Magna points supply chain toward local sourcing
Photo credit: Greg Horvath
TRAVERSE CITY, Mich. -- Canadian automotive supplier Magna International Inc. sees local strategy and efficiency improvements as key cost-saving measures within its supply chain.
Localization was one of three trends within Magna’s supply chain identified by Carrie Van Ess, vice president of procurement for the Americas, at the 2014 Management Briefing Seminars this week.
A new supply chain model is emerging, she said, in which “goods are produced, sold and consumed in the same geographic region.”
“This doesn’t mean that we’re not out there looking for the next area of global advantage,” she said. “What it does mean is that we’re looking closer to home first.”
Based in suburban Toronto, Magna controls one of the automotive supply industry’s most diverse product portfolios, including a variety of plastic parts and components.
Localization brings cost-savings across the supply chain, especially in light of climbing costs in traditionally low-cost regions, Van Ess said. Magna also is working to improve efficiency through packaging improvements and creative management of shipments.
Purchased goods and services represent roughly 60 percent of Magna’s sales, Van Ess said. The company handles about 8,000 shipments per week, and the number of trucks it manages has doubled since 2005.
“We are moving more parts than we ever have before, to places that weren’t on our radar screen even a couple of years ago,” Van Ess said. “And we’re doing it under tighter timelines than ever, with continued cost pressures and pressure to keep the environmental impact low as well.”
Magna is converting to returnable packaging where possible and in some cases actually redesigning its packaging to better fill space in trucks, Van Ess said. Some delivery routes are combined so one truck can stop at multiple Magna locations, minimizing unused space on trucks.
“We don’t want trucks going this way half-empty and this way half-full. We’re now looking at it as the complete network and optimizing those flows.” Van Ess said. “Our philosophy is no empty trucks, no empty containers equals lowest cost possible.”
Magna ranks No. 3 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $34.3 billion in 2013.