Through cooperation to the perfection of processes
Kinga Wiśniewska talks with Szymon Górski, the director of the Logistics Department at Volkswagen Group Polska and Radosław Rożek, the managing director of CAT LC Polska about building trust and partnership, about meeting challenges and creating new processes adapted to high requirements.
Volkswagen Group Polska (VGP) has been cooperating with CAT LC Polska since March 2011. Did the experience of CAT LC in the automotive industry services play an important role at the beginning of cooperation between your companies?
Szymon Górski: Yes, it definitely did. Volkswagen Group Polska is a synonym of the highest quality and the highest quality characterizes our products. That is why we chose the best company on the Polish market as a partner. It was the extensive experience of CAT LC Polska and understanding of the client's needs that allowed us to speak the same language understood by both parties. For our customers, the moment of changing the operator was associated only with one visible change - a change for the better.
Radosław Rożek: Our experience in the automotive industry for over 60 years allows the entire CAT Groupe to efficiently meet the expectations of such demanding customers. In Poland, we have been serving this industry for over 20 years.
Since the beginning of the existence of the Polish subsidiary ...
RR: That’s right. Our processes, products, solutions and tools have been adapted for many years in terms of serving this industry. I am convinced that it is our experience in serving automotive clients that often helps to build the foundation of trust and makes others entrust us with the most complex logistics processes. The automotive industry is also characterized by very high quality of deliveries –also in this respect we have experience as well as developed solutions.
How did cooperation with CAT help VGP meet the challenges resulting from the increase in operations and turnover in recent years?
SG: During our long-term cooperation CAT LC Polska, taking into account their own experience, convinced us to implement many solutions that they effectively use in cooperation with other clients. These solutions have allowed us to reduce costs, but above all, to save time needed for packing or loading operations. As a result, they allow us to handle much larger volumes while maintaining the same level of operational resources, as e.g.: three years ago.
RR: I would just like to add that I am personally proud that CAT LC Polska contributes to the development of spare parts logistics for such a leader in the industry as the VW Group.
In a very complex organization like Volkswagen Group Polska, you certainly had to face many other logistical challenges. What is the key to the success of such dynamic logistics?
SG: The key is the team. Logistics faces challenges every day, it has to handle more and faster every day, at the same time having the same limited resources. To meet this challenge, you need to build a very good team. We, at Volkswagen Group Polska, have succeeded. To be frank, today's success of our logistics is primarily thanks to the best managers and their teams that I have cooperated with. Our logistics consists of four teams: Distribution Center run by Karolina Smorawińska, Logistics Team Cars run by Natalia Dominiak, Logistics Support Team run by Katarzyna Trzebińska and Quality Assurance Team run by Magdalena Torge.
After several years of cooperation with CAT LC, the time has come for further tasks. VGP decided to entrust CAT LC with the service of the distribution warehouse for replacement wheels of all brands of the Group in Duchnice. The project would certainly not be possible if CAT LC did not comply with the high VGP requirements. What tasks did the operator have to face?
SG: Quality. Quantity. Time. We have decided to entrust CAT LC with a completely new area, i.e.: full service of complete wheels: reception, storage, picking and distribution. We expected very high quality with a demanding time regime for handling this particular assortment. An additional challenge in this area of business is seasonality determining the two extreme scales of operations. This task is also fully accomplished with CAT LC Polska.
CAT LC Polska stands out by building processes for each client's needs. Did the service of VGP replacement wheel warehouse require you to implement new processes? What do operations in the warehouse look like during the hottest periods associated with the seasonal tire change?
RR: Indeed, taking over the service of Volkswagen Group Polska wheel warehouse required us to adapt many processes. Particularly noteworthy is the huge volatility of volumes. In the off-season, we store several thousand wheels, but in the season the number of units stored reaches up to 20,000. This requires great flexibility both in terms of the available warehouse space as well as human and hardware resources. In addition, the requirements regarding warehouse service, warehouse movement reporting and inventory involved ‘tailoring’ the warehouse service process for VGP from the very beginning. We have invested in, among others, a dedicated warehouse service system (WMS) supported by the scanning process at every stage of the process. We have also adapted the storage model to ensure the flexibility of operations during volume growth and to improve the productivity of handling stored wheels. So in these hottest periods we are properly prepared to provide the service - we already have one winter season behind us.
This is not the end of new tasks. Cooperation between your companies is still developing. There
is another challenge to face. At the end of last year CAT LC won a tender for spare parts distribution and loading operations at the central warehouse of VGP spare parts in Komorniki. What sort of loads did the tender concern? Why did you decide to entrust such a large part of the process to an external operator? Running such processes as loading and distribution operations is complicated and requires trust.
Yes, as a result of the tender, in which we set even higher requirements, we have again entrusted CAT LC Polska with our entire distribution. A large number of car models that are offered in our portfolio determines a huge number of indexes, with which we work every day. Over a year, it's over 150,000 unique catalogue numbers of parts and accessories. This number of indexes translates into a large variety of transport loads, which in turn CAT LC Polska needs to deliver on time to our partners
across Poland at the same time providing the highest quality. We send a whole variety of items, from a single screw, through typical consumables, to whole sections, e.g. car plating. All parts ordered by our partners on a given day until 16:30 must be delivered, regardless of the destination, at the latest by 7:30 the next day. Answering the second part of the question - we did not have any doubts signing another extended contract with CAT LC Polska. By outsourcing the loading process, we have gained resources and time to handle the increasing volume. CAT, on the other hand, can manage the loading process in a flexible way, thus achieving earlier readiness for complete trucks to depart. Another aspect of this change is that now it is CAT LC Polska which is responsible for securing transported loads during transport before they are loaded. Of course, behind such an effective takeover of additional processes there are our long-standing operational relationships. It is these relationships, based on the vast experience of both partners, that are the foundation of mutual trust.
