01 Oct 2020
FCA What's Behind, season 2 – episode 3: Supply Chain Management
- Episode 3 looks ‘behind the scenes’ of logistics, explaining what the FCA Supply Chain mechanism consists of and how it works.
- The Supply Chain Management function of an automaker acts as the interface between its industrial production and its commercial operations: at FCA, it has a global scope and a sustainable approach.
- The efficiency of this function results in advantages for the customer, for the production system, and for the environment.
The first two episodes of the second season of FCA What’s Behind offered a broad overview of the philosophy that underpins FCA: a constant tension toward progress, expressed through research into increasingly sustainable propulsion systems, suitable for new forms of mobility, designed to coexist with attentiveness to a prestigious and inspiring story. The car is not just a tool, but the embodiment of ideas, dreams and perspectives that must be as democratic and accessible as possible. Projects and industrial production are required, but the processes to reach out to customers are also essential: the third episode focuses on the fundamental Supply Chain Management function.
The link between industrial production and commercial operations
The Supply Chain Management function of an automaker acts as the interface between its industrial production and its commercial operations. The women and men of Supply Chain move the materials and semi-finished products, activate the production nodes, and distribute the cars according to customer requirements. The Supply Chain mission is to synchronize the entire process like the precise mechanism of a clock, to prevent inactivity, delays and diseconomies.
A global scope
At FCA, the function’s operational scope includes the entire global supplier base, all the storage centers, and over 100 FCA plants around the world: a truly concrete example of the Group’s global nature. To fulfill market demand promptly and efficiently, the entire flow of incoming and outgoing materials must be planned from the earliest stages of the cycle onwards, and must be fully operational as soon as production starts.
A complex system to meet customers’ requirements
Supply Chain must ensure the feasibility of the objectives, by balancing demand and factory capacity; it must also define volumes and allocate all the resources required, by optimizing flows and inventory. It is an extremely complex, organic system, all of whose components work together toward a common goal: to turn customers’ wishes into reality. This is the only way to fulfill orders from any FCA dealership in the world, quickly and efficiently. Indeed, Supply Chain comes into play as soon as the order is made: the Demand & Production Planning and Capacity Planning functions give the green light to the production process, which is where the plants come in.
Logistics and sustainability
Based on the schedule received, I-Fast Container Logistics (a wholly owned subsidiary of FCA) organizes the movement of components from the suppliers to the factories, where they are processed and assembled. Once the car has been manufactured, the Vehicle Distribution function organizes the transportation
for delivery to dealerships in other countries, via another FCA company: I-Fast Automotive Logistics. To take the cars from storage areas to ports or their final destinations, they utilize state-of-the-art natural gas-fired car carrier trailers – the ‘green’, sustainable evolution of road transportation, then the cars cross the Ocean under contracts signed with various shipping companies. Around 60% of inbound and outbound movements are made by sea or rail, which significantly limits environmental impact.
Organizational innovation is also taking place in the name of sustainability: optimizing container saturation resulted in an offset of around 600 tons of CO2 in 2019. The adoption of new methodologies to optimize transportation of materials also led to an offset of over 1,500 tons of CO2 in one year. Finally, the streamlining of road transportation and changes to movements by sea and rail reduced CO2 emissions by another 2,700 tons. The Supply Chain Management function therefore works in an innovative, flexible and sustainable way, to satisfy every customer and result in advantages for the production system and for the environment.
Turin, October 1st, 2020