Automotive Manufacturer Case Study

Our client is a Chinese owned (Hisense) worldwide automotive component manufacturing company, specialising in compressors (primarily air conditioners) that go into all major car manufacturers vehicles, industrial & heavy machinery.

As part of their operations, our client also has an aftermarket, supplying smaller organisations with vehicle parts to fix vehicles.

Whilst they are Chinese owned (previously Hod in Japan), 70% of their business comes from Europe, with primary operational centres in France, Poland and Sweden.

The Challenge

Our client had several disparate ERP solutions across their locations, that were poorly integrated and causing a few key issues:

ERP system was working separately from each other in every country – this was causing significant inefficiencies
Poor supply chain visibility – resulted in reactive and expensive actions, such as having to air freight parts from the companies’ HQ in Japan to Europe
High levels of manual effort to rekey across the legacy systems

The most complicated part of this problem is the warehouse. Each location worked differently:

Parts from Japan arrive via sea, with a 6-week minimum lead time
The Poland centre is joined to the factory via a conveyor belt, which accepts goods via the interface
French and Swedish warehouses are 3^rd party logistic companies

The clients’ customers work according to Just in Time; therefore, it is vital our client is able to deliver on time. The impact on the customers of not delivering on time is very high and can result in high fines.

Whilst our client managed to meet customer expectations, the effort and cost of doing so was too high.

The Solution and Our Approach

SAP Extended Warehouse Management (EWM) is a module within SAP’s Supply Management suite of solutions. EWM provides flexible, automated support for managing stock movements throughout the warehouse process.

This solution is all real-time, using automotive standards around labelling (ODET) – this basically assigns a globally unique number to a pallet and allows it to be tracked and traced across the supply chain, not just in the warehouse but also in the customer site.

Each site has different requirements and specifications – making the solution easy to use on handheld devices, and ensuring warehouse workers understand quickly what the operations are was essential.

Impacts

Optimised movements in the warehouse to increase efficiencies, minimising time trucks
Managing picking operations to ensure accuracy
Created a perpetual inventory instead of an annual stock check – the company does not have to stop production twice a year to do a stock check
The dashboards and warehouse monitors visualise the activities in the warehouse – these are system-guided, but these can be tweaked and priorities changed
Batch and serial number tracking implemented in case of issues and failure – it is important to ensure what stock was bonded, track and trace from country of operation, and give some customers any additional customs documentation
OEM and aftermarket maintain the same space, increasing warehouse efficiency and space optimisation. SAP segregates where stock is and should be, the owner and the location before the stock can go missing.