Internal Logistics and Assembly Lines: Maintaining Efficiency During a Phase-Out Process : A Case Study of a Truck Engine Assembly Plant
Abstract: The Swedish heavy vehicle manufacturer Scania is currently phasing out their main engine assembly line in favor of a new assembly line. As a consequence, there is a need to adjust the logistics to the phase-out to maintain efficiency and free up space. Due to a lack of literature on this particular subject, it has been noticed that both Scania and the literature could benefit from a theoretical methodology that provides general guidance on how to approach reductions in production volume from a logistics perspective. To explore this problem the study answers the research question ”How can heavy vehicle manufacturing companies optimize inventory space at an assembly line when the production volume decreases?”. The study focused on a smaller internal logistics area within Scania’s Södertälje assembly plant, to develop a theoretical methodology that is also applicable to other areas and companies facing similar challenges. The phase-out will be executed in stages, starting with the most common engine types. The production volume will be reduced by changing the takt and removing engine carriers. Takt is a term used to describe the time that an engine spends at each assembly line station. The reduction in production volume leads to a proportional reduction in the amount of material picked at the logistics platforms. Consequently, the material stays in stock for a longer time, and the efficiency of the material handlers decreases. To maintain the stocking times and efficiency of the material handler, the study found that packaging sizes should be reduced in proportion to the production volume, as this would enable the storage to hold fewer items of each article while also holding a larger variety of articles previously stored elsewhere. As a result, additional activities can be given to the material handlers, while also freeing up inventory space that can be used to introduce the new assembly line. Approaching these challenges can be done following the theoretical methodology that has been developed in this study, consisting of three steps: Overview of Potential Changes, Quantifying Inventory Changes, and Calculating Inventory Space. Guided by this theoretical methodology, the study identified that the main potential changes revolved around packaging sizes. Changes in packages were then quantified for the 220 articles stored in the logistics area and synchronized with the phase-out to maintain the current stocking times. At the first step of the phase-out, when the takt is reduced to 3/4-takt, 107 packages could be changed, resulting in a 34% reduction in inventory space, indicating that one of the three logistics platforms in the logistics area can be closed. In the following stages of the phase-out, the further reduction in inventory space is marginal resulting in a final reduction of 46% at 1/3-takt, which might suggest that other approaches are more beneficial later on. As a result of this study, companies facing challenges adjusting the logistics to reduced production volumes can find guidance in the theoretical methodology presented in this thesis. The theoretical methodology highlights important aspects to consider based on both literature and empirical findings from the case study so that the efficiency of the logistics can be maintained during assembly line phase-out
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