The digital drive for better supply chain management 

Digital technology is an increasingly indelible link across automotive logistics processes. Whether it be to attain real-time visibility of goods in the inbound and outbound supply chain, improve network planning or use predictive data analytics to better manage inventory, the automotive industry is looking for more connected, data-driven supply chains. 

Some of the latest developments were under discussion through the recent season of Automotive Logistics’ Livestream Hours, which ran between April and July, and it was clear that the benefits of industry 4.0 technology are being brought to bear both in production logistics and in the wider supply chain, in part by supporting greater industry collaboration and standardisation.

In a discussion dedicated to the rise of artificial intelligence and analytics in logistics, Lars Bäumann, director of information management and digitalisation at Volkswagen, talked about the VW Industrial Cloud, a digital production platform developed with Amazon Web Services (AWS), Amazon’s cloud computing unit, to standardise production processes across VW Group’s 122 plants and manage logistics complexity.

At a corporate level VW Group has standardised processes that it hands down to its network of plants but the reality of production and logistics on the ground introduces variance. Plants are reliant on short-term resource information and have to deal with delays in supply, equipment breakdowns or sick employees, and each one deals with it in their own way. From a corporate level view it looks like a big mess, according to Bäumann.

Progress through disruption

The disruption caused by the Covid-19 pandemic on the supply chain and the impact the emerging health and safety regime has had on the workplace meant many OEMs resorted to established systems of crisis management. However, the growth in digital has also played its part and Synaos’s Hackenberg said that in an age in which more IT platforms were being implemented and system architecture being modernised the collection of data was helping to provide visibility on bottlenecks caused by the disruption, as long as companies were willing to actively use the data collected by AI. 

At the same time, carmakers have continued to advance the digital applications they were exploring before the crisis. As production resumed across the world in fit and starts over the summer, there were a number of announcements that reflected the greater uptake in digital and autonomous technologies. 

Elsewhere in the VW Group, Audi announced in July this year that it had introduced a logistics system in which AGVs were moving containers of parts in sequence to manned pick stations on the assembly line. According to the carmaker, rather than the traditional set up in which employees go to containers of parts to pick in sequence for assembly, the Supermarket 2.0 system reverses the process on a ‘goods-to-person’ principle. It is being used at Audi’s plant in Ingolstadt (Germany) and at the FAW-Volkswagen joint venture plant in Foshan (China).

There are currently eight AGVs being used in the Ingolstadt Supermarket 2.0 but Audi said that number would rise to 32 by the end of the year. The AGVs have been developed by Audi and technology start-up arculus, and are controlled centrally with Audi’s inhouse fleet manager software (Audi Fleet Manager).

“With Supermarket 2.0 and Audi Fleet Manager we are marking an important milestone on the way to smart logistics of the future,” said Peter Kössler, board member for production and logistics at Audi.

Audi is also conducting a drone pilot project to more efficiently locate vehicles for dispatch at its Neckarsulm assembly plant in Germany.

Each vehicle produced at the Neckarsulm plant has an RFID chip installed during the assembly process and the drone is equipped with an RFID reader to identify the vehicles selected for outbound shipment.

“The fast locating of the vehicles creates even higher process quality and is a further stepping-stone on the path to digital production,” said Steffen Conrad, project manager for innovation management at the Audi site in Neckarsulm. “The drone provides support from a completely new perspective. We will now share our experiences with other Audi sites and within the VW Group.”

Skoda, meanwhile, has taken another step in the digitalisation of logistics processes at its transmission plant in Vrchlabí in the Czech Republic with the autonomous ordering and delivery of parts for the CNC processing line at the facility.

CNC machines make complex parts using a coded programmed instruction and without a manual operator. Those machines are now also ordering the parts to be produced automatically and they are being delivered by robots using sensor technology to navigate

the way.

According to Skoda, the parts ordered are placed by a warehouse operative in a load carrier. The automated delivery vehicle then picks up the carrier and takes it to one of the CNC lines. On its return journey, the robot takes an empty load carrier with it and automatically reports back to the parts warehouse.

End-to-end digitalisation

Digitalisation is also playing its part in the provision of logistics services beyond the plant. In another Livestream Hour – Driving innovation in production and logistics – Ford’s Amlan Bose, then vice-president of the Global Centre of Excellence (Supply Chain & Logistics, Trade & Customs, Digitisation and Automation), Asia Pacific, MEA, South America, talked about the company’s transformative journey towards end-to-end digitisation and automation.

“We should be able to run the supply chain and logistics untouched by human hands, that’s our idea of an autonomous supply chain in the future,” he said.

The carmaker’s decision to insource its fourth party logistics (4PL) services in India in 2018 marked a significant change for the company. Instead of relying on a provider to optimise and manage its logistics services, it built up internal resources and rolled out a new transport management system (TMS) and integrated planning structure. 

“That was a huge leap forward for us,” said Bose. “It was quite a difficult task for us to convince ourselves that we can do this job or that we should be doing [it]. Now that we’re doing it for the last two years and have now successfully deployed this model in India, Thailand, China and then to South Africa, we’re now going into Ford Brazil and Argentina.”

Running its own network design planning model for all the markets it is responsible for has provided a substantial reduction in freight costs and lead time, according to Bose. “There is also a huge advantage in the amount of dynamism in the planning process, including quicker turnaround of trucks and the time it takes to create a new network plan for a new plant,” he said.

3D vanning

Another “huge leap forward” on Ford’s digital journey is the use of 3D ’vanning’. Vanning is a way of optimising load planning, using digital technology to find not only the best container sizes to use, but also the best way they should be loaded onto pallets or into trucks and containers.

“This is something which was relatively new to us,” said Bose. “Our logistics designer is actually designing the routes on his computer laptop screen and it’s connected to my entire bill of materials, which has all the necessary detail to plan the logistics, including the part number and the dimension and orientation of the boxes. In a 3D way it then builds the loading into a truck or a container in front of you, selecting the most optimised model.”

Bose said that this cube utilisation of a truck or container, which used to be a post-factor procedure is now pre-factor for the carmaker because the designer is in control from the start.

Controlling an untouchable supply chain is the ultimate goal for Ford, which plans to bring in aspects of artificial intelligence (AI) and machine learning (ML), as well as advanced bots that can make decisions on methods much more autonomously. Bose also pointed out the importance of record-keeping technology blockchain for the OEM, citing it as the “real future of logisticians in the automotive space”.

Blockchain for batteries

That is certainly the thinking at Volvo Cars, which announced it is investing an undisclosed sum in blockchain technology provider Circulor to provide visibility into its battery supply chain. Over the past few years the Swedish carmaker has been working with Circulor and its battery suppliers CATL and LG Chem on the implementation of the distributed digital ledger technology to accurately trace the origins of the cobalt it sources for use in its electric vehicle batteries.

Carmakers looking to an electrified future are currently focused on ensuring an ethical and sustainable supply chain for their new products, given the different raw materials involved in the lithium-ion batteries needed to power them. Traceability of those raw materials, such as cobalt, is one of the main sustainability challenges faced by carmakers.

Currently Circulor’s blockchain application is used throughout Volvo’s battery supply chain and the carmaker said it will achieve 100% traceability on the cobalt used in the battery for its XC40 Recharge P8 – Volvo’s first fully electric vehicle.

Cloud and AI technology will be discussed at Automotive Logistics and Supply Chain Live September 15-17