Old Infrastructure is an Obstacle to Lean Supply Chains

            For a supply chain to become lean, every part of the supply chain has to work properly. (The same is true in manufacturing; the whole point of total productive maintenance is to eliminate machinery downtime.)

            The problem today with automotive supply chains is that they don’t work properly. That’s one of the things I learned at the Automotive News World Congress recently – along with the fact that the problems cannot be fixed simply by applying lean principles.

            Alan DeCarr, group vice president of Toyota Logistics Services, presented some disturbing information during his presentation. And the problems he described, which I’ll get to in a moment, are exacerbated by increasing demand for his group’s services.

            Last year, sales grew faster than Toyota’s expanding domestic production capacity, and imports – meaning the company’s marine shipments – increased by 44 percent. Rail deliveries increased 11 percent, and trucking volume was up 14 percent.

            Rail deliveries are a particular problem, with an on-time performance last year of only 78 percent and quality performance of 0.24 percent. Ironically, that is partly because the U.S. economy has been healthy, contributing to overall rail congestion.

            In addition, DeCarr said, the rail industry has a continuing shortage of rail cars designed for hauling automobiles, particularly trilevel cars.

            To address these rail issues, DeCarr said Toyota is involved in network rationalization (exploring alternatives), working to ensure that haulaway companies keep rail ramps fluid, and working to ensure that loading and unloading occurs efficiently. On that last point, he said, the lean tool of heijunka is being applied, and operations have been altered to load certain destinations on designated days (based on RR requests).

            DeCarr also noted that, for shipping vehicles from Japan to the U.S., Toyota uses both young and old ships. An old ship might leave Japan, followed by a new ship, on schedule, two days later. But the new ship travels faster, so the two ships might arrive here at the same time – creating unloading problems. “When you don’t have that heijunka, that even flow… it all gets expensive,” DeCarr said. (Despite that, Toyota’s marine shipments had an on-time delivery rate of 98 percent last year, with quality performance of 0.04 percent.)

            Meanwhile, trucking companies are having a tough time, hit by downward pricing pressure, aging equipment and driver shortages. The two largest auto carriers filed for bankruptcy last year.

            To help, DeCarr said his group is trying to offer fair rates that support reinvestment, equipment financing and network rationalization. He added, “we’ve expanded the use of Toyota-branded carriers as appropriate.” Also, Toyota is implementing soft tie-down haulaway trailers, which can simplify truckers’ operations and improve driver ergonomics. With the soft tie-downs, vehicle designers don’t need to allow for clearance for traditional chain tie-downs.

            Other comments at the conference came from Christopher Connor, president (Americas) of Wallenius Wilhelmsen Logistics.

            Connor noted that not every shipping problem is actually a shipping problem. In some cases, “what might appear to be a logistics problem is an internal situation,” he commented. For example, a manufacturer will have finished cars on the ground but be unable to release them because of a problem involving quality, finance, or the vehicle not being allocated to a particular region. When release finally occurs, that causes a very un-heijunka-like surge.

            However, Connor agreed with DeCarr about the problems of infrastructure.

            “What keeps me awake is the concern over the future,” he said. “There has not been investment in automobile transport equipment. It’s a big problem.”