R.R. Answering this question, I would like to thank for this trust that VGP put in us. Tender requirements and expected service were really top-notch. We are pleased to be able to support VGP in the implementation of this complex process.
How will CAT LC operations work? Will they affect the functioning of the entire organization of the
distribution network, including night supplies? In what aspects in the new distribution process
for VGP, will you go beyond the service standards concerning the supply of spare parts for the VGP dealer network in Poland?
R.R.: Above all, it is worth emphasizing that the VGP spare parts service process carried out by our company already starts in the warehouse of the customer. Our team - 11 qualified employees, is
responsible for handling the volume prepared for shipment by VGP. Our tasks include quality control of goods, proper segregation, loading process and securing the goods that are in vehicles. We are also responsible for handling return shipments and packaging in the VGP warehouse. The next step, of course, is the distribution of spare parts, where timeliness of deliveries sets standards for the automotive industry. In addition to deliveries up to 6:00 am or 7:00 am, we also carry out deliveries on the same day. Distribution of VGP spare parts is currently the fastest night distribution in Poland,
not to mention the very late hours of goods release from the warehouse. The CAT LC network is the fastest night distribution network on the market. To ensure proper control and proper management of information, also solutions regarding communication and information flow are adapted to the whole process. Apart from the scanning process and advanced tracking system (also of return shipments and packaging), we have adapted the information management model. For this purpose, designated employees in the Customer Service Department begin their work at night. So the process starts with the VGP warehouse, focusing on overnight deliveries and deliveries on the same day, together with the properly prepared process of requesting data and information. Answering the second part of the question - of course, this project is modernizing the entire distribution network. As of today, our domestic distribution network is more than 500 cars a day, 12 reloading and storage facilities and about 200 dedicated employees only to support these facilities. [The company employs close 350 people]
After the introduction of brand new cars, our routes have undergone significant modifications, we have modernized them, we have also completed the necessary human and hardware resources,
as well as reorganized shift systems in individual CAT LC facilities. Before implementing the project
we also prepared various solutions in the form of tools supporting the securing of goods during transport, as for example, collective packaging for bumpers or dedicated baskets for car glass. We have also made modifications to ours ERP system, which will greatly facilitate the tracking of shipments to our key customer. A number of changes have already been made and I am convinced that more will be implemented as our cooperation with VGP develops. As Mr. Szymon previously mentioned - we are constantly learning while creating new or developing current solutions to meet the growing needs and requirements of our client - VGP. Thanks to this, we can also share them with other clients.
What does the implementation of the project look like? Have you prepared special teams
to plan optimal processes, as you have done so performing other tasks? How to conduct such complicated processes?
RR: Technically, the project has already been fully implemented in the operational part. The biggest challenge was to find and train experienced and qualified employees to support the process in the VGP warehouse. Both human resources, hardware, as well as means of transport have been provided in accordance with the intended milestones of the project. For eight years, CAT LC Polska has been developing its management model projects - we have a dedicated project management methodology developed for the needs of CAT with dedicated resources in the Project Office. Before starting the design works, we had selected a project steering committee that I am pleased to be a member of. We have also designated the project manager - a person probably the closest to our client - Mrs. Ewa Karbowiak, our excellent and experienced key account manager dedicated just to VGP. Of course, the project manager and the steering committee are only a small part of the project resources – it is the project team consisting of managers, specialists and employees both on CAT LC side and on VGP side that played first fiddle. And I would especially like to thank them for their commitment and excellent implementation of tasks. It's largely thanks to this team that we managed to achieve the project goals so efficiently, reaching its ambitious milestones. I believe that commitment and cooperation
between our companies were a key success factor in the implementation of this project. Apart from resources and methodology, of course, the whole project management was supported by IT applications and internal design procedures. The project was classified as strategic, so the right resources and tools had been assigned long before its beginning.
So far you have been talking about the nearest future. What about long-term prospects? Do you have to face more challenges?
SG: There are many challenges in the automotive industry. The industry itself is undergoing a huge change, focusing on the production of electric cars. In this case, one of the challenges
for logistics may be handling storage and transport of new types of battery based on completely new production technologies. The most important question, however, that we are facing today, is how long the current distribution model will suffice to satisfy our needs. We must answer the question whether or not there are still areas in the current model that we can optimize. When will the current model cease to be enough? When should we start implementing a new one and answer a very important question how a new distribution model should look like? As partners, we will certainly be searching together for answers to all these questions.
RR: I fully agree with Mr. Szymon. Basically, that's not the nearest future but the current state of affairs in our cooperation [Laugh]. I must admit that our cooperation is really a perfect partnership between a logistics operator and customer. There are many areas that I believe we can still jointly improve primarily for the benefit of the final clients of VGP. Looking at the challenges dictated by our market in the context of human resources, rising costs of doing transport business or a huge problem with the availability of drivers - I am convinced that a credible and reliable logistics operator as a partner becomes one of the key factors of the competitive advantage and guarantee of service quality not only for the automotive industry.
The dynamic development of technologies and IT solutions will also affect the responsibility of logistics operators. Looking several years ahead, the increase of cars with electric drive, printing 3D technology or full autonomy of vehicles and other changes will cause that customers will commission logistics operators to serve an increasing number of processes. And saying that, I'm not just thinking about the parts related to operational processes, but also about areas related to production technology, information exchange, management orders, IT support systems as well as communication with final recipients. At CAT LC we are constantly working together with our clients to create new breakthrough trends in the industry instead of only adapting processes to new challenges.
Thank you for this interview.