“We don’t have what the Japanese call muda [waste], and we don’t end up with parts that we don’t use or must send back.” —Wolfgang Flegel, Porsche logistics department
The automaker created a supply chain so efficient that parts arrive at the factory less than an hour before they’re needed
Most automotive manufacturers feed their assembly lines by pulling parts from extensive warehouse facilities on-site. When a line worker signals that his/her store of parts is depleted, pickers comb the warehouse—often with the help of expensive automated retrieval systems—to find and deliver backup stock “just in time” to the assembly line.
Porsche has taken “just in time” to a new level of synchronization and effciency at its plant in Leipzig, Germany. For the production of its Panamera four-door sedan and Cayenne sport-utility vehicle, Porsche developed a new Lean-based logistics system in which suppliers deliver parts to the plant less than an hour before they are needed on the production line, virtually eliminating the need for expensive supply storage operations.
“Suppliers get information about the sequence number of the car and the time when that car will be at a certain point on the assembly line where the part is needed—down to the day, hour, minute it will be needed,” says Wolfgang Flegel, who is responsible for business processes at Porsche’s logistics department.
Porsche uses an SAP ERP system that guides production planning based on customer orders. The system also acts as the materials management system that helps orchestrate the precise interplay of supplier parts deliveries and production floor activities. In this manner, Porsche coordinates the arrival of parts from more than 40 suppliers, which deliver modules such as seats, dashboards, steering wheels, carpets, and gearboxes.
Suppliers work with Porsche’s third-party logistics partner to deliver the needed parts to the plant the hour they are needed.
The exact sequence is critical in meeting customer demand for various configurations and options, including different engines, the color of the seats, and dashboard.
Porsche’s success with just-in-time production and waste reduction has become the envy of the industry, so much so that the company has formed its own Lean consulting division, which boasts 150 customers both inside and outside the automotive market.
As for the Leipzig investment, “There’s no doubt that this will bring back all the money [invested],” Flegel says, “because we don’t have the big storage area, we don’t have what the Japanese call muda [waste], and we don’t end up with parts that we don’t use or must send back.”