Inbound Logistics At Porsche

Using a holistic simulation and optimization tool to determine optimal supply cycles, the goal was to simulate and evaluate all performances along the process chain from first-tier supplier production down to the final product on the line of the OEM.

Transport costs, warehouse and stock costs, cage costs, incoming handling costs, and in- and outbound shipment costs were taken into account.

The idea of lean production as it is known in Toyota production and Kanban supply means keeping low levels of material stock for production. Minimizing this stock, however, increases the risk of losing sight of other costs along the supply chain, particularly for transports, handling, and administrative processing.

At the "Decision Supporting Systems in Supply Chain Manangement and Logistics" conference held by the Society for Operations Research, LOCOM presented an optimizing approach that takes account of all costs arising along the supply chain.

As part of a project for the company Dr.Ing.h.c.F. Porsche AG, LOCOM analyzed all logistics costs arising between the completion of a product at the supplier’s and the site where that part is integrated in a product at Porsche. This information was entered into an optimizing model. Required quantities were determined by splitting up parts lists and delivery documents for planned production quantities. In a special step for integrative cost investigation, all items from one supplier were examined simultaneously.

The result at Porsche was exact knowledge of the framework of supplier frequencies for individual items, that can now be optimized in terms of costs and cage-related minimum order quantities. Compared to previous practices, this saves 20% in logistics costs. After taking supplier relation constraints into account, the result is noteworthy savings of 10%.