Technology keeps production lines moving, says Future Electronics
Keeping the production line moving: how the latest automation technology is increasing reliability and speed in the electronics supply chain.
The electronics component supply chain deceives the casual observer’s eye. It appears simple: boxes of non-perishable goods are kept on shelves in a logistics centre until a customer needs them, when they are taken off the shelf and are trucked or flown to the customer’s factory.
How difficult a process can that be to execute?
In truth, in a conventional distribution facility it is possible to identify more than a hundred points in the process of fulfilling a customer order at which there is a risk of failure. Failure can occur:
• at the beginning of the process – for instance, through the failure of the distributor’s sales person to input the correct part number or order quantity into the order form
• at the end of the process – for instance by failing to choose a mode of transport which will deliver the package on time
• and anywhere in between – for instance by failing to match the part number of the item picked from the shelf with the part number requested by the customer
And when a shipment goes wrong, it can seriously disrupt the customer’s manufacturing operations: the just-in-time processes commonly employed today allow very little margin for error, and one missed shipment can halt an entire production line.
Supply-chain failures therefore cost the customer money; minimizing the risk of such failure should be an important goal for OEM production executives.
The biggest source of failure of all is non-availability of the part that the customer wants, and so investment in inventory, and effective inventory profiling and management, are crucial requirements of an effective supply chain.
But assuming that the required part is held in stock at the distribution centre, by far the most common source of error in the supply chain is the usual suspect: people.
So when Future Electronics built its advanced new distribution centre for Europe, the Middle East and Africa (known as the EMEA DC) in 2010, with the goal of achieving perfectly reliable delivery of customer orders, its strategy was to automate almost every process from the moment a component arrives at Goods In to its departure from the centre in the back of a lorry.
As Future Electronics’ experience shows, however, the human element in a logistics facility cannot be eliminated entirely, and the training and education of the distribution workforce is an important element of a zero-defect supply chain.
The new 15,000m2 EMEA DC in Leipzig, Germany replaced an older facility in Hayes, UK in June 2010. The Hayes DC was run on largely manual processes, with a relatively small amount of automation equipment, mostly for packaging and labelling customer shipments.
When component manufacturers shipped components to Hayes, staff processed and sorted the incoming shipments and placed them on the shelves in marked locations. When a customer order came in, the staff also retrieved parts manually from these shelves.
But humans make mistakes when executing repetitive logical processes: as a result, Future Electronics had to maintain large Quality Assurance (QA) teams to check processed orders, and to correct mistakes in outbound packages before dispatch to the customer.
The new EMEA DC has eliminated all such sources of error by using a sophisticated ASRS (Automated Storage and Retrieval System) to do most of the work that staff used to do.
Incoming shipments are characterised by means of barcode scanners. Once logged as stock by the inventory system, incoming parts are conveyed for storage to a robotic ‘dark warehouse’.
The storage area is kept dark because the ASRS, not people, picks and places totes [plastic boxes which each hold units of a single part number] at the 285,000 locations in the 18m-high, 100m-long storage racks. When a customer order comes in, the ASRS picks the right combination of parts, and conveys them to a packing station.
The system never forgets where it put a part, and unlike a human, it never picks the wrong part or goes to the wrong storage location.
At the packing station, human operators take the required parts in the correct quantity from the totes conveyed to them. These parts are then passed to a second station where they are checked, and then packed in the optimum number of cartons to ensure 100% quality control (QC).
Here again, the risk of human error is almost completely eliminated: a computer programme gives simple step-by-step instructions to the operator, and requires an operator input to notify it when each step is successfully completed.
All human operations in the EMEA DC are computer-assisted in this way. But the computer assistance would not work unless the operators understood the computer instructions and accepted the importance of implementing error-free processes. Future Electronics’ average of 72 hours of training per person in the first year of the EMEA DC’s operation (training which is continually refreshed and extended) is regarded as an essential element of the success of the new facility.
Future Electronics’ QC process, which checks all shipments for accuracy before release to the customer, is now showing that the combination of automation taken to the extreme, combined with computer assistance to skilled personnel, can succeed in completely eliminating errors from the supply chain.
Supply chain reliability is measured on a monthly basis, and in three months in 2011 there were absolutely zero shipment errors attributable to the EMEA DC. The centre ships on average around 7,000 packages per day and has achieved a staggeringly low average error rate of 55.5 lines per million (LPM) over its almost two years of operation – figures which Future Electronics could only have dreamed of before commissioning the new centre.
The high standard of reliability at the EMEA DC is confirmed by its compliance with recognised stan dards such as ISO9001 and its AEO (Authorised Economic Operator) certificate. Customers have also endorsed the facility, with automotive product manufacturer Stoneridge, for example, awarding the EMEA DC its highest ever approval rating for Future Electronics after the opening of the facility.
More can still be done to improve the EMEA DC, for instance by streamlining processes to improve the speed of receiving goods, in order to fulfil customers orders more quickly.
But even as things stand, the Future Electronics experience is proof of how much investment (the EMEA DC cost €50m) and effort is required to achieve merely what the customer expects: their shipment, correct and on time, every time. It is deceptively hard to do, and it is a rare distributor which succeeds in it all the time.
It is common today for an OEM or CEM to prefer one distributor over another because of superior design support, better availability of required parts, or lower pricing. In fact, a commonly overlooked source of competitive advantage is a high-functioning supply chain – something which the best distributors are able to provide, but which is not guaranteed from all.
Amir Wagenstein is EMEA operations director at Future Electronics