TRUE BUSINESS LOGISTICS.
VOLVO LOGISTICS
BUSINESSLIKE LOGISTICS – FROM THEORY TO REALITY. There is frequent discussion on the subject of business logistics. On the importance of logistics systems that support entire business processes and create concrete competitive advantages. So how about experiencing it in practice? We’re talking about meeting everyone’s needs in a large-scale production system, at exactly the right point in time: the manufacturer gets his packaging materials, the fitter his components and, last but not least, the customer his individually tailored vehicle. Volvo Logistics combines unbeatable experience of and knowhow about the automotive industry, with use of the very latest information technology. Together with our customers, we design, operate and develop global logistics systems that create unique preconditions for built-to-order production. It’s your turn to discover True Business Logistics!
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LOGISTICS SPECIALIST WITH AUTO-INDUSTRY EXPERTISE. Volvo Logistics is by no means a conventional logistics company. We work with logistics in the true sense of the word – focused entirely on the automotive industry. The following three points summarise what differentiates us from the other players in the market – the aspects that make us a unique logistics partner.
Unique direction, holistic solution and logical methodology
• ORIGINS AND SPECIALISATION. As a wholly owned subsidiary within the
Volvo Group, we have unbeatable experience and knowledge of the automotive industry. Unlike any other logistics anywhere in the world, we have chosen to specialise in this specific industry.
• COMPREHENSIVE LOGISTICS PACKAGE. We are among the very few players
with all logistics skills – inbound (material supply), outbound (distribution) and emballage (packaging materials) – under one roof. This allows us to deal with the entire chain of efficient flow patterns – from order to delivery – which in turn creates the preconditions for built-to-order production.
• PRODUCT
DEVELOPMENT AND CONTINUOUS IMPROVEMENT. As an organiser of global transportation services, our aim is always to give the customer the most efficient flow system possible. To achieve this, we usually participate at the initial development phase when a new vehicle is in the pipeline. We evaluate and improve all our logistics systems on a continuous basis.
Make logistics a profitable business By examining and integrating our customers’ order, production and delivery functions, they get the lowest possible total cost for logistics. One benefit of total responsibility for logistics is that we can tailor the materials, vehicles, packaging materials and transport systems to each other. One example: when a customer was in the process of developing a new model, we saw that the jacking point attachment was positioned in an unsuitable location, increasing the risk of the vehicle bottoming out and hitting the boarding ramps when embarking and disembarking from transport ferries. As a result, the attachment point was relocated and the customer avoided time-consuming and costly repairs. Another example: we once got the task of reviewing delivery precision, lead times and costs for Volvo Trucks in Brazil. Through a variety of measures, including rescheduling transport routes, cutting out one intermediate storage phase and shipping through one terminal, we streamlined factory delivery procedures and halved the lead times.
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INBOUND
FAST PACE THANKS TO INPUT TIMING. In order to ensure a reliable material flow pattern we participate at an early stage in the design of the logistics system as it relates to the customer’s industrial structure. We support logistics studies to choose suppliers and the logistics work to develop a new product or a production plant. We may also evaluate different material supply scenarios. In connection with the initial studies we design a transport system that meets our stringent demands concerning lead times, delivery precision and – not least – economy. For the actual transport process itself, we only contract the very best hauliers for each particular destination.
Efficient “milk rounds” We work primarily with two types of material flow: full load trailers directly from supplier to factory, and so-called “milk-rounds”. This latter encompasses an organised transport schedule from several suppliers, following a pre-determined route. The material can be routed either direct or via a terminal. At the terminal the goods are sorted for subsequent transport to the relevant destinations. We buy in all the necessary transport services, while operation of the terminal itself is either handled in-house or bought externally.
More than transportation Transport management and traffic development are two important functions. Management means that we monitor all deliveries and ensure that they arrive on time. The development function is all about maintaining and constantly improving the transport systems and operating frameworks for all transportation. In addition, we have an increasing number of supplementary services. These services take over once the transport process itself comes to an end. For instance, we assist customers with warehousing, sequencing, light assembly and goods reception. All to enable customers to focus on their core operations more efficiently than ever before.
The organiser of the future: Atlas One high-priority area is to create a common information base for all material flow patterns globally. In the future, this base will consist of a highly sophisticated IT tool called Atlas (Advanced Total Logistics for Automotive Supply). Atlas will always have updated real-time information about all relevant activities in the material supply process, and will enable us to provide proposals regarding the best transport solution for each individual customer. This will make it a valuable tool in our constant efforts to further improve the delivery precision – from 95 to 98 percent in terms of hourly precision.
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OUTBOUND
SATISFACTION THANKS TO RELIABLE DELIVERIES. Unsurpassed experience and cooperation with customers are the secrets behind our ability to design highly complex and efficient distribution networks the world over. Networks that guarantee that large volumes of customer-tailored vehicles will be delivered on the agreed date, directly to the agreed customer – and without any time-consuming and costly intermediate stops. When it comes to physical transportation, we always utilise the most suitable partner from our global network of first-class hauliers – just as we do in our inbound operations.
