Any effort to describe the operations of the production parts warehouse at BMW's assembly plant in Spartanburg, S.C., leads inevitably to comparisons with the finely engineered vehicles that emerge from the other end of the process.
BMW has earned a reputation for producing automobiles and sports utility vehicles that are fast, responsive and reliable. In the same way—from the coordination of inbound materials through the material handling process and sequencing of parts and out to delivery of parts to the production line—the warehouse facility is the result of both careful design and a well-oiled operation that ensures that the right parts arrive at the right place with little wasted motion.
What's more,the process is delivering parts not for mass production but for vehicles that are made to order. Each Z4 roadster or X5 SUV that's built at the Spartanburg facility is the result of an individual order configured with options and color schemes for a particular customer. Literally millions of variations are possible, including left- or right-hand drive and manual or automatic transmissions.
It is the challenge of the entire supply chain,and particularly the warehouse operation, to ensure that the right parts arrive for the right car at the right place at the right time. The plant produces 650 cars every day and the odds are that no two of any model are exactly alike.
The warehouse operation is essentially a DC with a single customer but with several delivery points within the assembly plant. Parts come in from suppliers from around the world and are picked for timely delivery to specific locations in the factory.
Many options, one standard
"Our focus is to deliver cars right on time while allowing customers and dealers as much flexibility to change orders as possible," says Manfred Stöger, vice president of logistics and information technology for BMW Manufacturing Corp. The materials and manufacturing systems allow dealers to adjust orders up to six days prior to the start of production. "That has a lot of advantages for customers and dealers," Stöger says, "but it's a huge challenge for the supply chain."
To deliver the enormous variety of vehicles on time and in the right configurations demands a highly automated system and a cadre of sophisticated suppliers and well-integrated systems. "The warehouse could not handle this manually," Stöger says.
The operation is interesting for a number of reasons. First, while BMW owns the warehouse, management of inbound materials and the internal operations is in the hands of a contract logistics company, TNT Logistics, which has more than 500 employees dedicated to BMW operations on site. Second,the highly automated system for storing and retrieving a large portion of the thousands of parts that go into any vehicle, through tight integration with BMW systems and automatic identification technology, enables much of the precision in the operations. The system was designed and installed by the German material handling company Witron, a specialist in building automated distribution centers.
The company selected Witron in part, says Stöger, because it develops and customizes its mechanical parts and software itself, including the warehouse management system used by the warehouse.
Witron CEO Reinhard Boesl says that the planning involved six months of "intensive discussions" with BMW managers in Spartanburg and in Munich. The actual installation took about 18 months. "We had tough timelines," Boesl says . "The roof was not done when we began installing systems." Another few months were required to ramp up and test the system.
Boesl continues, "As soon as we achieved a degree of integration, we invited BMW to do testing. The testing process is a good opportunity to double-check if the detailed specifications match the practical requirements. It's a critical phase. It allows the client to see what he is getting."
The complex system can adapt as BMW makes changes to its operations, though the flexibility is not unlimited.
On the other hand, the system adapted quickly to increases in production and model changes. Since the automated systems have been up and running, BMW and its partners have made a number of adjustments to the operation. For instance, the company added a third induction point in the warehouse—conveyor locations that move material to storage locations. When BMW ended production of the Z3 roadster and started building the Z4, the system adapted without a single change to software code. In late September, the plant began producing 2004 X5s that included 2,100 new parts—with only a 10-car gap between the old and new models. The warehouse is flowing parts for 600 to 650 cars a day with a system initially designed to support production of 450. Stöger says, "We'll be able to increase production to 700 units without additional storage space."
About half the content of the vehicles flows through the warehouse, which handles about 13,000 active parts for the Z4 and X5. A second warehouse within a few miles of the main facility handles hazardous materials and the largest and bulkiest parts. Those include any materials larger than a pallet and any that are mo re than 2.5 meters high.
Ronald Feld, section manager for physical logistics for BMW, probably has the most day-to-day familiarity with the warehouse operations. Because each car is somewhat different from every other car, getting the right parts to the line is perhaps the central mission of the warehouse. "I'm sequencing single parts," Feld says. But the system is efficient enough that it requires notice only three to four hours before parts are needed on the assembly line. "When a car enters the assembly area from the stacker, its [identification number] generates a broadcast signal to us in the warehouse and to direct sequence suppliers." The system also calculates the expected time to deliver the materials.
To keep operations running smoothly, Witron installed both pallet and tray automated storage and retrieval systems. The pallet warehouse is a high-bay facility with 17,400 storage locations on six storage levels. The Witron system has a number of fail-safe parts to its design, Feld explains. For example, pallets are stacked six wide at each level. Should a crane fail, the system allows other cranes to retrieve pallets five deep, allowing complete redundancy if required. In addition, the system is designed such that if the system wants a pallet that is three deep, for example, the cranes can store the first two in different areas to retrieve the third, all the while keeping track of the first t wo. "The warehouse reorganizes itself I don't know how many times a day," Feld says . To enable that, the system reserves 15 percent of the storage locations to allow it to relocate pallets.
