New Parts Distribution Centre - ABC Magazine 29 8 2014
1. PARTS: TRANSPACIFIC INDUSTRIES
A merging of truck and bus parts supply has created cost savings under
one roof
By: David Goeldner
Date: 29.08.2014
MAN buses has a secure future in parts supply, thanks to an expansive and smartly run distribution
centre
It would be an understatement to say Transpacific
Industries’ (TPI) Viking Drive Wacol Parts
Distribution Centre (PDC) on Brisbane’s western
outskirts is ‘state of the art’.
Ostensibly it appears as a large warehouse –
which it is – but what goes on inside is cutting
edge in the dynamic world of heavy vehicle parts
supply.
The 13,000 square-metre undercover facility
covers TPI’s four main commercial vehicle
divisions Western Star Trucks, Dennis Eagle
waste management vehicles, MAN trucks and
MAN buses.
While bus parts might not be the largest part of
the inventory, it is no less important to the total
operation, according to Transpacific Commercial
Vehicles Group General Manager Parts Mike
Hickey.
"MAN buses are very important to us," Hickey
says.
"We are lucky that we’ve got some other truck brands that give us some volumetrics which means that we can
look after buses rather than it being a standalone business."
He says having four vehicle brands together under one roof creates efficiencies in the system.
The factory, as one might think, is not carved up four ways to handle each vehicle division separately, but is
cleverly intermixed and integrated.
"Why you keep certain parts in certain areas is to provide for more product coming in, or you need room for more
expansion," he says.
"You wouldn’t get all the efficiencies that you need without the volumetrics of having the four brands together to
give us those efficiencies."
The Wacol PDC came into operation in 2008, and after five years is as clean, neat and tidy as it would have been
on Day One – spic and spec with room to grow, and not before time given the cramped situation TPI faced at its
nearby Formation Street facility leading up to the new PDC’s opening.
FORECASTING GROWTH
Hickey was involved in a future forecasting exercise in the mid-2000s when he started with Transpacific Industries
to see where the opportunities would lie, and it became apparent that OEM (original equipment manufacturer)
parts supply was a key factor behind growth.
Along with his peers from the truck and bus divisions, Hickey and other TPI GMs considered a rolling five-year
plan which led to modifications to the original Formation Street site until the Viking Drive industrial allotment on
which to build the new PDC came up for development.
"We put our foot on this site fairly quickly when it became available," Hickey says.
Why a large facility is needed is based around the demand for parts depending on vehicle age.
"Parts in the main in the first twelve months are mainly service parts, so you don’t see a lot of parts usage in the
first few years in the life of a brand new vehicle," he explains.
"With truck you see it at four or five years because of the kilometres they do but in bus its extended further to
seven or eight years."
Hickey says the world of parts and accessories supply lives in a time lag relative to the production of new
vehicles.
"If we build a lot of vehicles today, and sold a lot of vehicles this year, then I don’t see the need for parts –
particularly for bus – for the next seven years."
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2. However, for any new vehicle just produced, Hickey will bring in the parts to the PDC at the time of release.
"In some cases we get the parts before we get the vehicle, so if anything does go wrong in the first few years
we’ve got it covered," he says.
Hickey refers to this as ‘just in case’ parts.
"A good example is the engine mount. You don’t see too many of them break, it’s a rarity, but we will have them
on the shelf just in case."
But back to the recent past, and the cramped conditions of pre-2008, the inventory needed to be ‘select’, pruning
the volume and maintaining offsite storage, which was not ideal.
"It wasn’t efficient because you needed people to go and get stuff all the time," he says. "We were bursting at the
seams.
"I started the planning to move out of there when I came to the company in 2005. Our production facility needed
more room at Formation Street – they were bursting at the seams as well."
With all GMs and the board in accord, it made economic sense to make the move, and in so doing has brought
benefits to bus parts supply across the MAN range.
"From a consolidation point of view with bus, it’s useful to have volume to keep costs down."
Hickey says if the PDC just dealt in MAN bus parts, without the truck divisions, it would take longer to fill
containers to bring them in, and costs would go up.
A ‘less than container load’ – LCL in logistics parlance – has a higher freight rate.
"When you consolidate brands together you get efficiencies of scale, and keep costs down. Even with our
outgoing freight we don’t separate the brands if it is going to one location.
"Bus parts, truck parts, and body parts all go as one unit."
Hickey is proud of the operation, and what the Parts Division team at TPI has achieved in its first few years at
Viking Drive.
"It’s a pretty good operation and we actually came second to Coca-Cola Amatil in the Supply and Logistics
Awards the year after we moved in here – and we are happy to come second to Coca-Cola, that’s not a bad
result."
PAPERLESS OPERATION
The operation also prides itself in being almost paperless, with the exception of barcoded stickers attached to
each order.
"We run a fully integrated warehouse management system which runs on barcoding and radio frequency," Hickey
explains.
He says the system provides for accuracy.
