BREMERHAVEN, Germany - It's another routine day at DaimlerChrysler AG's parts consolidation center in this north German port city:
Eighteen truck-trailer loads of auto parts arrive from supplier plants all across Europe for immediate unloading.
The parts - nearly 1,000 different types ranging from screws to semi-built-up V-8 engines - are sorted by part number and either repacked for immediate shipment or put into temporary storage.
Eighteen 40-foot containers are loaded with just-in-time parts bundles - both from storage and from today's shipments - and carted to the docks for shipment to the United States, Brazil and South Africa.
Sixty containers arrive at the docks for transshipment to the Magna-Steyr plant in Graz, Austria, where the M-class sport-utility and Jeep Grand Cherokee are built.
Each day, in a complex ballet choreographed by a powerful mainframe computer and a custom software program, more than 1,500 cubic meters of parts pass one another across the loading docks of the nondescript DaimlerChrysler warehouse complex in the outskirts of Bremerhaven.
European-sourced parts going to build Mercedes-brand vehicles in the United States, Brazil and South Africa, and U.S.-sourced parts to build Chrysler and Mercedes vehicles in Graz, Austria, and Rastatt, Germany - all meet here to be sorted, inventoried and repacked into just-in-time bundles, and sent on their way again.
Mercedes-Benz has been shipping service parts around the world for as long as it has been exporting cars. But modern production components - built to order and scheduled for just-in-time delivery - required a new plan.
First, it required this kind of parts center.
'When the U.S. plant was launched, we had to get more than 600 parts from Germany to Alabama on a schedule. But we had no system in place to get them there,' says Albert Zeh, a logistics manager based at DaimlerChrysler headquarters in Stuttgart.
'As we go global with our plans, you will see the movement of more parts from one part of the world to another.'
Zeh, a 20-year Mercedes veteran, took an assignment three years ago as manager of a new business unit called Mercedes-Benz Consolidation Center-Europe, or 'MBCC-E,' as his business card reads.
Behind that name is a complex global parts system that reflects a dramatic change of focus at the former Daimler-Benz AG, a change still sweeping through the successor company.
Before 1997, Mercedes-Benz production was comfortably tucked away inside Germany. The automaker's engines, bodies, paint plants, stamping plants, engineering, research and development, and production control organizations were all within driving distance of the Daimler-Benz corporate headquarters in Stuttgart.
Daimler bought some content outside Western Europe, but not much. In the early 1990s, Daimler committed itself to expand manufacturing operations beyond Germany to meet demand in world markets.
In addition to starting M-class production in Alabama in 1997, DaimlerChrysler began building A-class cars in Brazil this year. It now builds its Smart cars in Hambach, France. It has a van production plant in Vitoria, Spain, and is preparing to turn a small kit-assembly plant in South Africa into the global source for right-hand-drive C-class cars in the next two years.
The 1998 merger with Chrysler Corp. intensified the need for a global parts network.
All of that means more containers out of Germany. It also means an increasingly complex worldwide supply chain and an increasingly sophisticated logistics system to keep track of it all.
The opening of its first non-German plant in 1997, in Alabama, gave the automaker a slew of logistics challenges.
For starters, Alabama would build just 65,000 vehicles a year, according to the original plan. That would be far too low to warrant either a dedicated engine plant or a dedicated stamping plant.
The engines would come from Bad Cannstatt, Germany, while the metal body panels would be built by a new Daimler supplier, Japan-based Ogihara America Corp. Ogihara would build a new stamping plant in Birmingham, near Vance, that would supply both Mercedes-Benz and other U.S. suppliers in the southeastern United States.
Traditional Daimler supplier ZF Industries would produce the truck's axle assemblies, but from a new dedicated plant in Alabama. And in a departure from procedures at other Mercedes plants, the U.S. plant out-sources large modules to single suppliers.
Delphi Automotive Systems would supply an entire assembled cockpit, made from individual components gathered from around North America and delivered in sequence. In all, just 65 Tier 1 suppliers would ship parts into the Vance factory.
Fast-forward to April 1999: Pressed by surging world demand for the M class, Daimler opens a second M-class production line at an independent assembly plant in Graz, Austria. The sport-utility is built by Steyr-Daimler-Puch AG, which is owned by Magna International Inc. of Aurora, Ontario.
The eventual production target is 30,000 M classes a year. Suddenly, Mercedes logistics are in a topsy-turvy world.
Engines will move from Bad Cannstatt directly to Austria. But the dedicated axle plant in Alabama now must ship its completed axles back to Europe, along with the assembled cockpits from Delphi and the five dozen or so other parts that Mercedes-Benz sourced in North America.
Mercedes-Benz spent $8 million to construct its own local version of the Bremerhaven operation - dubbed MBCC-A, to designate America - in Bessemer, Alabama.
That center now ships 60 containers a day back to Europe, complete with large locally stamped body panels from Ogihara and bumpers and interior trim made in Alabama by Rehau Inc., a German supplier.
