CLI: Value-Added Assembly, Sequencing and STREME WMS Drive Growth
February 21, 2018
Brad Constantini, CEO
Brian Hume, COO
John Hopton, CFO
Trey Lyda, VP Corporate Services
Steve Olender, VP of IT
Jeff Peters, VP of Quality
Gary Bobalik, Director of Marketing
The last third-party logistics provider (3PL) Case Study for Comprehensive Logistics Co., Inc. (CLI) was published in February 2009, four weeks before the bottom fell out of the stock market and Automotive took a nose-dive. Tough year for a 3PL with extensive service relationships with Automotive original equipment manufacturers (OEMs) and Tier 1 suppliers. CLI mounted a comeback, driven by new Value-Added Assembly (aka Contract Manufacturing) services, expertise in Manufacturing Replenishment (e.g. Sequencing), and investments in proprietary systems. It experienced rapid revenue growth since 2009 up to $191 million, a compound annual growth rate (CAGR) of 30%.
Gross Revenue Growth by 3PL Service (2009 to 2016)
Geographic Footprint: CLI’s Expanding Presence
CLI operates 17 facilities in eight states and in Canada with 4.3 million square feet of operating space and 2,100+ employees. Most facilities are dedicated to a single client with multiple services. CLI has become adept at managing union and non-union labor operations with monitoring and control systems to ensure productivity and quality standards are sustained.
Innovation: The Key to Rebounding from Decline in Automotive
Comprehensive Logistics’ 3PL business started in 1995, serving Automotive OEMs, like Ford and GM, with inbound value-added warehousing services. The Great Recession was a seminal moment for CLI for a couple reasons. First, it created an opportunity for the company to launch into Value-Added Assembly (VAA), signing its first contract with a major U.S. Automotive OEM in 2010. In the same year, CLI introduced its proprietary STREME Warehouse Management System (WMS). STREME has become a game-changing logistics execution, quality control and business intelligence technology. From inbound receiving to just-in-time (JIT) line-side delivery, CLI has complete web-based visibility to item-level details for any commodity with an integrated alert system to ensure material flow/operational issues are immediately identified and quickly resolved.
Combined with CLI’s Plan For Every Part (PFEP) approach to operations setup, STREME WMS provides part-level detail on the status of inventory on-hand, on-order, in WIP and in-transit. STREME’s visual dashboard makes it easy for operators to spot part supply issues.
Focus on Manufacturing Replenishment and Value-Added Assembly
CLI focuses on core competencies surrounding Value-Added Assembly (build-to-order Sub-assemblies) and Manufacturing Replenishment, including sequencing and Kanban providing line-side replenishment for OEMs. CLI narrowed its focus and shed businesses that didn’t support core services. It discontinued freight management operations, consolidated ownership and separated itself from Falcon Transportation, an asset-based common carrier. CLI maintains a small fleet of 63 power units and trailers to provide JIT shuttle services, critical to OEM production.
VAA in Spring Hill, TN – GMC Acadia/Cadillac XT5
Spring Hill is a 265,000 square foot facility with 400 people working 2 shifts to provide VAA services (aka Contract Manufacturing) to support GM’s assembly of the Acadia and Cadillac XT5 models. GM builds over 200,000 units annually or roughly 900 units per weekday. CLI builds four major sub-assemblies for these models including tire and wheel assemblies, front suspensions, rear suspensions and headliners. All sub-assemblies are built, quality inspected, and delivered to the point of consumption on the OEM assembly line for a specific model and trim level, and in sequence based on the assembly schedule sent by the plant. These sub-assemblies are comprised of 372 part numbers, with multiple build BOMs for each sub-assembly. With 1.5 days of inventory on-hand on-average, there’s virtually no margin for errors in inventory control and uninterrupted material flow to assembly lines.
Therefore, CLI incorporated IT systems to track material flow progress from the time a trailer load of parts is in route (ASNs received), through every production sequence, to line-side delivery, including quality verification checks. Each sub-assembly line has automated stations to check for part verification, torque requirements, positioning, tire pressure, and a myriad of quality checks. Assemblers scan at the start and end of each operation, which allows CLI to alert assemblers and supervisors when a work center is falling behind takt time. Work centers are often contiguous and continuously moving. Therefore, immediate error-correction is critical. Andon lights and display monitors signal production status and alerts requiring immediate response, which are captured by the STREME WMS connected to the Manufacturing Execution System (MES).