The warehouse is not fully automated, however. A substantial amount of picking occurs by hand. Employees pick and scan each part. "It's all picks of one," Feld explains. So while a tote containing visors contains enough for 80 vehicles, each one is destined for a specific car. When a worker completes a pick in one location, he or she receives automated notification of his or her next stop. "This optimizes the operation," Feld says. "[A worker follows] the shortest path with the fewest steps."
The automated tray warehouse has 26,000 storage locations, and each storage location can hold up to 10 part numbers. The t ray handling system can handle individual loads of up to 220 pounds, compared to 2,200 pounds for the pallet handling system. Further, the tray system is simpler than the pallet system: Trays are stored one deep on each side of the large racks, and the automated picking equipment need only select to the left and right.
The system provides protection against breakdowns by storing each part number in more than one tray and in separate aisles, so if one machine breaks down, parts are still accessible for other parts of the warehouse. About 70 percent of the storage locations are in use.
Trays selected by the automated system move to one of five identical workstations. Four of the locations are used for picking and putaway, while the fifth is reserved for unusual requirements. Even that is part of the efficiency plan: Keeping the fifth position in reserve helps compress the travel time for the automatic guided vehicle that transports material to and from the work stations. Typically, one worker can man two of the stations.
On the inbound side, materials are scanned on arrival and data uploaded via an RF system. Data capture then occurs several other times as goods move to putaway locations and eventually to staging for the shop floor. After shipments are received, palletized loads move to one of two major induction points, or i-points as they are called by BMW. "A scan marries the container to a bar-coded pallet," Feld explains. The pallets then move via an automated system to the pallet warehouse. As the pallets move down the conveyor, automated devices automatically check for contours,height and weight and divert any pallets that might need any correction, a process handled manually.
A large portion of the inbound shipments are in returnable containers that will be sent back to suppliers for reuse. "We promote returnables," says Feld. "We're making giant steps with our European suppliers. They were shipping 100- percent corrugated. Now we're getting 30- to 40-percent returnables. Our NAFTA suppliers are shipping 95-percent returnables." Those suppliers, he reports, only ship in disposable corrugated containers when they are short of returnables.
The actual material handling in the warehouse is overseen by BMW, but operations are in the hands of TNT Logistics North America, the lead logistics provider for the company. TNT manages both inbound transportation and material processing and sequencing in the warehouse. It processes more than 10,000 inbound and outbound shipments each day: the outbound sequencing, which involves 28 parts families, is managed through Witron's warehouse management system.
TNT, BMW suppliers and BMW operations are closely integrated from origin until delivery to the production line. Deb Hall, vice president of l ogistics solutions for TNT North America , summarizes the process: "BMW provides the demand file, which provides all information on material from each supply point. We schedule by optimizing loads and provide that to suppliers."
Carriers are responsible for signing off on shipments picked up at the supplier locations. Both the carrier and the supplier have to agree on the contents of a shipment: Drivers report any discrepancies to TNT's Jacksonville call center.While physical receiving takes place at the warehouse, BMW has immediate visibility into any exceptions.
Currently, five truckload carriers and one LTL carrier bring in the bulk of the shipments.TNT also operates a small dedicated fleet performing a few milk runs, shuttles between warehouses and truckload shipping. Some 425 trucks a day move through the warehouse bays over two shifts. Those loads are destined either for the plant or the warehouse. Once the materials have arrived, TNT continues to manage the process for BMW, managing the yard and staging of trailers. Shipments are scanned and received at the dock and validated against what's expected. Goods then move either directly to the production line or to the warehouse. (BMW manages ocean and air freight transportation. It consolidates shipments out of Europe in Germany to maximize weight and cube utilization, sending about 9,000 40-foot containers a year to the South Carolina facility.)
Hall says, "A lot of 3PLs manage transportation. The difference here is that we are actually managing materials. BMW does not view the route or the driver—it doesn't need to see that. BMW personnel see things that are of interest to them. They can see exceptions. There's a proactive notification, so there's no monitoring needed by BMW."
She adds, "BMW is a very demanding customer, but it doesn't expect more than it should." She meets with Stöger every month to gain an executive level view of operations. In addition, the TNT operations managers on site meet with BMW's materials and logistics managers daily. "Our staff and their staff are integrated," Hall says. "They are very forthcoming.
They want us involved in the planning process. … We were fortunate to find a customer that would allow us to be integrated, not only in transportation but in material planning. They allowed us to step over a line we're not allowed to step over very often."