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International Logistics Flows in Automotive industry PDF Print E-mail
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In the automotive industry, most of the international logistics difficulties lie within the choice in the way of supplying parts, elements or vehicles.

Indeed, a car manufacturer who wishes to sell a vehicle in a given country, will have to choose between importing already built vehicle or manufacturing it locally.

In case of local manufacturing, the logistics flows repartition will have to define:

 

Local flows:

  • Parts supplied by local suppliers.
  • These suppliers can be in the country or in the close region of the country.
  • We often speak of local integration parts.

International flows:

  • Parts supplied by abroad suppliers.
  • We often speak of CKD or KD parts.

There are 5 possible supply modes:

  1. Built-up
  2. SKD or Semi Knocked Down
  3. CKD or Completely Knocked Down – KD Mode (Kit)
  4. CKD or Completely Knocked Down – IPO or Individual Part Ordering
  5. Direct

In here is a summary, every case is detailed in corresponding free-logistics spec sheets.

 

A vehicle V must be sold in a target country

This vehicle is already manufactured in an origin country where lie most of the suppliers

 

Supply Mode Short Description Suitable for Advantages Drawbacks
Built-Up

> No plant in target country.

> Vehicle is manufactured in the origin country and sent completely finished in the target country.

> Confidential volumes (< 2000 vh/year)

> Risky countries

> No local plant investments

> High logistics costs

> High customs costs > No added value in target country

SKD Semi Knocked Down

> Assembly only Plant construction in target country.

> The welded, painted and assembled body of the vehicle is sent from origin country.

> Rest of parts are sourced locally or sent from orgin country

> Very small volumes (< 5000 vh/year)

> risky countries or new target plant

> Reduced plant investments

> No production control in target country plant

> Quite high logistics costs

> Quite high customs costs

> Low Added value in target country

CKD Completly Knocked Down KD Mode (lot)

> Complete Plant construction in target country.

> Target plant orders in vehicle quantities by lot (10, 12, 48 vehicles...) to a KD Plant or Center in the origin country which sends by lot, all parts necessary to manufacture the 10, 12 or 48...vehicles.

> Rest of parts can be sourced locally

> Small volumes

(< 15000 vh/year)

> New target plant or with low maturity

> No production control in target country plant

> Quite low logistics costs

> Quite low customs costs

> Added value in target country apreciable

> High plant investments

> Production control in KD Center

CKD Completly Knocked Down IPO Individual Part Ordering

> Complete Plant construction in target country.

> Target plant orders in parts quantities to a KD plant or center in the origin country which sends individually all parts.

> Rest of parts can be sourced locally

> Average to High volume

(> 15000 vh/year)

> Target plant with quite high maturity

> Low logistics costs

> Low customs costs > High added value in target country

> High plant investments

> Production control in Plant

> Quite numerous suppliers relationships

Direct

> Complete Plant construction in target country.

> Rest of parts can be sourced locally

> Target plant orders in parts quantities to its local or foreign suppliers which send directly all parts.

> High Volumes

(> 15000 vh/year)

> Target plant with high maturity

> Minimum logistics costs

> Minimum customs costs

> Maximum added value in target country

> High plant investments

> Production control in Plant

> Numerous suppliers relationships