SPEYER, Germany -- Mercedes-Benz aims to reduce its logistics costs by about 20 percent per vehicle as the company invests hundreds of millions of euros in a global reorganization of its supply chain network.
The automaker has increased production outside of its German home over the past decade but many of the components used in its cars are still sourced from Europe. This increasingly stretches its supply chain because of the distances the parts have to travel, placing a bigger strain on a system that is already trying to cope with record demand.
Logistics is a "very significant" cost position, according to Mercedes production and supply chain boss Markus Schaefer, who said supply chain costs can exceed manufacturing costs in some of the division's lower-wage plants.
"With more than 30 vehicle derivatives each built from several thousand parts, the complexity is immense," Schaefer told reporters in Speyer, Germany, where the carmaker recently opened a 90 million euro ($98 million) consolidation center. Here, components from European suppliers will be consolidated and repacked more efficiently for shipping abroad to Mercedes plants in China, the U.S. and South Africa.
Mercedes may establish similar centers in growth regions such as China and North America, the company said in a statement.
Mercedes vehicles and cars for its Smart small-car brand, along with engines and components, are built in 26 factories worldwide including production at partners such as Renault, Magna Steyr and Valmet. The automaker employs 7,500 people in its supply chain operations.
Delivering the right part to the right factory at the right time and in the right place on the assembly line is an increasing challenge, especially when the company must ensure that inventories are lean to control costs but not too lean that the supply chain risks tearing.