At the end of last year, news broke that the prestigious “European Supply Chain Excellence Awards 2003”1 had been awarded to the Jungheinrich Group. The winner was selected from approximately 250 organizations entered in the competition from all over Europe. The justification for the competition jury’s decision does not fully reveal the sources of this success. Perhaps, then, a perspective from an internship completed at the headquarters of the concern’s Polish branch will help not only to discover the recipe for this company’s success, but also to emulate the winner’s achievements and dispel doubts about the benefits flowing from this type of competition2 .
It may be surprising that Jungheinrich, known as a manufacturer and supplier of forklifts and warehouse racks, also reached for the laurel of the best-organized supply chain in Europe. After all, there are specialists whose operation and market position are a reflection of optimal cooperation of all departments among themselves and with partner companies, for whom great organization is an end in itself. Does Jungheinrich owe its success to anything other than high product quality?
The path to the award in the general classification was opened by the company’s victory in the “Engineering & General Manufacturing” group in difficult competition with companies such as: Finnforest U.K., Volkswagen Navarra together with Logistyka Navarra, and Volvo Powertrain. This confirms that the “European Supply Chain Excellence Awards 2003” could not have been any mistake. Volkswagen Navarra, nominated in the same group, is a very interesting example of supply chain organization. After a successful pilot project with Logistica Navarra in 1990, initially focusing only on the organization of supplies for production on Seat lines, the company decided to trust its new co-operator, entrusting them with the function of the concern’s main logistics partner. Logistica Navarra’s tasks included, among other things, the creation, implementation, and management/control of a center uniting ten main suppliers. The only way to achieve the goal was cooperation based on partnership principles, which in this case resulted in shortened delivery times, reduced inventory levels, and reduced operating costs. The partners shared not only information, but also responsibility. Interestingly, with the help of an ICT system, it was possible to completely integrate planning in individual branches, which allowed the structure to function effectively as a single company. The example of Logistica Navarra shows how important the function of a leader is among the entities participating in the logistics venture. The function of the resulting organization was leadership understood as unification and cooperation taking into account all participants with their characteristics, rather than imposing the leader’s will.
An equally good example of great production organization is the Volvo Powertrain factory. It is undoubtedly one of the largest European plants producing diesel engines for trucks. It has undergone enormous changes in recent years. Initially, production was carried out solely and exclusively for the needs of the concern, but over time the factory became a global supplier of components and engines for many recipients, e.g., for Renault.
Market demands mean that currently all engines are produced exclusively to customer order. This proves that the individual needs of the recipient, wherever they might be in Europe, are not only satisfied by the car seller, but even by the factory where the engine is produced. Reasoning in this way, one can go a step further. Knowing that 65% of production parts are purchased at the same time in various places, it can be stated that the truck buyer indirectly decides how many parts and when the supplier will produce, and consequently, how this affects the functioning of the factory’s partners.
Achieving such a state is possible thanks to long-term joint planning. The Volvo partner knows about future production plans. They also have the opportunity to analyze current information. Volvo uses many solutions created specially for its needs, such as the MINT system, which, according to the company’s decision-makers, is the only one on the market. An order appearing in the system automatically reserves production capacity and sets production, furthermore informing the supplier about changes in inventory levels. All information and its constant changes are made available on an ongoing basis to authorized partners. What is more, the supplier not only has the opportunity to acquire information, but also influences the production process itself. However, despite long-term planning, Volvo Powertrain does not act under the dictate of adopted plans, but is able to efficiently adapt to constantly occurring changes.
If these competitors for the award alone appear extremely strong, what could be even better? It turns out that when it comes to the idea of operation, in the case of the Jungheinrich Group we are dealing with a combination of both previous strategies. Operating from the position of a natural leader, the concern relies on the co-responsibility of its co-operators and, importantly, is extremely flexible in responding to individual customer needs. Here we are dealing with action on many organizational levels. Uniqueness begins already at the stage of production and order negotiations, because most of the available offer is manufactured in factories belonging to the concern. We encounter a situation similar to that of Volvo, where information and plans from company branches together with the capabilities of suppliers create the future and actual production structure.
Notes
1 Logistics Europe, November 2003
2 Józef Okulewicz, Contest of Excellence [@:] http://www.okulewicz.republika.pl