I'd appreciate your take on Monday's WSJ report: "GM to Open Stamping Plant in Texas"
This new stamping plant shortens travel distance for sheet metal from press to assembly line to 20 feet. Annual savings in shipping costs for this plant and part alone estimated at $40MM. Tangible evidence of Akerson et al's efforts to streamline manufacturing operations.
""We spend billions a year on logistics," Mr. Akerson said. "Think about that, billions. Any savings I can get by cutting my logistics bill goes right to my bottom line and makes us more competitive. I've told our teams that we need to make this a priority to look across the organization and take the steps to cut the costs.""
What's your guestimate of potential costs savings from further logistics rationalization?
"What's your guestimate of potential costs savings from further logistics rationalization?"
I couldn't begin to guess, but producing parts close to the point of use makes sense on several levels. Shipping large body stampings is particularly difficult and expensive. For instance, imagine shipping hoods. No two hoods can contact each other due to scratching or denting. That means special racks must be built that captures the stamping individually with rubber clamp inserts. They ship them in these racks which only hold about 15. As you can imagine that they can't get very many in a truck. I believe I read that currently these stampings were made in MI and OH, probably in Flint and Parma, and needed to be shipped across the country to Texas. At 50 vehicles an hour, you probably need a truck every couple of hours and the costs add up.
Also think about the amount of inventory that would be required in shipping parts across the country. They probably spend at least 2-3 days in the trucks vs. a few minutes when produced in a contiguous plant.
The stamping people have been migrating to these contiguous stamping plants right next to the assembly plants for quite a while now, but this sounds like a particularly good case. According to news accounts, the plant will cost $200 million with annual savings of $40 million, so a 5 year simple payback.
This kind of thing was not possible in the old days because it took a long time to change these huge dies in the presses. With the progression of SMED (single minute exchange of die) technology and moving press bolsters, the cost/benefit equation starts to swing in the favor of the contiguous plants.