"A container arrives every 1.3 days, but some days we get two or three. Parts are stored in a ‘one pass put away’,
purely for efficiency."
But before that happens, there is scanning to be done.
"Parts that come in to the distribution centre are scanned by barcode. Each time a part passes through what we
call a ‘gate’ it’s scanned. When it comes in its scanned, when it’s put on the shelf it’s scanned, at stocktake it’s
scanned, when it’s picked it is scanned and when it’s packed in a box to send to a customer – also scanned.
"That’s where we get the accuracy."
It also means that TPI is less reliant on needing a skills base in parts interpreting as you might find at similar
warehousing operations.
"Normally in a distribution centre you need this skill, but with barcode reading you take a lot of that skill base out
of it," he says.
"But we do teach staff to challenge what they are picking and packing if it appears obvious that a part isn’t the
right size for its box."
The PDC dispatches about 10.2 tonnes of parts a day, which goes out to 109 locations through the Asia Pacific
region.
Hickey brings in 40-foot containers from places such as MAN in Germany, and backfilled from Australia into New
Zealand.
Specifically for buses, the complete parts range from front to rear bumpers for the MAN-MCV Elite buses are kept
at Wacol on the premise of ‘just in case’.
Items most commonly kept for buses are those that tend to get damaged, notably for front left- and right-hand
corners – the ‘hit zones’.
"We make sure we keep all parts from a crash perspective to get operators back on the road quickly," Hickey
says.
"Our dispatch works on the basis that if we get an order for a part today, it leaves today."
Up until 3pm parts leave Wacol as road freight, and up until 4pm as air freight, working within the Toll Freight
Management System.
"Everything we do is electronic and we produce very little paper work," Hickey says.
"There are no pick lists, everything is done by barcode scanner and radio frequency.
"Virtually the only paperwork you will see in the PDC is a pick ticket – a sticker that goes on the part so the
customer knows what part has been received and what order it came from."
The pick ticket provides information on who picked the order, who packed it and when it was packed.
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For some larger customers, such as Brisbane Transport, which operators the Brisbane City Council’s bus fleet,
Hickey oversees an integrated system where BT sends an electronic purchase order to the PDC, which generates
an electronic acknowledgement that the order has been received. BT can see the cost of the stock and what they
are getting as the order is placed. At dispatch an electronic invoice is attached to the purchase order sent back to
Brisbane City Council which electronically uploads into its own system for those parts.
"So it’s a ‘one button’ receipt rather than entering detail line by line," Hickey says.
"For us it doesn’t matter what computer system they are on. It runs through XML technology which is a ‘box’
between our mainframe and their mainframe, putting their data into a format our system can understand – and
taking our data and putting it into a format that their system can understand as well, so it makes life a lot easier.
"The technology has been around for a little while, but we have a number of customers on that system."
The PDC takes about 6,000 orders each month, which means about 120,000 pieces are shipped out of Wacol
every four to five weeks.
Rather than operate a ‘just in time’ system, TPI prefers to back up its commercial vehicle division with ample
inventory.
Hickey says the amount of inventory is calculated based on a purchasing logarithm, factoring in seasonal stock,
and what should be on the shelf. About 20 per cent is added to inventory as safety stock.
"We also look at a ‘J curve’ to see where product sits in terms of demand, whether it’s on the way up or down," he
says.
"As older vehicles are taken off the road, you start to reduce inventory for these vehicles."
Hickey says the good thing with bus is the commonality of parts among different bus chassis.
"This makes it slightly easier for us because you don’t have to worry about body parts – in most cases."
SUBHEAD: WORKING TO DEADLINE
Like most transport oriented businesses, there are busy times, and not-so-busy periods during the working day.
The PDC has 48 staff, 23 in the distribution centre itself, the remainder either in the office or in the field meeting
clients and drumming up business.
About 70 per cent of the PDC’s orders come in between 1pm and 4pm each day, which necessitates two shifts,
day and afternoon.
Afternoon shift starts at the peak time between 3pm and 5pm.
That means a full crew overlaps for two hours on a day shift starting at 7am, and the later shift working up to
11pm, five days a week.
The later shift tends to focus more on ‘put away’ than packing.
While there is less a need for expertise in parts interpreting at the PDC as you may require at other similarly sized
parts and accessories warehouses, there is nevertheless an emphasis on training.
"We spend a lot of time on training. We have a number of people doing certificates in logistics and warehousing –
and parts interpretation – and we have a mentoring program," Hickey says.
ROOM TO GROW
TPI is five years into a 10-year, plus five-year lease option on the purpose built facility, and currently sits at 72 per
cent capacity.
"So we’ve still got 28 per cent to go, and we have wide and skinny aisles so we can do double deep pallet racking
where we can increase from 5,300 pallets where we are now out to 7,700 pallets," Hickey says.
"We have plenty of expansion without changing the racking configuration - we have oodles of space."
So it appears, oodles of Western Star, Dennis Eagle – and of course MAN bus product – to fill it.
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