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3PL supplier delivers parts lineside

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THIRD party logistics have reached a new level locally, with the lineside delivery of production parts for the new Mitsubishi 380.

In an Australian first, Mitsubishi Motors Australia Limited (MMAL) has outsourced all its material logistics management.

The move has enabled the car maker to track and sequence every part of its new car from suppliers, locally and globally, right up to alongside MMAL’s Tonsley Park production line.

The new logistics control centre, established and operated by TNT Logistics (TNTL), is expected to offer the car maker significant productivity benefits.

Howard Critchley, TNTL’s local managing director said the control centre has three main functions, “It receives products in a sequenced manner, it then stages those products into a manner ready to be fed to the production line, and then feeds the products to lineside.

“The centre only delivers required parts, in some instances only one or two parts at a time, when needed, thereby minimising delivery of parts to the production line and minimising storage.

“It also provides instant visibility of production levels of downstream supply issues enabling contingency planning and optimising of management resources by assigning production staff based on product availability and immediate task needs.

However Critchley admits, getting TNTL’s staff lineside was not without problems. “The unions took some convincing, however in the end, it has been a collaborative effort between management and operational staff.

“Breaking these boundaries and delivering a specific logistical solution on the client’s site is a first in Australia’s automotive industry, and is set to revolutionise this sector with increased productivity across the board.

“The strength of this partnership and innovative solution is an example of forward thinking and commercial acumen combined with flexible workplace relations, all essential factors to sustain Australia’s economic performance in an increasingly globalised economy.

“The system will give MMAL an early warning of supply problems of close to 2000 parts. Previously it was just a matter of hours now it will be two and half days.

“Logistics management is a key element of manufacturing but Australian businesses need to concentrate more on core manufacturing competencies and assign logistics management to third party experts,” said Critchley.

MMAL president & CEO (at the time), Tom Phillips, agreed saying the company’s decision to engage TNTL as a partner to manage its material logistics is an important element of MMAL's overall manufacturing strategy for the 380.

“With the new control centre, parts shortages are eliminated from our production process, which in turn will result in no requirement for post production rectification and therefore a better quality product.

“This is the first deep and more sophisticated relationship between OEMs and suppliers which Mitsubishi sees as essential for the future of the automotive industry in Australia,” Phillips said.

Phil Saloniklis, MMAL manager, production control-operations, said the major benefit of the new system is transparency in the supply chain.

“We still control the level of inventory we wish to hold. Initially we have set it at 3 to 5 days for this project, while we launch. We will then review the levels and slowly wind them down.

“We now have complete transparency from within the suppliers to line side, which we never had before. Suppliers are obliged to tell us the day before what they are about to send us.

“The first six weeks of their schedule shows daily deliveries, then after that monthly buckets for twelve months, so they can forecast their requirements.

“As well transparency of the complete supply chain, we have been able to pull inventory back from the production line.

“Now we can see what is line side, what is stored here, what’s in transit, and what’s at the vendor.

“Previously we had no visibility. We knew we had parts, but did not know where they were, could be line side, could be at the dock, we just knew it was here.

“There will be a lot of costs sucked out once we get up to the 170 volume and stabilise the build. That figure could go higher.

“The system itself has also led to labour efficiencies within the plant. Logistics is any easy business if you have good systems. And systems govern everything, when the parts are required, what to build,” Saloniklis said.

TNTL’s US-developed Matrix, PSS11, E-line, WIMS and PARTS software systems are used to manage the complexity of MMAL’s supply chain, which is already used by other car makers in the US and Europe.

Saloniklis said in the past, “If someone couldn’t supply, we didn’t know our true position on that particular commodity.

“Now with increased visibility, we now know what is sitting at the supplier and what the true impact will be. If for example blue seats are not available, we can switch our build around to allow the line to run further, and not build those cars for a while.

“This will reduce the amount of costly rectification work. We can manipulate our build, for a seamless manufacturing operation,” Saloniklis said.

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