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Daimler’s production and logistics consolidation started at its Rastatt plant. The whole project will be concluded globally in 2020 (Photo: Daimler)

Mercedes-Benz is moving ahead systematically with the modernization of its factories and that involves a consolidation of production and logistics systems.

Those systems are the key to maintaining the flexibility today's carmakers need to remain competitive. They are especially important to a builder of premium cars like Mercedes-Benz.

The company's production and logistics structures have grown and spread over the years and the whole system is showing its age.

"Many of our logistics systems were established in the 1980s, so the systems are slowly declining technologically," said Klaus-Peter Schmitt, IT manager at the Diagnostic Competence Center, Flasher and Control Technology, Mercedes-Benz Cars.

So the premium car maker decided four years ago that a consolidation was in order. The goal: a new SAP-based logistics and production system capable of increasing flexibility and improving support for business processes. The automaker wants and needs standardization across-the-board.

These considerations are not really new. "People were already contemplating the migration of the old systems at the turn-of-the-century," Schmitt told automotiveIT. And this was going to be across all Mercedes-Benz factories.

The problem: "The larger the factory, the more complex the logistical processes behind it," Schmitt said. Not to mention the expense. The execution across all the main assembly plants would have cost hundreds of millions of euros.

A comprehensive solution was initially discussed, but senior management rejected it in favor of a "smaller solution" in the form of a gradual approach. The Rastatt plant was ultimately given the nod for the first rollout. The reason: only two model lines were manufactured at the South Baden assembly plant at the time.

The Rastatt factory, a stone's throw from the French border, was needed for the expansion of the model lineup planned for the end of the 1990s. About 5,500 employees at this modern facility have been building the compact A-Class since 1997 and the B-Class since 2005.

And the new B-Class has been rolling off the line in Rastatt since summer, and the next generation of the A-Class follows next year.

Ambitious project

The ambitious logistics project was launched in January 2009 under the title "Automotive Supply MFA." Its managers developed an advanced material logistics strategy. The concept behind it was drawn up based on the actual assessment of demand for parts, TBE in German.

"We wanted to replace the TBE at the same time," said Marc Krueger, IT manager, Logistics Systems Competence Center, Mercedes-Benz Cars, Vehicle Assembly and Stamping.

“But we had to come to the conclusion that the product documentation and the bill of materials explosion are so closely meshed in our company that this would not have made sense," said Krueger. " It would have involved a huge expense. So we made the cut there.”

A bill of materials explosion breaks apart each assembly or sub-assembly into its component parts

Mercedes deliberately maintained the old system environment, cutting away an additional complication.

“We are satisfied with it,” Krüger said. The targeted processes included material planning, incoming goods, warehousing, assembly line supply and parts shipment. Time and expense are saved when items reach the assembly line quickly.

The new SAP configuration is based on modules. They include materials and warehouse management, production planning, and sales distribution.

The idea is to keep project-specific extensions ”“ in-house developments ”“ to a minimum. They merely generate costs and "the automaker need not be concerned with issues that aren’t relevant to competitiveness," Schmitt said.

A better solution: SAP incorporates the in-house solutions as standard features in its portfolio.

Hungary first

The initial project went into operation on-time and nearly trouble-free during summer 2010. It was possible to keep incidents at a very low level. Five old systems were shut down in the end.

Last August, precisely one year later, the system went live at the new factory in Kecskemét, Hungary. The template only needed to be expanded marginally. The reason: only the legal requirements and the suppliers differed from Rastatt.

The next steps are not far off. Corporate IT is now expanding the system for highly complicated factories in its global network. "In the Bremen and Sindelfinden assembly plants, the template is being expanded to include functions not available in Rastatt and Kecskemét,” Krüger said.

Bremen will be ready for take-off in late 2012, before the launch of the new C-Class. The system will subsequently be introduced at Sindelfinden and nearly simultaneously at the Tuscaloosa factory in the US. "With the experience gained, we feel prepared for two parallel launches,” he said.

Even though it’s able to build upon a base concept, the company is again spending heavily to introduce the new standard in Bremen.

The rationale: "The fact that we again have to commit a large sum is simply related to the plant’s greater complexity," Krüger said. "That increases the rollout costs." The same applies to Sindelfingen.

But thanks to a much leaner approach (no replacement of each total system at all factories simultaneously), the cost structure for the main assembly plants will come in significantly below the early expectations.

East London in South Africa, Hambach in France, and Beijing will follow. In 2020, Daimler wants the systems in its Mercedes-Benz Cars assembly plants to finally be state-of-the-art. That will put the company in a strong position for model-line expansions.

That applies to Rastatt, too. There are expected to be more models in the A-Class’s third generation, and the company will have to support them logistically.

-By Hilmar Dunker