Source: Automotive Logistics
Container pool shrinkage is an issue that has a costly impact on OEMs and tier suppliers across the automotive industry. At various points in the extended supply chains which support today’s vehicle manufacturing operations, containers go missing, are misused or are even stolen to be resold and used elsewhere – in the industry or outside it. Lack of visibility over the movements of containers makes it hard to put a number on the scale of the problem, but one carmaker attending an ideas lab at the Automotive Logistics Global conference in Detroit last year said it would be easy for an OEM to lose 10% of its pool.
Given that one vehicle-maker and its suppliers may have hundreds of thousands of containers in circulation, the combined total loss for the industry is sure to be vast, with significant implications for costs, efficiency and sustainability.
For this reason, OEMs have started to pay more attention to visibility in their packaging operations. A recent Automotive Logistics survey of senior automotive industry executives revealed that visibility comes a close second in their list of top priorities, just below the actual availability of packaging (see graph below).
As part of this move towards improving the oversight of their container fleets, various OEMs are now investigating different types of tracking technology to provide more visibility. Nissan North America (NNA) is one of them.
In spring last year, the OEM started exploring the merits of GPS (global positioning system) technology to provide better visibility of the containers of parts moving through its supply chain.
“The idea came about because we were struggling to determine the root cause of container shrinkage that we were experiencing between the plant and a few of our key suppliers,” explains Anthony Brownlow, packaging engineering manager at NNA with responsibilities across its operations in Tennessee, including the Smyrna vehicle assembly plant, the Decherd engine factory and the OEM’s export centre.
The problem – similar to that experienced by other vehicle-makers – was that suppliers were contacting Nissan to report that they were short of containers and to ask if these were to be found anywhere on the OEM’s property. From Nissan’s point of view, the containers had been loaded onto a truck at its return centre, but beyond that it was unable to say what had happened to them between its own facility and the supplier’s premises. The suppliers, meanwhile, believed that the containers had not been returned.
The only way to try to track down the containers and establish who had last been in control of them was to go through paperwork, such as bills of lading and manifests, a slow and tedious process. “We realised that our visibility outside of our campus was limited,” states Brownlow.
He and his packaging team started brainstorming ideas for how to address this lack of visibility, taking inspiration from technology already being used in the transportation industry and, indeed, by ordinary users of mobile phones for navigation.
“The question was: could we use that same technology – GPS tracking – to solve packaging issues?” Brownlow explains.
Tracking down the right tech
There are a number of technologies available that can be used for tracking, including RFID (radio frequency identification), BLE (Bluetooth Low Energy) and of course GPS, but Nissan needed to find one that could cope with monitoring the exact location of containers in the context of its cross-border, international supply chain.
“The more miles and touchpoints in the supply chain for containers, trailers or any asset [and] the more providers you count on, the greater the risk to the supply chain for various types of disruptions, a few of those being compliance, delays and misroutes of varying degrees,” says Brownlow, giving some idea of the scale of the task.
Nissan settled on GPS because its key benefit is that it can locate an asset at all times, whereas an RFID tag that can be read at the gates of a facility – a cheaper technology – merely acknowledges the arrival of the container it is attached to; if the container fails to arrive in the first place, the RFID cannot say what happened between one gate and the next.
Other key questions to address in the search for the right equipment included the length of battery life in the tracking devices, their fitment to the containers, location accuracy and ability to pull and aggregate data. Through trial and error, says Brownlow, Nissan found a GPS system, from Surgere, that suited its requirements: trackers that could be fitted to a bulk container or steel rack, supported by software to handle the incoming data.
The GPS tracking units can be fitted to the bottom of containers, such as 30 by 32 or 45 by 48 bulk bins, inside the celled structure of the bases. The units cost $400 each, then $500 on top of that for a year of service, therefore amounting to an outlay of nearly $1,000 per container in the first 12 months; visibility, it seems, comes at a price.
Nissan kicked off its project in April 2018 with five tracking units, but over the course of a year broadened this out to 45 across 30-40 suppliers. The GPS may have involved a cost premium, but it soon became clear that the initial outlay would be more than compensated for by what the technology enabled Nissan to discover.
On the trail of violations
Container misuse is commonly found across the automotive industry and can include tier one suppliers using them to service their own relationships with suppliers further down the chain, inter-company part transfers stretching the container route without permission, and even theft. With the help of the GPS, Nissan confirmed that its own situation was no different.
Out of the sample of the suppliers with tracked containers (a relatively small proportion of the nearly 500 that Nissan uses in North America), the contract violation rate signalling some form of misuse was around 30-40%. The theft rate was about 5%.