Case Study 1

The supply chain is one of the most important operational areas for any OEM, a vital, and often sprawling, spider’s web that links its infrastructures in a harmonious flowing manner – it has to work perfectly, the slightest hiccup and there can be devastating knock-on consequences. For a multi billion dollar OEM it is a function that has to be handed to a partner, where reliability and trust are the cornerstones of the relationship.

Long and stretched, the supply chain operation is also subject to outside influences that can hit the weakest links and set off a chain reaction that reaches all the way to the production line, potentially causing a halt. And its not just an extended network, each component has to be sequenced to arrive with precision timing at its destination, from national or international starting points, and the whole chain must run like clockwork.

Significantly, it is also an area where real value can be extracted for an OEM, reducing capital expenditure and inventories. Optimising and smoothly running this giant spider’s web is the task of the Supply Chain Management Provider. That is just when working with one OEM – Titan-VNS in fact manages warehouse operations for one of the most innovative and complex assemble operations to be put together in Thailand: The contract manufacturing of Nissan Motors Thailand Co Ltd (“Nissan”) 1-ton Navara pickup by Mitsubishi Motor Thailand Co. Ltd. (“Mitsubishi”).

“The face of logistics has changed beyond all recognition during my career,” explains Mr Peera Thaweechart, Managing Director, Titan-VNS Auto Logistics Co. Ltd. “I have been involved throughout the key growth phase that has seen the responsibility of the Logistics Provider ramp up to where it has become a key partner of the client, taking over a whole series of day to day operational metrics to build chains that are integrated into the client’s systems at every level. We really started with a plain piece of paper here and our depth of knowledge of the Thai industry.”

The growth of the industry here with the giant multinationals carving the landscape out between them has “left space,” says Mr. Thaweechart, “a vacuum to fill as they are so big.” By being smaller and more tightly focused Titan VNS can eliminate bureaucracy and improve speed and flexibility. “Customers are looking for someone who they can react with, someone with high flexibility and agility,” he adds. “We slot right between, under the multinationals and above the local companies that can’t deliver a full supply chain solution.”

Mr Thaweechart is clear that “we can compete with the multinationals on a level playing field and create more value.” To be awarded the contract, he says, “we had to be tough, we had to sell our value, sell our experience, show how we can do better and add value.”

With long experience of working with Mitsubishi, as well as other OEMs and Tier 1 companies, Mr Thaweechart, says that Titan-VNS was able to facilitate “compromise between the two companies.” He says that “everyone has a common goal, everyone wants the project to success and we cannot rely on any individual solutions.” The first step was to benchmark the inward and outward integration of the warehousing operation, looking for improved efficiencies as well as cost reductions.

The warehousing management contract came with a clean sheet of paper, down to the brand new industrial unit zone, and a very unique challenge, working with two major global OEMs: Nissan and Mitsubishi. “They are both Japanese, but both have very different cultures,” says Mr Thaweechart, “we are in the middle; we are the go-betweens in a day-to-day scenario, bridging the gaps. Our motivation is to take on new challenges and to deliver, this is a challenge that we were excited by – and more importantly, one we were confident we could deliver better than anyone else.”

The warehouse complex, located in the Laem Chabang Industrial Estate, covers 40,000 sq. m. and comprises of four separate purpose-built units, with one being ring fenced from the other three and located in the ‘Freezone’. “Our team optimized the operating process, designed a system that allows for priority parts positioning, eliminating all unnecessary travelling and allowing staff to mobilise in the most productive manner.” The warehouses are stocked in order of component priority. We also built-into this operating structure the maximum possibly flexibility after extensive modelling of operational scenarios. This was especially important with this programme as it involved a different operational process to what is usual, bringing with it a longer chain with more stakeholders involved.” That longer chain required careful adaption of inwards delivery and outbound supply to the remotely located Mitsubishi assembly plant. “We also had to develop a smooth running transport solution that has the adaptability to allow more trucks from more points to be slotted into operations.”

Another plus point for Titan VNS is its workforce, all are long term employees; unlike logistics industry norms we don't use subcontract staff. “It means we have a huge skills base and highly motivated staff who are ready to take on a new challenge,” says Mr. Thaweechart. “This contract was a challenge that all our staff were eager to embrace. We also have a short chain of command; this keeps everyone in the loop, aware, and able to move very fast,” he continues.

While Titan VNS has optimised the operational process, this happens in tandem with the IT system. Our in house IT unit, ‘Titan VNS Logistics Management Solutions’ (TVLMS), develops and manages solutions using our sector-first, ‘Predator’ software platform.

“We have created an IT system that is fully customisable,” says Mr Thaweechart, “this means we can work to the requirements of both Nissan and Mitsubishi as smoothly as possible, in effect we are linking three different computer systems, but with the unrivalled flexibility of TVLMS we are able to provide the smoothest possible transfer of data at the terminals.” An example? “We are able to integrate Nissan’s customs declarations for tax purposes into the process, automating this function and reducing costs as well as optimising payment sequencing.”

Mr Peera adds: “Our system tracks parts in correlation with the consumption of the plant, based on a made-to-order process. Originally our customer would plan for two days’ worth of warehousing before assembly, but because of this groundbreaking new system, Titan-VNS has been able to reduce that to a day and a half or less.”