Major machinery business, China National Machinery Industry Corporation (Sinomach), has significantly improved its service levels and reduced huge logistics costs after partnering with UK supply chain and logistics consultancy, SCALA.
Sinomach, a Fortune Global 500 enterprise, wanted to improve its supply chain and logistics service to particularly help major client, GM-Wuling Automobile, improve sales rankings. GM-Wuling Automobile manufactures two of the best-selling cars in China.
Previously, Sinomach used three different suppliers to transport goods from its factory in Zhejiang province (east China) to GM-Wuling Automobile in Liuzhou city (south-west China), which proved costly and inefficient.
But recognising that high service levels in warehousing and distribution are very important in the automotive industry, Sinomach wanted to improve the transportation, packaging, storage and distribution processes of its materials.
Sinomach invited SCALA and its joint venture business in China, Ocean Supply Chain Group, to provide a comprehensive supply chain solution to thoroughly solve all supply chain issues and improve service levels.
Huddersfield-based SCALA investigated Sinomach’s various processes and analysed issues in each to develop a brand-new operation system for the company.
This included integrating cargos from other customers on the same transport routes to greatly reduce transportation costs – enabling larger load sizes and replacing 9.6 metre trucks with much more efficient 17.5 metre trucks.
Sinomach’s warehouse in Liuzhou city was replaced with a SCALA Ocean warehouse, close to GM-Wuling Automobile’s factory, to improve the efficiency of receiving and dispatching goods.
In addition, foldable green recyclable packaging was designed to replace the original disposable cartons to improve sustainability and reduce costs.
After implementing these supply chain optimisation improvements, the company achieved impressive results. Just in Time (JIT) delivery punctuality improved from 89 per cent to 100 per cent and GM-Wuling’s automobile production line shutdown time dropped to zero.
The cost of packaging and transportation has been reduced by 1.36 million RMB annually.
Moreover, the breakage rate of packing boxes, the amount of defective materials, the accuracy of inventory and the number of customer complaints have all improved.
Andy Yang, consultant at SCALA China, said: “Companies such as Sinomach now recognise that integrated supply chain solutions for transportation, packaging and warehousing can achieve remarkable results in improving service, distribution, sustainability, inventory accuracy and reducing logistics costs.
“Faced with the ever-changing market challenges, Sinomach needed a simple, results-oriented, practical and efficient integrated process to achieve the goal of high efficiency and low logistics costs. We were able to provide that.”
Mr Liang, supply chain director at Sinomach, said: “We set a goal to find a solution that helps us to meet high levels of service on a consistent basis, while reducing overall logistics costs. Since the implementation of SCALA’s integrated supply chain solution, various transportation, packaging, warehousing, inventory, distribution and other issues have been revealed and solved, and we are very satisfied with the results.”