• Miebach India

Complications of Tire warehousing

Tire

Employing over 650,000 people globally, the tire industry is a significant piece of the world economy. Despite its high consolidation (80% share by a handful of companies), it is still an industry which remains widely competitive. Thanks to this competition, and the ever-impatient consumer, tire companies face significant pressure to make fast and cost efficient deliveries to the market – not an easy task with the product characteristics they have to handle.

In the recent years, Miebach has had opportunity to look closely at tire supply chains, understand their issues and explore solutions to address some of these issues.

Below are some of the highlights from issues we have seen and the solutions we have recommended on those:

Large number of SKUs: Tire manufacturers produce anywhere from 300 to 1500 SKUs, with 60% sales coming out of 5-15% SKUs. You can see where this is going – a lot of slow moving inventory, which is always a challenge to maintain. And yet, most tire companies continue to use “one size fits all” approach. To some of our customers, we have recommended a 2-dimensional categorization, based both on velocity and profitability to identify different supply chain policies.

Dependence on manpower: Since all the tires are black, the tire information embossed on them is very difficult to see manually. Also since the tire sizes vary a lot, even with barcoding , it is difficult to always scan and identify the tires. Hence, in most warehouses, there are a set of people who are trained in identifying the SKUs. But they have a learning curve, and therefore make mistakes.

Despite the lack of volume complexity, this makes a strong case for WMS (Warehouse Management System) with real time location mapping and trace-ability within the warehouse.

Handling

Tires are a difficult product to keep on standard pallets. They will either lead to unstable storage, or inefficient use of space. Even when specially designed pallets are used, demand is seldom equivalent to pallet loads (~20-30 tires in a tire pallet). This means that in picking, loading & in unloading, they have to be handled manually, which for a weighty product is not an easy task.

For storage of small tires, the industry largely relies on special tire pallets, which also double up as racking. While this gives an efficient storage structure, it is more difficult to handle when compared to standard pallets, especially when placed at heights.

tire pallet

There is still innovation awaited in this space – particularly for picking. Some of the burden can be eased during loading/unloading by using telescopic conveyors which will save both the effort (in bending and rolling) as well as time (in directional alignment) from resources.

Storage

A lot of warehouses continue to store tires on ground. More sophisticated warehouses move to use of pallets mentioned in the above section. But even there, the storage is often restricted to 1 or 2-deep. However, most warehouses carry significant inventory, particularly when carrying seasonal products like farm tires. This inventory often needs 3-10-deep storage, and almost exclusively relies on a flexible storage structure as inventory builds up or depletes through the month/season. To manage such a dynamic storage structure, a WMS system becomes an absolute necessity.

There are other numerous issues – like maintaining visibility of a tire through the warehouse for efficient picking, eliminating put-away & picking errors due to similarity of products, and many more. Most of these can be solved through use of barcodes and a WMS system. While for small warehouses, WMS may seem like a significant cost, but there are many inexpensive & simple WMS solutions available in the market which are cost efficient even for distributor operations.

Miebach Consulting has worked successfully with Tire companies in reducing their supply chain costs while streamlining operations. For knowing more about this service and our success stories in supply chain consulting, please write to mcindia-mkt@miebach.com

 

The question of Last Mile Delivery – 2

Last mile Continuing from our discussion in the last post,  where we looked at a few levers to reduce variable costs of last mile delivery, let us now talk about the other key cost of operations: Fixed costs. For most ecommerce vendors & courier companies, these fixed costs are the cost of facilities & the fixed costs of delivery agents. Working with less: We can begin with keeping the assets low. Continue reading

The question of Last Mile Delivery

leh

At one time, the last mile was a problem relevant only to the communication companies. It pertained to the complexity of laying that last bit of wire that takes the TV, internet, telephony to each and every home. Now, as that technology has come to our homes and brought with it the rapid advent of eCommerce, last mile is no longer only a communications problems, but also a supply chain problem. How do I ensure that I reach my customers, sitting across millions of addresses today in a fast and effective manner, without spending a fortune? The jury is still out on the one ‘Bull’s eye’ solution, but here are a few thoughts that might be useful.

