Close co-operation between the international metals company Corus, wire drawer Caparo Wire, and finished component manufacturer Emhart Teknologies is claimed to have “radically improved” the supply of fasteners to the automotive industry, the three firms said on Wednesday.
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The initiative is said to have reduced the amount of stock in the supply chain by at least a third, increased stock turnover by 25% and freed up large areas of valuable space.
The project was initiated by Caparo Wire and supported by “Accelerate Wales”, a public sector programme aimed at developing the competitiveness of the automotive supply chain in Wales. It has reportedly led to a greater understanding between the organisations and a more integrated approach to supplying these small but critical components into the automotive market.
Working together, the three companies identified material and information flows, handling and manufacturing activities to investigate the processes involved and the time it took to produce fasteners for the end user. Representatives from each company were trained in value stream mapping to enable them to examine these processes effectively. The team was then able to pinpoint where efficiency could be improved and where cost savings could be made.
Their work showed that, while Emhart Teknologies had a very consistent and predictable demand for wire, this was not replicated in processes higher up the chain, with Corus making just a few major deliveries to Caparo each year. The project aimed to match the supply of steel more closely to the final demand for components, so that there were fewer huge peaks of input into the chain.
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By GlobalData
Eighteen months after the project was initiated, the results are described by the three companies as “remarkable”. Two of the three major delivery ‘spikes’ from Corus have been eliminated and the third has been significantly reduced. Overall, the peaks in rod deliveries have reduced by 64% and stock is now delivered more evenly across the year to match demand from Caparo and, ultimately, Emhart Teknologies.
The quantity of stock in the chain at any one time has also been reduced, by at least a third, thanks to the greater visibility of demand and processes among the participants. This means they can all be more responsive to their direct customers as a result of sharing information.
Emhart Teknologies has been able to halve its stockholding of the product line, releasing a significant amount of valuable space at its premises.
“As well as the physical benefits of reducing the space we need for storage, there is also less chance of the stock deteriorating or becoming damaged while being stored. This is particularly important when we are manufacturing performance critical components for the automotive industry,” Emhart Teknologies purchasing manager Mark Cornish said.
The company has also seen a 25% increase in stock turnover – a key factor in improving working capital. Stock is now processed through the business much faster, meaning the company can provide a more efficient and responsive service to its customers.
Caparo has changed its processes for producing and delivering wire to Emhart Teknologies and its increased responsiveness and supply reliability has led to a significant increase in orders. Caparo has also worked with Emhart Teknologies to introduce a simple but innovative way to monitor stock levels, using a webcam. The camera is trained on the stock area, enabling Caparo to see immediately when stock is removed for component production and needs replenishment.
The improvements in forward planning have also enabled Caparo to reduce its transport costs. By booking transport well in advance the company no longer has to pay premium rates for short notice bookings, and can even plan to share transport and make better use of return journeys.
“Thanks to the close co-operation between all of us, forecasting has improved immensely and we no longer have to react at short notice to meet unforeseen demand. Orders are now planned well in advance and integrated into our long term steel rolling programmes,” Corus account supervisor Linda Lewis said.
The culture of co-operation is now firmly established and tripartite meetings are held every six months to discuss progress and plan future developments.
