New Logistics Ideas Help Cut Costs in Half
Source: Editorial Staff
Several local enterprises are installing IT and logistics management systems to improve efficiency and boost customer satisfaction.
Encouraged by substantial cost savings in high-priority areas, several companies have continued to upgrade their entire logistics systems to ensure survival in a fiercely competitive global marketplace.
A comprehensive logistics service provider since 1964, K-line’s subsidiary, Krungthep Cholkij, handles all road transportation services, using trailers, 10 trucks and container chassis for overseas cargo.
When oil prices peaked last July, diesel cost Bt 43-44/litre, pushing transportation costs up by 40-50%. Realizing that 100-200 meter deviations from planned routes pushed up transportation costs, K line Deputy General Manager Operation Division Logistics Department, Chaiyos Chongprasitipol, installed GPS and petrol tank caps to optimize asset utilization, prevent accidents and pilferage while setting the speed limit at 60-80km/hour. As a result, petrol costs were cut by 5-10%.
Milk Run proved to be the most efficient and cost effective. Based on careful selection of zones/regions as well as suppliers and packaging designs, the company could determine how many suppliers could be served along each route, allowing only 30 minutes for trucks to come and go. After unloading empty boxes, parts and components are immediately loaded for delivery to assembly plants, ensuring just-in-time delivery.
To prevent overcrowding and accidents, the company also proposed three systems for transporting containers.
1. Wholly system: each plant determines the number of containers hence congestion/accidents/delays are minimized;
2. Incoming and outgoing trucks leave chassis tails at the plant – 90% of Malaysian factories use this system;
3. Round used containers: raw materials/products taken out of the container are immediately replaced by new products and are ready for shipment upon completion of customs clearance – so there is no need to return empty containers.
Since 1995, Panjawatana Plastics Co., Ltd., has implemented various quality standards including ISO, 5-S activities and business plans.
“We started by looking at causes of waste within the company, then we appointed a task force to solve these problems, particularly with regard to internal logistics. Precise development objectives and an action plan were approved by executives, along with a system for monitoring the progress of the action plan,” said Wiwat Hemmondharop, Chief Executive officer.
A project to upgrade raw material storage system aimed to cut stockholdings by 50% without an adverse impact on production. Revamping the storage cut the number of plastic pallet bags from 7,000 to just 3,960 while production time was reduced from 108minutes to 70minutes per tank.
Orderly stacking of plastic pallets instead of 20 bags scattered on the floor cut the 20 minutes previously spent moving plastic bags to just 8 minutes. Instead of packing mixed plastic pallets into 18-kg bags, plastic pallets are now loaded into 740-kg mixing tanks, reducing the mixing time from 30 to 5 minutes. Personnel pouring pallets were also cut from a 2-men shift to zero. From a total budget of Bt 363,000, cost savings were achieved of Bt 61,102/month.
Aiming to minimize the lead time for delivering automotive parts to customers, Denso International Asia Co., Ltd., re-organized transportation and inventory systems to consolidate delivery along the same route, said Suvimol Sujaritvanichpongse, Production Control Center director.
Six local production bases also consolidated export containers while Denso Singapore served matched buy-sell orders and arrange shipment schedules, thereby minimizing lead time from the date of purchase order to the final delivery. K line’s Paperless system also enabled the company to cut export/import clearance time from 8 hours to just 1 hour, while specially designed packaging further reduced unused container space from 60% to 5%.