To begin with, let’s start with a background on how last mile is structured currently. Continue reading

How can my warehouse turn orders around in an hour?

clockwork

You have newly opened a spare parts warehouse, which while servicing orders for your dealers, is also servicing orders for emergency off-road vehicles. You get both orders from the same warehouse, and serve them in the same cycle, though you attempt to dispatch the emergency orders on priority using express couriers.

The problem is, there is a world of difference between a dealer who expects his order to arrive in two days, and the emergency vehicle whose asset value is diminishing with every minute it spends waiting for the spare to arrive. Emergency or fast-turn around orders have to be dealt separately as compared to your regular deliveries, and should follow a shorter lead time. (Unless you are in a business where every order is fast turn-around, in which case you can follow the basic philosophy for all your orders.)

So how can we shorten the warehouse lead time or the order turn-around time? Continue reading

How to improve productivity in my warehouse?

The plight of managers at distribution centers with manpower intensive operations is no different from the farmer who had to carry his goat, wolf and a bag of cabbage in a rowboat across a swelling river .

In a geography where project viability calculations almost invariably work against automation due to manpower cost arbitrage, distribution center managers are in considerable trouble if they automate and doomed if they don’t. The solution to this seemingly paradoxical business problem is fairly simple – continually looking at ways to improve manpower productivity at distribution centers till such time partial / full automation begins to make business sense.

If you are asking where to start looking, may be this post will help. Continue reading

How to reduce the size of my warehouse?

‘This warehouse was designed to accommodate business growth for 5 years. It has been operational for 3 years, and I already see little space to walk. We have been hiring temporary godowns for the last 6 months, and it is a struggle to coordinate movements between the two locations’

This is something we hear from many perplexed logistics managers. Across India, many supply chains have gathered inventory, and are expanding into different warehouses in an ad-hoc manner. How is it that a space designed for 5 years becomes full in 3?
The answer (often) lies in the fact that when a warehouse is designed, it is designed assuming perfect systems. The forecasts will be accurate, supplies will be in-time, and warehouse operations will run with clock-work efficiency. Factors like product obsolesce and their piling inventory often escapes people’s mind, as do returns or damaged stocks.
But of course, there is merit in assuming efficiency at the time of design. An operation which is already designed with an inbuilt inefficiency will always retain an element of that inefficiency. What needs to be done is to ensure that steps are taken to bring in that efficiency. Continue reading

What keeps you from delivering a fresh product to the market?

There are few things more off-putting than opening a packet of chip longingly, and smelling a waft of oil. Clearly, the product has been lying around on shelf too long, even if you just bought it today. It has spent days in the plant, in the distribution center,  on road and then in your local mom and pop store. (It would seem that its velocity was highest only in one supply chain node – your home)

The importance of freshness is not just limited to the food industry. It  extends to a commodity product like cement or paint. An apparel piece lying folded too long is overlooked by the costumer. A technology product which takes 3-4 months to reach the market has already lost half time from its product lifetime. So Freshness is certainly not an attribute that supply chains can ignore, no matter which industry.

What makes is so hard to deliver a fresh product? It is usually a series of small roadblocks at many stages of the chain. Let us look at the FMCG supply chain for some of these roadblocks: Continue reading

When should I use market trucks?

Most companies like to use existing market trucks for their transportation needs rather than going for custom truck capacity. Even though this heavily increases their dependence on external parties, why do companies do this?

The simplest answer is, someone has already invested in the capacity and it is available for use. It meets the needs of varied requirements and therefore its asset utilization is higher. If on the other hand, you decided to build dedicated truck capacity, the cost would be higher, there may not be many takers and hence the service would come at a premium. New investments would also result in high depreciation of trucks and hence higher cost of operations in the initial year of operations. Continue reading

Levers for Managing Transport Cost

Transportation cost is a key cost component for supply chains. At 2-5% of revenue for most industries (12-15% for some industries e.g. Bulk) , a reduction in these costs can directly impact the bottom-line in a significant way. It is therefore very important to understand the levers impacting transportation costs.

What are these levers? Most of the levers can be classified under the following 4 heads: Usage of market truck capacity, Return load, Truck-turnaround time and economies of scale. Continue reading

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