• 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

 

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