Service Parts Distribution Center
Dealer/
Service Station
3
Supply chain management (SCM) is the strategic management tool that coordinates the material and information flows across the value chain to support adaptiveness
Auto Logistics and Supply Chain Management Summit 2003
The Practice of VMI in China
1
Agenda
Our understanding of the automotive logistics needs What is VMI – definition, procedures and benefits Challenges of VMI in China Case study Brief introduction to China Logistics Company
Suppliers
B2B
Manufacturing Direct Delivery
Exchange
Source: Lehman Brothers, A.T. Kearney Analysis
5
Third-party logistics providers (3PLs) can directly, or through a partner network, provide a range of services
Warehousing and Inventory Management
• Overall inventory management • Optimizing supplier order schedules • Optimizing dealer order schedules • Certification of incoming shipments • Bar coding • Performance and exception monitoring and reporting • Tracking and Reporting Systems accessible via Internet • Material Resource Planning
2
understanding of the automotive logistics needs
An automotive OEM’s logistics needs cover both inbound and outbound operations of parts and finished vehicles
Procurement
• Procurement • Payables management • Supplier payment and consolidated invoicing • Vendor performance monitoring and exception
reporting • Joint process improvement with vendors
Manufacturing driven by actual demand
• The rate of manufacture is determined on a real-time basis by the rate of demand
• While this model is more efficient, it requires perfect integration of all logistics operations within one process
Freight and Distribution Coordination
• Overall freight coordination • Full load truck carrying • Less-than-load truck carrying • Small lot (less than 150 pounds) carrying • Order consolidation • Delivery scheduling • Expediting special / rush orders • Returning and reprocessing undeliverable orders • Delivery tracing • Performance and exception monitoring and reporting
Bonded Warehouse for Import Parts
Consolidation and Loading Center
Suppliers
Logistics for Production Parts Logistics for Complete Vehicles
Plant
Dealer
Logistics for Service Parts
4
“Demand-pull” value chain requires the companies to be flexible and able to “control” a large part or the entire supply chain
Suppliers
“Supply-push” Logistics
Demand indirectly drives manufacturing volume through forecasts
Chain
• The rate of supply was set by the
manufacturer in advance, based on
expected demand
• It was the role of the logistics providers to
ensure a just-in-time supply of
Manufacturing Warehouse Wholesale/Retail
components
“Demand-pull” Logistics Chain