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Mercedes-Benz sets course for growth and efficiency in global logistics 16 July 2015

Consolidation Centre plays key role in strategy

The next step in the strategic realignment of Mercedes-Benz Cars focuses on worldwide logistics, taking central responsibility for efficient and flexible management, with several hundred million euros to be invested in the strategic realignment of logistics operations. Logistics plays a key role in the Company’s success. Its objective is to gear the Supply Chain Management organisation towards growth and to make it even more efficient and flexible, the next logical step in the Company’s global production strategy.

By reducing logistics costs per vehicle, the manufacturer will improve its competitiveness since logistics has a major impact on the Company’s overall cost position.

In line with the Mercedes-Benz 2020 growth strategy, Mercedes-Benz Cars is expanding its global production and supplier network close to customers and markets. The increasingly complex incoming production material flows at Mercedes-Benz plants and the transport of newly manufactured vehicles from production facilities will be centrally managed in an even more efficient and flexible manner.

The focus will be on securing the supply of materials in the global production networks, reducing inventories, ensuring on-time deliveries of new vehicles to customers around the world, and incorporating the logistics organisation into the continuous advancement of the global production network at an early stage.

The new strategic approach for the Supply Chain Management organisation was presented at the grand opening of the new Mercedes-Benz Consolidation Centre in Speyer in the Southwest of Germany. Such consolidation centres play an important role in Mercedes-Benz Cars’ logistics strategy in terms of ensuring the supply of materials used at the division’s plants around the world.

The global Supply Chain Management unit has been integrated into the central production organisation at Mercedes-Benz Cars (MO). It reports directly to Divisional Board member Markus Schäfer and is managed by Alexander Koesling, Head of Supply Chain Management at Mercedes-Benz Cars.

The unit’s responsibilities include planning and managing the global production programme; ensuring the production capability of Mercedes-Benz Cars locations through the delivery of required materials, including on-time deliveries of supplied parts and components from suppliers and MBC facilities to the target plants (inbound logistics); securing the supply of materials and material flows to the stations where the parts and components are installed within Mercedes-Benz Cars vehicle and powertrain plants (intralogistics); and managing the global transport of new vehicles from manufacturing plants to customers around the world (outbound logistics).

The Supply Chain Management organisation at Mercedes-Benz Cars directly employs nearly 7,500 men and women, as well as numerous service providers for logistics and transport.

In terms of inbound logistics the planned increase of unit volumes at Mercedes-Benz Cars will lead to a significant expansion of merchandise flows throughout the global production network, especially at plants outside of Germany. The increasing product complexity resulting from a larger number of engine versions and personal customisation options, for example, are putting an additional strain on logistics operations. The new Consolidation Centre in Speyer represents a perfect example of a strategic investment in a new facility operated by highly specialised logistics service providers. These providers will consolidate supplier shipments in an optimal manner to ensure deliveries to the three major Mercedes-Benz Cars plants abroad, in China, the US, and South Africa. The setup of similar consolidation centres in the upcoming years is being considered, especially in growth regions like China and NAFTA. This new strategic approach is a result of the growing demand for local suppliers in these regions and the increasingly strategic employment of regional suppliers for global deliveries of production materials.

Measures related to intralogistics focus on the intelligent optimisation of material flows in production plants, from material deliveries to component installation in vehicles. Such optimisation begins at an early stage with logistics and load carrier planning, which have a major impact on inbound logistics freight costs. The continual modularisation and standardisation of production processes is accompanied by the use of state-of-the-art digital transformation approaches resulting from Industry 4.0. These include wireless real time monitoring of materials and empty packaging, support from big data cockpits for the planning, monitoring and control of processes, and largely automated driverless transport systems. The Mercedes-Benz plant in Kecskemet, Hungary, for example, is currently implementing a pioneering project in which materials used in the final assembly area are exclusively brought to the line in pre-packaged baskets by driverless transportation systems (DTSs). This not only eliminates the need for workers to go get the materials themselves: A look into the baskets is sufficient to determine if all components have been installed, yet another simple and effective way to improve quality assurance.

Activities in the area of outbound logistics revolve around the realignment of the global transport network in order to prepare it for the significant increase in unit volumes at plants around the world, and thus ensure the flexible, damage-free, and efficient delivery of vehicles to customers everywhere. A key strategic project in this area was recently given the green light. It involves the construction of a new network hub at a port in the Adriatic Sea that will be used to ship vehicles to Asia. Other measures include the systematic use and further development of a reference calculation method for the allocation of transportation services, much in the same way this has been done successfully with production material procurement.

The new Consolidation Centre in Speyer consolidates production materials from European suppliers and initiates the transportation to the major car production plants operated abroad by Mercedes-Benz in China, the US, and South Africa. A total of approximately €90.0 million was invested in the facility, which is now being gradually brought up to full capacity. When it becomes fully operational in 2016, the centre will ship several hundred sea containers every week via inland waterways or rail to Antwerp and Bremerhaven, where they will be loaded onto freighters and transported to Beijing (China), Tuscaloosa (US), and East London (South Africa).

Up until now, logistics service providers in Bremen were solely responsible for managing shipments of materials from German and European suppliers to the major Mercedes-Benz plants abroad. Thanks to the new consolidation centre in south-western Germany, deliveries from European suppliers south of the Main River will no longer have to be shipped over long distances, which will significantly reduce the logistics costs. This, along with the direct links between the centre and the ports via inland waterways and rail lines, will lower relevant CO2 emissions by more than 25.0%. After intense examination, Daimler chose Speyer for the new centre because of the available space and the geographic location.

The Consolidation Centre Speyer was planned according to the requirements of Mercedes-Benz Cars and designed in a way that ensures all processes can be carried out very efficiently and safely, for example, by keeping pedestrians, trucks, and reach stackers (vehicles for loading and unloading containers) separate from one another. The centre, which is located at a site with a total area of 251,000 m2, extends over a distance of one kilometre and has around 79,000 m2 of hall space. In addition, the centre includes a roughly 21,000 m2 container yard and an administrative building.

A team from Mercedes-Benz Cars Supply Chain Management is responsible for the overall operation of the facility. The operational logistics at the Consolidation Centre, the transshipment of supplier materials from trucks to containers, is managed by the global logistics company syncreon, which employs around 400 people in its onsite operational material transshipment and administrative units. The specialist transport company Contargo, in turn, is responsible for transferring sea containers to trucks and then transporting the containers to inland waterway or rail transshipment centres.