Active participation in production development In built-to-order production, every vehicle is unique. If a vehicle is damaged in transit, it is impossible to quickly replace it with a similar one. By participating from the initial product development phase, we ensure the quality of our distribution systems. We can quickly discover and solve any potential transport problems, either by proposing a change to some part or by preparing the hauliers for new equipment requirements.
Unique A4D monitors all deliveries We carry out continuous quality checks at every stage of the distribution chain. All so as to ensure that customers get their vehicles in top condition and at the right time. In order to obtain a better overview and to further streamline our systems, we developed A4D (Applications for Distribution). This is the name of our unique e-business platform that links together and provides current information throughout the order-production-distribution sequence. All global transport paths are integrated into the system, which calculates the delivery date as soon as the customer orders his car.
Constantly facing new challenges Together with customers and suppliers, we continuously evaluate our distribution systems. A constant process of improvement is a natural ingredient. We also try to inspire all our partners to work actively to meet forthcoming rules and needs. Our systems are already in a class of their own. But that isn’t enough for us. The challenge ahead of us is to further cut lead times, while at the same time improving delivery precision and continuously cutting total costs on behalf of our customers.
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EMBALLAGE
FULL CONTROL THANKS TO AN ADVANCED CONCEPT. An efficient packaging system is a smart and, not least, a profitable investment. It quickly gives tangible results in the form of higher quality and lower cost. Volvo Logistics has more than 50 years of experience with packaging processes in the automotive industry - the world over. All our work is part of a constantly ongoing process in which we work closely with our customers to design and develop flexible systems that offer our customers ”package trips in first class – at economy prices.”
Preliminary study for individual packaging solutions All our assignments begin with an analysis phase. Together with the customer, we sketch a solution that secures future packaging material requirements in a cost-effective way. If any sub-suppliers are needed, they too are brought into the discussion so as to achieve the best possible total economy. We command all imaginable support in the area of packaging materials. We can offer standardised packaging, which we own and administrate. We can also undertake to handle the administration and/or distribution of the customer’s own packaging materials. What is more, we are happy to provide help in developing packaging instructions and in designing packaging materials to suit individual requirements.
5–0 to the Emballage Pool Control and quality characterise the advantages of the Emballage Pool, our advanced concept for easy to handle and rational packaging material distribution and use.
• COST CONTROL. The customer pays only for the packaging materials that he
actually uses. This gives full control over all costs, and at the same time avoids tying up the customer’s capital unnecessarily.
• GLOBAL SYSTEM. Our far-reaching coverage makes things easy, particularly
for customers who have their own operations or partners spread throughout the world.
• ECONOMIES OF SCALE. With many users of our standard packaging materials,
the result is a minimum of empty transportation, which in turn is reflected in lower total cost to the customer.
• QUALITY. Our high demands on the packaging materials in our system minimise the number of damaged and scrapped products.
• ENVIRONMENTAL CARE. All our packaging materials are recyclable. High utilisation rates also mean a reduction in the number of transport runs.
Just like a bank, we give our customers online statements of their packaging material accounts. In addition, this information is always available on our web-based service, Emballage Pool Online. All so that our customers always have full control over their packaging materials and, perhaps most important of all, their costs!
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SUPPLEMENTARY FUNCTIONS
SPECIALISTS AN IMPORTANT RESOURCE FOR CONTINUOUS IMPROVEMENT. Intimately linked to inbound, outbound and emballage operations, we have staff with specialist competence in the areas of logistics development, purchasing, customs regulations and risk management. They provide vital support functions in our untiring effort to look for new, more efficient logistics solutions.
Strategic development process Logistics development is all about working together with the customer on a long-term strategic basis. The inbound, outbound and emballage sectors often work together to review potential synergy and integration benefits. For this reason, we have developed a logistics analysis process and a tool for the calculation of global logistics costs. We also often participate in both pan-European and global logistics projects as part of our ongoing drive to obtain valuable knowhow for our various development projects.
Cost-aware purchasing As a company that adds value to products in the making, purchasing accounts for a large portion of our costs – costs for handling and transporting of materials and vehicles alike. Through long-term dedication, we have built up a partnership of tried and trusted suppliers spanning the entire globe. We do not choose our suppliers simply because they provide reliable transport today, but also because they can demonstrate steady improvements in lead times, precision and, not least, economy. The purpose: so we can continue to reduce our total costs by about five per cent a year. For the benefit of our customers..
Responsibility for customs and risk management issues We take over-riding responsibility for all deliveries. For example, this means that we handle all customs and risk management issues on behalf of our customers. We have knowhow about and can administrate all necessary customs documents. In our role as importer on behalf of our customer, we often also take care of all direct contacts with the customs service. Perhaps the most important aspect of the insurance operation is to prevent damage to goods – whether components or finished vehicles. This is something that we accomplish with immense success. With the help of thorough preliminary studies and inspection records, we have methodically worked our way down to a very low damage frequency (below two percent for vehicle haulage, for example). Just what does this mean for our customers? Probably the lowest premiums in the market.
