Volume 13, Issue 2 - March/April 2011

Supply Chain Dynamics
inside distribution

 

The Complexity of Stocking Parts
by Dino Lanno

Editor’s Note: This column is the first in a series from a variety of manufacturers and distributors who will take a look at the changing supply chain.

In the last decade, the supply chain business for vehicle glass has changed more drastically than ever before. Today, there are more car makers selling a wider variety of makes and models. That means there are more parts to account for in the supply chain, which translates to more SKUs. For example, in 2000, there were just 1,200 different windshield SKUs. In 2010, that number increased to 2,400.

Following is a review of how the growing diversity in parts has impacted the vehicle glass supply chain.

Impact of Global Economy on Ordering
While vehicle glass made in China traditionally has been less costly than glass made domestically, there are other ways that costs can creep in. For instance, the supply chain is faced with longer and less predictable delivery times, impacting an accurate forecast of your available product. Glass from China can take up to 16 weeks to arrive. If there is a delay or issue with delivery, distributors must search to find the needed product from alternative suppliers, usually with a premium price-tag attached.

In addition, the number of glass suppliers has increased. There is no more “one-stop shopping” like there was a decade ago. Distributers must commit more time to working with more suppliers, and spend more effort in coordinating and stocking the right parts.
Finally, with vehicles from around the world continuing to filter into the United States, there has been an increase in low-volume specialty parts; keeping that type of glass in stock is even more challenging. Some manufacturers cannot justify the cost of the investment in tooling to reverse-engineer these low-volume parts, making them difficult to source, and, ultimately, proprietary in nature. And proprietary means costly. The increasingly complex decision-making around choosing to both order and stock these parts impacts the dollar investment for this growing segment of parts.

More Complex Stocking Needs
The increase in parts also impacts the warehouse structure and design. Longer lead times are forcing larger safety stocks. Stacking more parts means more racks. And because parts are more varied than before, some existing racking has become obsolete. Many warehouses have had to change racking to accommodate these new sizes and shapes. In some situations, warehouses have depleted building space and now require new locations to handle the volume.

Another factor is that, as parts increase in size for the new breed of SUVs, vans and the dramatically raked windshield, they get heavier. This requires special equipment for transport.

Sales patterns also are changing more rapidly than ever. It is the exception, not the rule, to see a five-year vehicle production run using the same windshield part. A decade ago, that would have been different. The ups and downs in the market mean that part numbers within a warehouse need to be moved around much more frequently so that the most used are more easily accessible to be picked and delivered. We find ourselves in a complex world where parts are constantly changing and the interchanges involved make part selection and warehousing ever increasingly difficult.

Economic Forces Affect Distribution
In America, people like choice. There’s a greater need to meet customers’ needs with the right glass, at the right time, at the right place. This increased attention to customer demand means the supply chain has to have available products, closer to the customer.

Another way the distribution of vehicle glass has been affected is the changing economy. The general cost of doing business is higher than ever with the cost pressures of higher gas costs, insurance, vehicles and maintenance. In fact, our fleet has traveled more than 80 million miles within our supply chain delivering products last year.

As you can imagine, these complexities makes the supply chain function more difficult to oversee, and we must continually invest in upgrades. It requires more sophisticated computer and IT systems and a more intuitive way of racking. We also must do more to protect the racking so the glass doesn’t break, especially the specialty glass parts.

Ultimately, while some people think glass is almost free, there is so much more to getting the right glass to the right place at the right time.

Dino Lanno is senior vice president of supply chain and manufacturing for the Safelite Group in Columbus, Ohio. Mr. Lanno’s opinions are solely his own and not necessarily those of this magazine.




AGRR
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