Jaguar Land Rover has transformed its business and both brands over the past five years, investing over £10 billion and doubling sales. Mike Mychajluk, supply chain & external engagement, Jaguar Land Rover, explained how it was harnessing its supply chain to support this growth at the Logistics & Supply Chain conference.
“This calendar year-to-date to the end of December 2014 our sales are 462,678 vehicles, nine per cent up on last year. Jaguar retails at 81,570 are six per cent up and Land Rover at 381,108 are nine per cent up.”
JLR has been part of the TATA group since 2008, but is independently managed from the UK. It currently has UK vehicle assembly plants, with two UK product development facilities – and it opened its New UK Engine Manufacturing Centre in 2014.
Its first overseas manufacturing facility opened in China in 2014 and there is a new plant under construction in Brazil. In total it employs more than 32,000 people globally – a figure that has doubled over the past few years.
It has developed a technically advanced aluminium vehicle architecture. “This all new technology not only represents a significant milestone for Jaguar Land Rover (£1.5bn/$2.4bn) but, more importantly, for our customers. Aluminium has already been used in Jaguar’s XJ, XK and F-Type models, while also helping to reduce weight on the Range Rover family of vehicles.
‘This uniquely developed architecture will be modular and scalable. It will enable us not only to enter but also to compete aggressively in exciting new segments, creating new markets for both brands with far more scope than ever before as we start delivering a wider range of compelling products tailored specifically for our demanding customers,” he said.
The first product built upon the new architecture will be the Jaguar XE (right).
“In supply chain we are the people that makes it all happen,” said Mychajluk. “Over and over again we are having to work out how we can increase our capacity.”
Mychajluk highlighted the importance of the UK supply chain to JLR. In the UK, its purchasing will be over 50 per cent of UK passenger vehicle OEM expenditure by 2017.
It is working in collaboration with government on automotive strategy. “We are going to grow the supply chain – we want new technologies to flow through. For example, he said: “We have a proving factory to take a prototype and work out the manufacturing steps to get it produced.”
The growth in the automotive industry is not just about the OEMs it is also about growth in the supply chain, he said, highlighting the move to reshoring.
JLR’s is pushing its suppliers to increase production for its UK plants, but increasingly its wants them to increase production for its overseas plants. The Hams Hall Export Centre became fully operations in September 2014 and at peak will send out up to 140 ship containers a day, he said.
JLR plans 50 new product actions over the next five years, which creates huge opportunities for the UK, he said. “But the UK manufacturing environment is challenging, and a partnership approach with our stakeholders is vital to realise employment and financial benefits for the UK.”
Asia Pacific leads growth of third party logistics
Asia Pacific will overtake Europe as the largest market for third party contract logistics by 2017, Simon Hobbs, vice president – supply chain development at Ceva Logistics, told delegates in the opening session of the Logistics and Supply Chain conference.
The global contract logistics market grew by 2.8 per cent in 2013 to some €168 billion – and the prediction is for six per cent compound growth between 2013 to 2017.
Today, 37 per cent of global market is in Europe, but by 2017 Asia Pacific will be the largest market with 34 per cent.
Hobbs highlighted the importance of collaboration in logistics in a changing market.
“We are seeing much greater collaboration with our customers’ competitors. If supply chain not a competitive issue for them – why not,” he said highlighting the motor industry as an example.
Every component in a car in unique to that vehicle – and that is where the competition comes – not in the logistics.
And he pointed out that there are times when a big 3PL will use a small local operator or even a competitor 3PL – areas of the world where it does not have a high level of coverage, for example.
There is also a growth in joint ventures – it’s common typically in China where it can be used to get local knowledge.
Hobbs looked at developments in the outsourcing process. “Some mature companies see outsourcing as “insourcing” 3PL skills into their organisation,” he said pointing out that this was when it worked best.
Collaboration boost for Homebase
Collaboration was at the core of the presentation by Chris Warn, head of supply chain at Homebase. He said: “Close collaboration with suppliers is crucial to ensuring complete visibility across the supply chain.”
Warn argued that working strategically with suppliers could result in bigger savings than could be achieved in a purely transactional relationship.
At Homebase, he said the starting point had been developing a broad understanding of supplier.
It started with purchase order management – and went to speak to suppliers to get feedback on how we could operate more efficiently. What came out of that was the importance of sharing information more proactively with the supplier base.
Another example is factory to store operation where Homebase is looking to do as much work as possible at origin before bringing into UK and, if possible, direct to store.
At Christmas, Homebase brings in some 700 containers for Christmas – and failure is not an option. Warn said Homebase had worked closely with Kuehne + Nagel to take the pressure off its distribution network.
One of the results of this change of approach is that it is asking product suppliers to do things differently – particularly in terms of labelling and product handover.
The growth of e-retailing means that there are now a significant number of products that are available online only, and often the supplier will manage that delivery. In that situation, it can’t be master servant relationship, he said.
If executed correctly then the benefits of supplier collaboration have the capability to deliver sustainable benefits to both the retailer and the supplier.
Sainsbury’s revolutionises GM flow into the UK
Sainsbury’s has revolutionised the way its flows general merchandise product in to the UK from overseas sourcing locations. Iain Bartholomew, head of the non-food supply chain at Sainsbury’s, explained the benefits of the innovation at the Logistics and Supply Chain conference.
The retailer faced a number of business challenges, he said. Non-food is growing at three times the rate of food. Sourcing has been shifting and imports volume have been increasing at 20 per cent year on year. It is now handling some £1bn worth of general merchandise per year.
All this had resulted in significant challenges to its UK infrastructure. The solution involved picking at origin so that goods can be delivered direct to store. Added value origin operations now provide 100 per cent availability of sale stock in every domestic store.
Not surprisingly, this initiative won Sainsbury’s and its logistics partner Allport Cargo Services the 2014 Logistics and Distribution Award in the European Supply Chain Excellence Awards.
Working with Allport, Sainsbury’s ran a pilot programme for Halloween 2009 handling some 60,000 cases – picking for store at origin in Asia and shipping direct. Over the five years since then the volume handled this way has grown to some 1.5 million cases.
Bartholomew highlighted the importance of the use of a control towers to manage the process. Sainsbury’s now has five sourcing offices around the world – notably in China and India.
One of the advantages of picking at origin is that infrastructure cost is avoided in the UK and more efficient store receipt for store colleagues.
Not only that, said Bartholomew, “We can pick in Asia at least as accurately as we can in UK.”