As part of the 1990s lean manufacturing approach that Daimler honed in Alabama, the North American-made parts must arrive in Steyr on a just-in-time basis. They arrive according to a production schedule set by managers in Alabama, broadcast to suppliers on both sides of the ocean and executed by logistics managers in Europe.
How it works
Such tight control is at the heart of Mercedes-Benz's worldwide approach to logistics, Zeh says.
'We are seeing the rise of worldwide parts management,' Zeh says.
'We are learning how to bring production parts over the ocean.'
From Stuttgart, Zeh's organization controls the flow of parts from around Europe into Germany. In the case of the Brazilian A class or the M class, orders for nearly 1,000 parts numbers pass simultaneously from the factory to the European suppliers.
The notice is transmitted 28 days before an American worker will reach for the part to install it in a vehicle. The Alabama-based ordering system treats the Stuttgart office like a supplier. As the European suppliers produce their parts, they ship them to Bremerhaven.
There, they are offloaded and shelved. Then workers pull the parts from shelves and move them into containers that leave the warehouse 45 times a week for the Mercedes-Benz plant in Alabama, where they are broken down for line-side delivery at the plant.
'Alabama has only about 65 Tier 1 suppliers, but we are one of them,' notes Peer Heikes, manager of the Bremerhaven warehouse center. 'And coming through us are more than 100 more suppliers.'
Heikes represents another layer in the Mercedes-Benz logistics story.
Heikes is employed by Schenker Automotive Logistics, a unit of Veba Group, a German transportation and utility conglomerate. Mercedes-Benz Consolidation contracts Schenker to accumulate, package and move all production parts out of Germany.
Schenker performs similar services for Volkswagen AG, shipping parts to South Africa, Mexico and Brazil, and, for BMW, shipping parts to BMW Manufacturing Corp. in Spartanburg, South Carolina.
DaimlerChrysler is taking Schenker to a new level.
In addition to moving European parts to the A-class plant in Juiz de Fora, Brazil, Schenker also receives the parts at an MBCC center on the ground in Brazil. There, Schenker deconsolidates the components into specific vehicle orders and prepares the parts for line-side delivery.
Every 90 minutes, the Brazilian staging area delivers the parts into the Mercedes-Benz plant.
Daimler and Schenker are negotiating a plan that would have the transportation company actually bring the parts up the assembly line, organized according to the production schedule that was broadcast to suppliers four weeks earlier.
Schenker is already pushing the envelope in its role as a transportation supplier. The Brazilian deconsolidation center requires Schenker to serve as a quality inspection service on some A-class parts and also to repackage components such as rear lights, wipers and production screws into easier-to-use containers.
At the Hambach Smart car assembly plant, Schenker also works for some of Daimler's suppliers, bringing parts together as an actual assembler of modules.
'There are clearly benefits for DaimlerChrysler to use this method,' Heikes says.
'They don't have to invest in facilities this way. They don't have to add people to their organization or train them. We have an expertise in transportation. They have an expertise in building vehicles. By having us do this, they are able to do what they are best at.'
Another benefit could come as Mercedes-Benz establishes transportation channels to potential overseas suppliers. DaimlerChrysler officials indicate each new parts center it operates has the potential to open the pipeline to new component sourcing.
U.S., Canadian and Mexican parts now flow into the Mercedes-Benz European system because of the Alabama plant.
Some U.S. parts are beginning to move through the Alabama Mercedes pipeline to feed production of the Jeep Grand Cherokee built in Austria. Latin American parts eventually will join them.
Even cars assembled at Mercedes' small-volume kit factories present the opportunity to source parts in those markets. Mercedes-Benz now has kit plants in India, the Philippines, Thailand, Indonesia, Malaysia, Vietnam, Mexico and Egypt.
But how those parts might flow back into Europe may not be such a simple issue. Schenker is a German-based company, expert in moving parts in Germany. When it came to opening the pipeline of production parts from Alabama to Austria, DaimlerChrysler called on different resources.
Purely by coincidence, the Steyr-Daimler-Puch plant in Graz already was assembling vehicles for Chrysler Corp. before the 1998 merger. By the time Mercedes-Benz needed to create an eastward logistics chain earlier this year, it could tap into the network its new partner, Chrysler, had already established.
Today, Chrysler Austria - the corporate entity the Detroit company created to do business in Graz - takes responsibility for all shipments of Mercedes-Benz production parts leaving North America.
The Alabama factory management sets the schedule and orders the parts. The plant also takes responsibility for moving the parts to the port at Charleston, South Carolina. But at that point, Chrysler logistics managers in Graz take over the shipment.
Chrysler Austria brings the parts to an off-site deconsolidation center, prepares them for line delivery based on Alabama's schedule and hands them off to Steyr-Daimler-Puch production workers.
'Developing a whole new system wouldn't have made sense,' explains Gary Cash, managing director of Graz Manufacturing Operations.
'We already had one in place that Mercedes could take advantage of. That was one less problem Mercedes had to worry about.'