INBOUND LOGISTICS OPTIMIZATION - A case study of an Original Equipment Manufacturer and its deviation handling process

Abstract

Globalization has its impact on almost everything and the automotive industry being one of the key contributors to the world's economy faces the challenges of maintaining the complex supply chain dealing with significant uncertainty pertaining to extensive supplier base with inbound logistics handling extensive transport networks and related transport deviations including time, quality, product, quantity, packaging or documentation. These deviations reflect on the performance of IBL operations making the process of handling deviations as extremely critical to ensure smooth operations in the supply chain. The purpose of this study is to evaluate the deviations handling process currently being employed at the Inbound logistics of an Original Equipment Manufacturer (OEM) by mapping and evaluating the existing process. Furthermore, root causes are identified for the inefficient deviations handling process and possible improvements are suggested for process optimization at Inbound logistics. Lean Six Sigma is the selected methodology for this research and DMAIC framework has been adopted to improve the process. Following a case study approach, qualitative data has been obtained through semi structured interviews and observations from company personnel and industry experts. Quantitative data is analysed using deviations log through descriptive data analysis. The results of this research show that the main causes leading to inefficiencies in the deviations handling process at Inbound Logistics of OEM are the IT tools, procedures and the information. These causes are obtained through value-added flow analysis and deviations reports affecting the Transport Operations and are presented through cause and effect analysis. The improvements suggested are related to implementation of real time visibility and data analytics tools, standardization of the deviations handling procedure and centralized information by implementing IT tools.