There is a strong partnership between Volvo’s financing arm and its leading equipment brands.
A supply chain is providing the template for a series of similar centers worldwide that aim to capture a bigger share of the global loose attachments business.
The beautiful mediaeval Belgian city of Ghent sits at the meeting point of two rivers: the Lys and the Scheldt. It takes its name from a Celtic word meaning ‘confluence’ and has a rich history of trade dating back to around the year 650.
Now, nearly 1400 years later, Ghent is becoming internationally renowned once again as a meeting place but this time as a 21st century hub lying at the center of a new Volvo Construction Equipment supply chain.
The dedicated Volvo CE loose attachments hub is in Desteldonk, on the outskirts of Ghent. It has been developed as part of the company’s Attachment Processes and Systems (APS) project and has resulted in a considerable reduction in lead times for customers.
Karl Serneberg, Global Director Attachments, says there are key improvements areas for Volvo CE customers. “First of all, the ease of doing business – we have a simplified order process for loose attachments here. Secondly, with the hub system, we give our customers shorter lead times and good availability of attachments. And thirdly, this system gives us a cost-efficient hub set-up and cost-efficient transportation of attachments.”
TIME IS MONEY
Before the hub became operational, customers who ordered individually supplied attachments faced delivery times ranging from eight weeks to three months. Now, for large wheel-loader attachments, there is a maximum four-week wait between order and delivery. Customers ordering loose attachments for compact wheel loaders or excavators have seen their lead times cut to two or three weeks – and that drops to just one week for those with compact machines for the majority of loose attachment orders.
Developing a complementary supply chain that works to the customers’ advantage has a critical role to play in future business growth for Volvo CE and its dealers alike. A supply chain solution has been found that rationalizes operations and is easy to use for those placing orders.
Capturing the loose attachment business is something that is important to Volvo CE, continues Karl Serneberg. Traditionally, attachments were supplied with machines direct from Volvo CE production facilities, but now, he says, there is a need to look beyond that to the broader market.
“Machines that are in stock with our dealers sometimes need new attachments. Or there are customers who say, ‘Hey, my attachment has worn out’ or ‘I’m going to do something new with my machine – a new application – so I need a new attachment’.” Karl says it is in cases like these that an efficient loose attachment supply chain can really make a difference.
IN GOOD ORDER
Orders are placed electronically. The availability of a specific loose attachment is determined immediately in the ordering system and the Volvo CE dealer receives information on the delivery lead time. As soon as the order reaches the hub,
the loose attachment is taken from stock and packed. Non-stock items that are ordered are despatched from the supplier before being consolidated at the hub and delivered to the dealer.
By consolidating and coordinating orders, trucks can optimize their loads. These deliveries are made either to regional dealers or directly to customers. This dedicated transportation system is a complementary delivery service to that of parts or machines.
Suppliers from various parts of the world ship loose attachments to the Ghent hub where some 1,800 different items can be ordered and almost 900 units are in stock. Since the attachment hub in Ghent became operational in April 2012, more than 4,000 attachments have been delivered to dealers and end customers.
An efficient transport hub, serving the whole of Europe, is one of the three cornerstones that underpin the new supply chain. The second is the cost efficiency which comes from having a dedicated loose attachments hub that shortens delivery lead times, while the third is the improved functionality now built into the ordering system. The dealer portal has been modified and the entire ordering process simplified and shortened.
The Ghent hub shows both the efficiencies and improved customer satisfaction as having a direct and positive impact on Volvo CE business. Karl Serneberg says that Europe is just the beginning. “Here in Belgium the first hub was opened in April 2012. Now we’ve opened a second hub in North America, just outside Chicago. And in 2014 we want to place at least one hub in Asia.”