A large Canadian manufacturer is facing several major challenges, that is, an increase in production rate, the start of production of models that incorporate new technologies and expansion into the U.S.  Since warehousing space is no longer sufficient, the company decided to open Third Party Logistics (3PL) centre with the help of a transport and warehousing supplier.  This 3PL centre is responsible for storing some of the plant’s parts and delivering them in production ready kits.  These kits are delivered in sequence for each production cycle. 

When operations began in 2008, our client noticed that the supplier was unable to provide quality service.  Parts were being delivered late and the inventory precision level was only at 85% (monetary value).  The situation is very critical for the company because now has to set up an emergency plan to rectify the situation. 
Supply Chain Including 3PL Centre 

CGG’s mandate is set operations at the supplier’s premises back on the right track within 4 weeks in order to, re-establish an acceptable inventory precision level of 98% (monetary value), eliminate late deliveries and ensure supplies are delivered to the client in good condition 

APPROACH TAKEN

  • Quickly analyse the situation at the supplier’s premises and set priorities
  • Set up control measures on a daily basis until the crisis is over 
  • Impose changes in the work process: improve the layout of the warehouse, make sure the offices and the warehouse are always in order, etc. 
  • Suggest new assignments for those employees who have exceeded their level of competence 
  • Improve how kits are packaged and loaded onto trucks 
  • Support the supplier by teaching him the client’s process and proper industrial engineering practices

RESULTS

  • Inventory precision now exceeds 98.5% (monetary value)
  • Late deliveries have been reduced from an average of 4 per week to 0 
  • Rush requests for parts due to supplier errors have been reduced from an average of 8 per day to fewer than 3