/UK) and F. X. Coughlin (Rest of the World/North America) ensured a seamless launch, full transparency of our supply chain and its associated cost, improvements in service levels and a total cost reduction overall. In addition, associated environmental benefits have been achieved through reductions in traffic and the investment in a railhead for shipments of outbound finished product for efficient delivery to market. Since 2001, logistics operations for Jaguar and Land Rover have been continually improved, learning from the best in class model developed for Halewood. The Halewood plant has continued to retain its leadership in all aspects of lean manufacturing and recently received the highest score in a worldwide audit of Ford-owned assembly plants. Kevin Wall Director of Material Planning and Logistics Jaguar Cars Ltd and Land Rover 5

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