• vehicle assigning and dispatching.
According to modern techniques, the above-mentioned systems for flow setting and controlling use:
• automatic devices for products and component ‘‘on process’’ identification (bar code systems, capacitive memory devices…);
• wireless systems for easy diffusion of information in real time to the different working stations for controlling and dispatching;
• monitoring networks interfaced with PLC and Numeric Control, which control machinery and equipment.
Similar systems are also used for engine, transmission and suspension assem- bly, because they present a high level of complexity, even if not directly connected to the final customer orders.
It is important to consider that the above IT systems allow for detecting and storing information related to supply batches and the manufacturing period, specifically for elements critical for safety(Traceability).Every supplied batch and every temporal phase during the assembly process subject to traceability obligation is assigned to the relative space frame serial number on each vehicle or engine, so that it is possible to trace specific responsibilities in case of problems. Whenever it becomes necessary to intervene on commercialized vehicles, through recall campaigns, the traceability database allows for focalizing interventions at point of occurrence, minimizing the total number and their consequent costs as much as possible.
2. temporal value in working days (D), obtained by the ratio between the eco- nomic value of inventory and Work In Progress to the economic value of product developed per day, in the same productive process (production value at standard costs, delivered to warehouses for finished products or to customers);
3. yearly rotation index (R), obtained by the ratio between the value of products delivered to customers in a year to the economic value of inventory and Work In Progress.
The trend analysis of the above indicators shows the logistic effectiveness from a financial point of view, according to the budget and improvement plans.
6.6.2 Process Lead Time and Flow Index (FI)
The Process Lead Time (PLT) corresponds to the process time between the moment of insertion of direct material into the productive process (most impor- tantly, the withdrawal of raw or semi-finished materials from the warehouse) to the moment of the process’s end. For assembly, the insertion moment is when the first component enters into the assembly process, while the end is when the finished products are delivered to dispatching points for customers or to warehouses for finished goods.
To evaluate the effectiveness of the production flow, the process lead time PLT can be evaluated statistically, distinguishing the main phases as follows:
• type aphases, during which the transformation process is active and operations adding value to the product are performed;
• type bphases, during which the product is transferred without adding any value;
• type c phases, during which the flow is interrupted, waiting for type a phases, because of repair interventions, process failures, or stocks and buffers existing inside the considered process (including inventory necessary for batch production).
Each of the above phases can be affected by the process’s intrinsic variability, because of different standard times of operations depending on the product, var- iable waiting times for inventories, or eventual speed losses within the process.
Detecting these data statistically, the PLT average value can be determined and flow effectiveness also known as Flow Index (FI) can be measured:
PLT¼XA
i¼1
aiþXB
j¼1
bjþXC
k¼1
ck
FI¼ PA
i¼1
ai
PLT
These calculations consider the total of A, B and C phases composing the analyzed productive flow, deployed into the above-mentioned typologies.
The analysis of parameter FI is necessary for searching for the best logistic organization of productive flow, choosing a more convenient method and layout.
The more FI is close to one, the more the flow can be considered logistically lean, with reduction of PLT and speed-up of rotation index R ofwork in processinternal to the productive process analyzed.
6.6.3 Risk Indicators of Inventory Obsolescence
These indicators are related to the following types of goods:
• spare parts for after sales technical assistance;
• spare parts for equipment and working means maintenance;
• other consumable materials used in industrial processes.
Through withdrawals and monitoring of materials in stock, the following can be automatically obtained:
1. stock rotation index, deployed by utilization classes and value segments according to ABC analysis criteria (see chapter on basic concepts at the end of the book);
2. number of handled parts,in stock and without request of utilization since ‘‘n’’
months (where ‘‘n’’ is the alarm threshold, according to the utilization mode);
3. goods obsolescence index,expressed as percentage of goods not handled (and probably no longer useful), for which it is necessary to calculate the devaluation and proceed to a partial or total disinvestment of inventories, having eliminated any possibility of re-utilization.
The trend analysis of indicators 1 and 2 can determine countermeasures for inventory optimization, assuring continuity of service and decreasing working capital, consequently avoiding risk of obsolescence.
6.6.4 Order Execution Lead Time (OELT)
We refer to a car’s final assembly. The time necessary for the execution of orders starts from date of order acquisition (customer’s obligation) and ends when the product is delivered to the same customer. We call the duration of this process Order Execution Lead Time (OELT), evaluated as a statistical data, referring to a specific model or product line, the final assembly plant and the commercial des- tination area.
OELT=Time necessary to introduce the order into the production plan, manufacture and deliver the product to the final customer
Let us see what the phases affecting the total duration of the execution of orders are:
(a) time necessary to introduce the order into final production process, considering available productive capacities in relation to order portfolio(order processing time);
(b) time necessary to end production process (manufacturing lead time), also including supply process of intermediate products affectinglead time;
(c) time necessary to transfer finished products from final assembly plants to commercial dealers, also including inventory waiting times necessary for organization of transport batches (distribution lead time);
(d) time necessary for sales operations at commercial dealers and public regis- tration (customer care time).
To minimize Order Execution Lead Time, ideal conditions are:
• sales flow balanced with production flow;
• ‘‘one-piece-flow’’ production systems, with necessary degree of flexibility for multi-model production;
• production sites linked in an easy way to product dispatching centres;
• products diligently respecting order requirements, in terms of quality and specifications, without performing extraordinary finishing operations to correct manufacturing defects or damages occurring during transportation.
For mass produced cars, organized in a one-piece-flow, where ideal conditions are set, the order execution lead time is normally 3–4 weeks by best practices. In case of higher values, processes being slower and/or having a customer demand higher than production capacities, it is still important to define the necessary lead time precisely to maintain delivery obligations towards final customers.
As already established forTime To Marketrelative to new products,OELT for actual productions is also considered to be one of the strategic factors for sales success. When ideal conditions are not met, critical conditions can affect relationships between dealers and customers and there is a high risk of lost market shares.
6.6.5 Service Level (SL)
These indicators are strictly related to the satisfaction of obligations in terms of delivering on time and products corresponding to original requisites, according to order specifications.
Indicators normally used to evaluate Service Level are:
(SL)1 =number of deliveries on time/total number of deliveries (punctuality index)
(SL)2 = number of corresponding deliveries/total number of deliveries (conformity index)
Deviations from delivery obligations are evaluated through statistical criteria, dividing them into severity classes (1 or 2 weeks delay, 2–4 weeks delay, higher delays). These indicators can be referred to a specific industrial customer when we are dealing with materials or intermediate product supplies or to a specific com- mercial distribution area when we are dealing with final products, always in relation to the final assembly plant for a specific model or product line.
Indicator SL1 is used to estimate punctuality of deliveries for component suppliers along theSupply Chain; this argument will be examined inChap. 7, in the section on supplier performance evaluation.
Let us conclude this section underlining that the main Logistic Key Per- formance Indicatorsare those relative to Finished Products and WIP inven- tories, to Service Level towards commercial networks and Order Execution Lead Time. Modern information technology systems allow for automatic data collection, assuring a monthly report.
Other indicators are not subject to recurrent data collection and reporting, but are specifically analysed in process phases and the setting up of manu- facturing systems or in considering specific improvement programs for logistic processes.