Say Goodbye to Interim Storage

Consignment Storage Facility Photo: Automotive Lighting

This also gave rise to the concept of single-level warehousing at a consignment storage facility, also known as supplier-managed inventory (SMI). This involves the customer establishing a storage location near its plant. The supplier stocks the facility on its own. The parts stored there are owned by the supplier until retrieved by the customer. The supplier receives word of the items withdrawn along with a credit memo through an Electronic Data Interchange (EDI) interface, and then verifies the posting of the memo.

Trucks instead of warehouses

Ninety percent of AL’s customers use its SMI concept. In supplying Daimler and Smart, however, the company is taking things a step further: Instead of a traditional warehouse, AL’s plant facility features a single truck. “We don’t need a buffer anymore; the parts go straight from the production floor to the truck,” says André Nieding, who is responsible for the implementation of new IT processes at AL.

BTC SMI Cockpit – based on SAP

AL came up with this concept during the construction of Daimler’s supplier logistics center in Sindelfingen, Germany. To avoid overstocking the storage location, Daimler set its minimum stock level at just three production days. “In the end, having things just lying around costs money,” says Nieding.

To meet the challenges involved, AL worked with the IT consulting company BTC AG to develop BTC SMI Cockpit (see text box), which is seamlessly integrated into SAP’s software with the automotive add-on DI. With BTC SMI Cockpit, Daimler controls both the supply of its consignment storage facility and the logistics throughout its production locations.

BTC SMI Cockpit

The SAP add-on BTC SMI Cockpit suggests optimal supply quantities and times to suppliers based on the customers’ stock reports. It also recommends minimum and maximum stock levels and generates requirement forecasts. Planners can then modify the proposed quantities and simulate various supply scenarios. They decide whether to include the quantities in single-level warehousing and production planning.

BTC SMI Cockpit increases transparency by visualizing the following elements:

  • The storage facility’s current stock level
  • The parts currently stored on the truck
  • How many headlights Daimler has withdrawn

A traffic light indicates when a value falls below its minimum threshold, enabling the logistics planner to keep the storage facility optimally stocked.

The Daimler subsidiary Smart – which has operated a consignment storage facility at its production location in Hambach, France, since early 2007 – holds its suppliers to even higher standards. For example, Smart entrusts its headlight supplier with all movements between its storage locations up until the assembly line. AL then recalculates its stock levels following all of the parts movements – a task that would be impossible without BTC SMI Cockpit, according to Nieding.

Delivery errors virtually eliminated

In addition to the lower costs its customers enjoy, supplier-controlled warehousing also benefits AL. “Thanks to the high level of transparency, we’ve seen a huge drop in incorrect deliveries,” Nieding reports. He also believes that “our stock levels will be reduced by half over the long term.” Since AL is now responsible for its own delivery planning, there will no longer be any surprises in its orders from Daimler. This will help AL optimize its production based on machine setup times or lot sizes.

BTC SMI Cockpit guarantees planning security

AL customers with smaller, highly variable quantities can also use BTC SMI Cockpit. For example, Decoma – a subsidiary of the automotive supplier Magna Steyr – works with the software to outfit Volkswagen’s minibuses with headlights. Since demand for these tends to fluctuate, the risk of calculation errors is high. AL decided to manage its production with the aid of BTC SMI Cockpit rather than on the basis of its customer’s planned figures, thereby improving its machine capacity utilization and planning security.