Core IT Executional Systems: STREME WMS
CLI’s systems development focuses on simplification, measurement and accountability. It incorporates multiple scanning points in each process to measure start and end points. IT system touches are incorporated in the physical processes to provide verification of task completion, which greatly reduces human errors on the line. It also provides robust information about productivity, making each operator accountable.
STREME WMS communicates via EDI with several key IT components, including. . .
CLI-YMI: A traditional YMS is about physically managing trailers in a yard. CLI’s custom-developed, Yard Managed Intelligence (“YMI”) integrates inventory on trailers into the overall material availability picture, allowing system algorithms to run and calculate optimal dock scheduling and put-away routings.
MES: CLI’s Manufacturing Execution System (MES) is Matrix Automation, which is integrated with STREME. The MES also connects with PLCs, robots, torque systems and quality measurement systems.
Quality Measurement System: Q-Pulse 6 Quality System captures quality data and provides alerts when data indicates out-of-tolerance condition, trending or exhibits abnormal process variation.
Preventative Maintenance: CLI’s PM software catalogs equipment inspection and maintenance requirements driven by cycle counts or run-time equipment monitoring. PM data is shared across facilities with similar equipment to manage service requirements and spare parts inventory.
Workforce Scheduling: Workforce management systems correlate individual clock-in/login at the facility to assigned work stations. Attendance, functional qualifications and training records validate job promotions and transfer to assignments with pay premiums.
Smart Phone App: CLI’s STREME WMS system is built on a web-enabled/responsive platform that allows CLI to provide access to data adapted to mobile devices, tablets and laptops.
Sequencing & Manufacturing Replenishment in Dearborn, MI – Ford F-150
Dearborn is a 488,000 square foot facility with 370 people working 2 shifts to provide sequenced parts replenishment and small lot parts to Ford’s F-150 assembly line. Dearborn receives 39,624 truckloads and delivers 53,040 shipments annually. It manages 2,250 part numbers with an average of 1.5 days on-hand, which is challenging, given Ford sends 100 to 150-part change orders to CLI per week, excluding model changes.
CLI delivers in three ways. First, larger parts or sub-assemblies from T1 suppliers are received and fed to the line in bins. Second, small lot/consumable parts are supplied via Kanban systems to the assembly area. Third, parts are sequenced in assembly kits based on the production schedule, which is established when the unit receives its “blend number” or “birth record” which is represented by the Vehicle Identification Number (VIN). The VIN triggers which parts CLI should process for delivery to the assembly plant for each vehicle produced.
Process Focus on Engineering and IT from Launch to Stabilization
The challenge for OEM outsourcing is performing complex tasks better and faster with zero defects. CLI’s competencies are Engineering and supporting IT systems development. Its capabilities blur the lines between OEM and 3PL. We see this same overlap in the Technological segment with Electronics Contract Manufacturers (ECMs) that have expanded services to include logistics. But, CLI already has competency in managing the logistics around OEM manufacturing.
The key differentiator in the 3PL market, especially in the Automotive and Industrial segments, is the ability to quickly launch and stabilize outsourcing services. CLI has a standardized approach that starts with analysis and planning, progresses to launch preparation and progresses to execution. Shippers view this capability as “insurance” that the 3PL is not only capable of providing the service but will not fail in the launch.
Future Growth in OEM and Industrial Manufacturing
Since 2009, CLI tightened its focus on core competencies and experienced rapid growth. Future growth prospects are focused on expansion and customer diversification into select Industrial OEMs segments that require similar capabilities for value-added service with a high level of quality assurance and logistics synchronization, especially to leverage investments in Engineering and IT, such as Construction, Forestry, Agricultural, and Heavy Truck Manufacturing. No doubt, diversification is both a revenue growth and risk mitigation strategy.
Sources: A&A Primary Research, http://www.complog.com/