A World of Ideas

July 1, 2001
Automotive companies in the U.S. and Europe share ideas on the best material handling technologies and methods.

A World of Ideas

Automotive companies in the U.S. and Europe share ideas on the best material handling techniques.

by Leslie Langnau, senior technical editor

For U.S. automakers, and their suppliers, the cost squeeze is on. Even though this year is shaping up to be the third best year in sales revenue the automakers have ever had, profits are down. Thus, shaving even a few cents off assembly and material handling costs adds up to big savings. For example, a recent edition of the Wall Street Journal noted that manufacturing processes cost Ford Motor Co. about $20 billion annually. Reducing that cost by just 4 percent will save about $800 million.

Trimming costs and driving up profits for shareholders has leveled the automotive playing field. As U.S. car-makers build plants in Europe, they find cost-cutting solutions to problems occurring in the States. Likewise, European automakers see interesting techniques in their U.S. satellites. The newest competitive edge is how much cost you can cut out, and all information exchange that helps reduce those costs is fair game in the global automotive industry.

DaimlerChrysler, for example, found expertise on container handling in Europe. “We’ve looked at the container management system of our Mercedes Benz counterparts,” said Jim Terry, senior manager, corporate material handling engineering. “We’ve not grown up with returnable containers like European companies. But with our change to small lot containers, we learned how they handled them and improved our system.”

Europe, on the other hand, is looking closely at the U.S. models on fast delivery. “The U.S. goal of delivering a car in a few days has recently become relevant to Europe,” said Uwe Eckart, president, Swisslog Automotive. “Part of the reason it took a while to reach here is because the variety of individual equipment within each car is high, whereas ‘standard equipped’ cars are more common in North America and Asia.

“We expect the individuality of car equipment to grow in North America and delivery times to shrink in Europe,” continued Eckart. “This means — for both continents — that the improvement in supply chain management has to be tremendous.”

Other areas of common interest include lean manufacturing, improving forecasting and inventory control, simplifying material handling equipment and processes, and developing “supplier parks.”

The skinny on lean manufacturing

Toyota developed a highly disciplined approach to production that requires strict scheduling, assembly of small-batches and the use of low-cost flexible machines. To meet the goal of “producing vehicles with one-third the defects of mass-produced cars using half the factory space, half the capital and half the engineering time,” companies must find the most efficient way to do a task. Reasoning such as “We’ve always done it this way,” and “I want to do it that way,” no longer count when it comes to finding this efficiency.

As can be expected, this approach often causes friction with U.S. employees. Thus, each of the U.S. automakers is at a different stage in implementing lean manufacturing. Work still needs to be done in forecasting, inventory control and supplier relationships.

Contributing to the forecasting and inventory problems, though, is the current consumer-buying slump. Sales were down about seven percent in April, plus, U.S. consumers were buying more foreign cars, forcing automakers to offer heavy discounts to move cars off dealer lots. “Which,” says John Costanza, an expert in demand-based manufacturing, “can be attributed directly to antiquated methods of forecasting and fixed-volume manufacturing.”

Costanza went on to say that automakers must revamp production methods to be responsive to actual customer demand. They must stop looking too far into the future, which results in the assembly of unwanted products and large finished goods inventories. Today, automakers have all the manufacturing technology and communications tools they need to build cars closer to customer demand.

“Europe doesn’t have the same problem with buffer stocks that the U.S. has,” added Rick Diefenderfer, senior director of customer development, Exel. “U.S. logistics often forces buffer stock, but that is changing as logistics improves.”

Simple is in

“There’s a new set of customer directives with the auto companies, now that money has gotten tight,” said Tony Rosati, vice president, Dearborn Mid-West Conveyor. The auto companies are examining every component in material handling systems, looking for ways to cut costs.

“Mercedes, for example, recently wanted to know the price of each individual conveyor component,” he added. “This is relatively new. But everyone is trying to figure out the best way to buy things. As the economy gets tighter, people try to control the bucks more.”

The cost of material handling systems has risen over the last five years, much of it due to more stringent specifications for safety and ergonomic concerns. “For our customers,” continued Rosati, “we’re looking at the conveyor safety equipment, the on-site safety requirements needed when we install systems, the conveyor controls, the factory information systems now integrated into the conveyor systems and training requirements. These features are nice to have but are they really needed now that they’ve driven up the costs? These are issues the automotive companies are exploring.”

Many of these added features were mandated by the government; others were required by labor unions. But the automakers’ decisions on whether they will still need these features will have a tremendous impact on material handling OEMs.

Inside changes

Several U.S. automakers are taking advantage of the methods European companies use to move material. “Historically, we’ve done a good job of pulling parts from our suppliers to our plants,” said Terry. “But we’ve needed to work on handling parts once they were in our facilities. So we’re minimizing non-value added activities within an operator’s scope. For example, we’re reducing or eliminating walk time to get parts, opening, emptying and stacking boxes, having an operator move material into or out of his area, and so on. We’ve also shrunk the size of the workstation. Anything that doesn’t facilitate putting a part on a vehicle, we tried to eliminate.

“Because of the shrunken workstation, we bring in smaller packages and quantities of parts,” continued Terry. “We’ve introduced the small-lot containerization process, which lets us bring in just hours’ worth of material. We now use a line-feed roller rack setup where material slides down to the station. All of this has allowed us to increase production at our facilities without adding square footage. Our new facility in Toledo, Ohio, for example, is one of the smallest plants we have. We’re producing 800 units a day there.”

European practices are also influencing the selection of material handling equipment. “We look for simpler ways to perform,” continued Terry. “For example, we’ll let gravity do the work rather than use an electronic or air-driven system to move material. We also plan to standardize on the type of equipment that’s in all DaimlerChrysler facilities.”

Terry also has plans to reduce the use of lift trucks to deliver parts to operators. “One of our biggest concerns with lift trucks is safety,” he said. “They are 13,000-pound pieces of equipment moving around human beings, and it’s too easy for someone to just step in front of one. So, we’re working on delivering parts with AGVs, carts and tuggers, and using lift trucks for unloading and perimeter storage functions. Plus, since we use small-lot containers, we don’t really need lift trucks to deliver parts to operators.”

Newer hardware

Conveyor equipment that uses belt technology is popular in Europe and is finding its way to the States. “In some applications, it can reduce material handling costs by 20 percent to 30 percent,” said Al Betz, vice president, Eisenmann. And electric monorail systems continue to find more application in the U.S., based on their success overseas. The latest trend in Europe is to combine EMS with skillet conveyors.

One of the more interesting trends in Europe, which may find its way here, is the use of “supplier parks.” Several automotive companies have their suppliers build plants right on the automaker’s premises. Eisenmann, for example, has been involved in such an endeavor. “We’ve built a ‘supplier bridge,’” continued Betz. “We take our conveyors into the satellite factory and bring the parts directly into the assembly line.”

The bridge is like an elevated tunnel. The benefits include reduced work in process and storage because certain key components are made right next door. MHM

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