Automotive Logistics Europe Conference Connecting a
Greater Europe ALTAN AYTAÇ Supply Chain Director, TOFAŞ – FIAT Turkey Mar.1st, 2012

Agenda

•  Turkish Automotive Industry –  Current Situation & Potentials

•  •  •  • 

Tofaş – Facts & Figures Markets – Need for Flexibility Challenges Ahead The Agility Model –  Dynamic Planning –  Capacity Management –  SC Design

•  Conclusion

Evolution of MVI in Turkey 1960-1970

License

ASSEMBLY

1971-1980

Protected Market

DEVELOPMENT OF COMPONENT IND.

1981-1990

INCREASE IN CAPACITY

1991-1995

EU/TR Customs Union Free Market Global Competition

Localization

Modernization

UP-TO-DATE MODEL EXPORT

1996-2000

Up-to-date Model

FULL INTEGRATION MANUFACTURING BASE

2001-…..

Transition Period

Entrance of Toyota, Honda, Hyundai

Research & Development, Design & Technology Management, Intellectual & Industrial Property

TARGET FOR NEAR FUTURE : CENTER of EXCELLENCE

Turkey as an Automotive Production Base

KARSAN TOFAŞ ISTANBUL ISTANBUL IZMIT

RENAULT

BURSA

ADAPAZARI

Automotive Industry – Turkey Production & Exports 5th in EU

TRIBUTE TO TURKISH AUTO INDUSTRY Renault Clio Oyak / Renault Bursa Plant Ford Transit Connect İzmit Plant

Fiat Fiorino/Peugeot Bipper/Citroën Bipper (Tofaş Bursa Plant)

2001

2003

2006

2007

2009

Ford Transit İzmit Plant

Fiat Doblò Tofaş Bursa Plant

Ford Transit İzmit Plant

2011

Fiat New Doblò (Tofaş Bursa Plant)

Global Production 1995-2011 and Future

LMC / OICA

Changes by Regions 2024 / 2008

Production Moves From West To East & North To South J.D.POWER / OICA

BRICT ?

2,000 1,094 x2

Direct employment of 600.000 people Total export of $50 billion With an additional investment of $ 5 billion

Cars + LCV Market Evolution

The Automotive Market is an Unsaturated One

Potential for Rapid Growth

•  Growing Country •  Growing Industry •  Speed of Change •  Quality Labor •  Quality Supplier Base •  Strong Ramp-up Ability

Logistics Infrastructure Evaluation

Logistics Performance Index •  LPI

3.22

39th

•  Customs •  Infrastructure •  International Shipments •  Logistics Competence •  Tracking & Tracing •  Timeliness

2.82 3.08 3.15 3.23 3.09 3.94

46th 39th 44th 37th 56th 31st World Bank 2010

Agenda

•  •  •  •  • 

Turkish Automotive Industry Tofaş – Facts & Figures Markets – Need for Flexibility Challenges Ahead Agility Model –  Dynamic Planning –  Capacity Management –  SC Design

•  Conclusion

TOFAŞ – Facts & Figures

•  Established in Oct.1968 •  Production start in Feb.1971 •  JV btw Fiat Auto S.P.A. & Koç Holding A.Ş. •  Established prod.capacity : 400.000 units •  7500 employees •  Production for 5 brands •  Sales of 6 brands

TOFAŞ – Facts & Figures 2011

•  308.000 units produced (CBU+SKD+CKD) •  $ 2.5b exports •  Turkish market sales 130.000 units (15% m.s.) •  New Doblò – Van of the Year •  CSI +3% yoy

Local Suppliers 75% by part number 160 Local Suppliers

VOLUME (m3) < 100 KM

% of suppliers

87%

43%

> 100 KM

< 200 KM

1%

3%

> 200 KM

< 500 KM

12%

53%

0.1%

1%

> 500 KM

2.2 million m3 Milkrun 2 million m3 JIS/JIT

Global Suppliers Poland 26%   



France 7% Spain 2%

 



Italy 56%

Brazil 1%

Others 4%

Agenda

•  •  •  •  • 

Turkish Automotive Industry Tofaş – Facts & Figures Markets – Need for Flexibility Challenges Ahead Agility Model –  Dynamic Planning –  Capacity Management –  SC Design

•  Conclusion

Markets, Europe – E27+EFTA

+7% -5%

+9%

-2% -4%

-4%

-1% -4%

-3%

Markets, Europe – P.Cars + LCV

  


 
!

  








+20%




-5%

+37% +7%




-22%




+59%

+13%

-17%

-14%

+49%




-24%





































B: Budget R: Realized

Seasonally Adjusted Annual Market Trend – 2011  
 




 






















 






 





















 
 















 









 








Agenda

•  •  •  •  •  • 

Turkish Automotive Industry Tofaş – Facts & Figures Markets – Need for Flexibility Potential of Turkey & Logistics Needs Challenges Ahead Agility Model –  Dynamic Planning –  SC Design

•  Conclusion

Main Challenges

•  Demand Volatility / The Downturn •  Macroeconomics – Trade Deficit in Turkey •  The Capacity Issue •  New Investment Decisions – Risk factor •  Reducing the Costs •  Design – Product, Production, and Supply Chain •  Climate Change •  Oil Price Increases •  Heavy Legislation

Agenda

•  •  •  •  • 

Turkish Automotive Industry Tofaş – Facts & Figures Markets – Need for Flexibility Challenges Ahead Agility Model –  Dynamic Planning –  Capacity Management –  SC Design

•  Conclusion

Who
s First?

•  Production rules or Sales leads •  Organizational Gaps •  Who
s driving the decision? •  At what Cost?

 
3


 


 


3


&$

)##,



+
$")&
&$&0)#%


#&,.
"!%&$!&%/


$$%.
$*%"!%
1 2
*$,
)%



 
  



3
.
"$%&%



)##,
3
 !

! !&


$")'"!
!.


&$
)##,.


 


*&,
1&"0)"&2

%
.


3
$&%



 
  


+
")$!%1
%!2
4
'"!%#%.
"!&$&%


$$%.






  


 



Dynamic Demand Planning •  Generating Data, Following Inputs •  •  •  •  • 

Marketing & Sales Coordination - Previsions Management Sales and stock information Order collection performance Macroeconomics Legislation

•  Continuous Planning, Many Scenarios •  Sensitivity Analysis •  What if scenarios?

•  Financial Evaluation •  Stocks (buffer?) •  Alternative or Premium Transportation

Capacity Management •  Production Flexibility •  Capacity moves •  Calendar management •  Exports / Local Market balance •  Outsourcing / Insourcing

•  Suppliers Integration •  Supplier Logistics Engineering •  Supplier Relations

•  Risk Management

Alternative Transportation •  Ability to switch •  Reliable partners in process •  Contract management

POLAND

FRANCE

ITALY

SC Design – Sourcing

•  Logistics Cost Engineering in Advance (ALCE) •  Globalization / Localization •  Cost of Logistics – ok •  Cost of flexibility / risk – ? •  Premium transportation •  Buffer stocks •  Obsolete risk

SC Design – Managing Variety •  Reduce the Variety for Flexibility •  Finished Goods Rationalization •  Parts Unification

•  Design for Flexibility •  Early Equipment Management

•  Marketing for Flexibility

Final Cut

•  Things Change Fast •  Supply Chain Organization for Sustainable and Agile Logistics • 
Life is a Delicate Equilibrium