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VOLVO TRUCKS, NORTH AMERICA
SOLID TEAMWORK BEHIND MAJOR INBOUND SAVINGS. Reducing costs in the first and second years is usually not particularly difficult. It’s only afterwards that the real challenge begins, and it is then that solid experience and true creativity are put to the test. We always aim to achieve annual cost improvements of five percent. A pretty high target, some might feel. For Volvo Trucks in North America, a customer of ours these past eight years, we reduced transport costs in 2001 by no less than ten percent. That’s a total improvement of 1.42 million USD.
75 projects in one In November 2000, Volvo Logistics was given the task of finding solutions that could help to further reduce transportation costs for Volvo Trucks in Dublin, Virginia. Five people from our organisation joined forces with another five from the customer’s organisation to create a hard-working team. Their motto: "Every dollar counts!" The team By working closely met once a month to discuss, evaluate and implement with Volvo Logistics we various measures. The entire inbound process was examined in minute detail for all possible improvewere able to realise a ments, resulting in no less than 75 sub-projects. Of favourable cost improve- these, 39 were subjected to various cost-cutting measures. ment in 2001! The remaining sub-projects form part of the normal continuous improvement process. John O'Connor, Materials Manager,
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Volvo Trucks North America,
Saving twice over per truck
New River Valley Assembly Plant
Renegotiated contracts with carriers, better utilisation of trailers and containers, modified domestic routes. These are some examples of improvements that have been made. These improvements resulted in savings of an impressive 106 USD per truck. That’s more than twice the target based on year 2001 production volumes – volumes that were almost halved during the course of the year. Without the exceptional dedication of the team members, the various small – but nonetheless important – sub-projects would never have been created and implemented. Everyone is in total agreement on that score. For our part, this success brought with it a rather pleasant problem for our future operations: namely, to exceed our own goals and continue to save money for Volvo Trucks – and for all our other customers.
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VOLVO CARS
INNOVATIVE IN-HOUSE SYSTEM FOR BUILT-TO-ORDER DISTRIBUTION. A4D (Applications for Distribution) is the world’s first distribution system that is totally integrated with order and production systems. The benefit is optimum planning of the physical distribution process. At the same time, one gains the best possible overview of the entire flow process from order to delivery. Volvo Buses has been using A4D since autumn 2000. Now this unique e-business platform is all set to help other customers such as Volvo Cars to further improve, for instance, the precision of their deliveries.
Up-to-date information on each vehicle A4D is all about creating the very best information quality. It's about creating a joint system for the entire distribution system and about giving everyone access to the same information so as to minimise the risk of errors. For Volvo Cars, we created the preconditions for real-time updating throughout the distribution process. A sophisticated interface based on EDI (Electronic Data A4D gives us a strong lead Interchange) and the Internet makes it possible over other carmakers – a tool for all concerned to use the computer to trace the location of any given vehicle. Previously, for meeting the customer’s smaller hauliers used to send diskettes with this constantly increasing demands information on a weekly basis. This information on precision and short lead is now updated constantly. Together with Volvo Cars and Volvo IT, we times. implemented A4D in October 2001 – and it Börje Anderberg, soon brought results.
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Vice President, Business & Volume Optimization, Volvo Cars
98 percent delivery precision
From having sold transport services, we now sell comprehensive logistics systems and help clients like Volvo Cars to keep their delivery promises to their customers. When an order is placed in the order system, A4D automatically matches production of this vehicle with the programmed distribution routes – and calculates the exact delivery date. A4D then plans and monitors every unique vehicle all way to the dealer. If something changes, A4D quickly calculates a new delivery date. The aim is to help Volvo Cars raise precision to 98 percent and shorten lead times. And that is something that boosts competitiveness and helps the company secure more satisfied and more loyal customers.
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THIS IS VOLVO LOGISTICS. Volvo Logistics designs, handles and develops comprehensive business logistics systems for the automotive industry the world over. The fact that we have all the necessary logistics areas in-house – inbound (material supply), outbound (distribution) and emballage (packaging materials) – creates the ideal preconditions
for built-to-order production on a large scale, making us a unique logistics partner. We are represented throughout Europe, North and South America, and Asia. We harness the very best partner in each individual case for all haulage requirements, selecting from our global network of first-class transport specialists. We have a current turnover of about 750 million USD a year. As a wholly owned subsidiary within the Volvo Group, all aspects of our work are characterised by the well-known core values of quality, safety and environmental care. For further reading, visit www.volvo.com/logistics
Apart from the automotive industry, which consists of cars, trucks and buses, Volvo Logistics also develops comprehensive logistics systems for the transport industry. Always with focus on solutions that give True Business Logistics.
Volvo Logistics Corporation
Volvo Logistics Scandinavia & Overseas
405 08 Göteborg
405 08 Göteborg
SWEDEN
SWEDEN
Tel + 46 31 66 93 00
Tel + 46 31 66 93 00
Volvo Logistics Europe
Volvo Logistics North America, Inc.
Postbus 309
7825 National Service Road, AP1,1st floor
B-9000 Gent
Greensboro, NC 27409
BELGIUM
USA
Tel +32 9 250 21 11
Tel + 1 336 393 3889
Volvo Logistics (UK) Ltd Wedgnock Lane Warwick CV34 5YA ENGLAND Tel +44 1926 414646
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