Recently EVs set off another round of price cuts. The intensity of competition among the auto brands is obvious to all. The price of many models of various brands has been cut continuously, while the quality of service cannot decline. The increasingly mature and rational consumer groups are driving the auto manufacturers to deliver higher quality of service.
"Under the trend of structural changes in the auto industry, auto manufacturers are paying more attention to reducing costs of operation. Warehousing and logistics of automotive parts has always been a tough one, costly and difficult to manage. In the pursuit of service quality and efficiency, they have to not only meet the requirements of supply chain optimization, but also provide customers with better experience. Planning for warehouse and lean management in logistics play an important role," said Jackie Zhang, Director of Customer Led Solution and Business Development from Prologis, at a summit focusing on logistics of auto industry, recently held in Chongqing.
Logistics facilities: a key part of logistics optimization in auto industry
Compared with the warehousing and logistics of vehicles, those of auto parts are more complex. Tens of thousands of SKUs with different the size, specifications and materials require various storage conditions. The auto parts of different models need well planning of storage areas and refined management measures to optimize the efficiency of manufacturing and after-sales service supply chain. Primary location and space utilization are two key factors to be considered.
Take Chongqing as an example. Several traditional and cutting-edge auto brands have established their pants in Liangjiang New Area. For whether the inbound logistics of parts or after-sale parts, automobile brands tend to choose high-standard logistics facilities around their plants to improve space utilization and reduce operation costs to a certain extent.
"When planning our logistics centers in Chongqing, we have fully considered the potential demand from auto manufacturers related to manufacturing, logistics and after-sales. Based on our expertise in the serving well-known auto brands globally, we developed best-in-class logistics facilities to serve customers in China," Sean Zhou, Vice President of Prologis China and General Manager of West China, introduced.
Prologis Chongqing Liangjiang Logistics Center is located at the Yufu Industrial Park in Liangjiang New Area, with five auto plants nearby. This primary location enables its customers to respond to VMI demands efficiently. Meanwhile, it is only 12 kilometers, or 20 minutes’ drive, from Guoyuan Port, a major hub for the import and export of auto parts in Chongqing, making it a prime choice for auto brands to import and export auto parts and creating synergy effect for their supply chain.
Improving space utilization to save costs
Auto parts logistics has its own characteristics, not only covering a wide range of SKUs in varying specifications, but also comprising of many long tail SKUs. Some parts have a low turnover rate and uncertain demands, but the customers have high requirements for timeliness. That’s why those auto parts must be kept in stock and result in high warehousing costs. In this case, improving the utilization of storage space per unit area has become one of the important means to save costs.
For auto parts logistics, maximizing space utilization and optimizing the spatial structure layout of a warehouse can save costs and improve operation efficiency. As a leader in logistics facilities, Prologis introduced its global standards of state-of-the-art logistics facilities to China over 20 years ago. With customer centricity in operation, Prologis have in-depth understanding on the specifications of floor, loading capacity and clear height, which facilitate the installation of shelves, forklifts and automatic equipment. The Prologis standards not only reflected in the design of the logistics centers, but also in the quality of construction.
Prologis high standard warehousing facilities can meet the auto customers’ demands for optimizing layout of shelves, trays and laneways, including mezzanine racking for small auto parts. With the increasingly wide application of intelligent and automatic equipment, the technical standards of Prologis facilities also cater to the requirements of installing automatic sorting machines, automatic shelves, AGVs and other automatic equipment, saving the customers costs for reconstruction.
In Conclusion
With the booming of China’s EV market in recent years, the agglomeration of the EV industry has become new economic pollars across many cities. Chongqing is among the top ones in this round of opportunities. As an important vehicle manufacturing cluster in China, Chongqing is actively developing its new blueprint for EV industry and striving to initially form the prototype of a world-class intelligent EV cluster by 2025.
Sean Zhou said, "In the future, how to drive the growth and success of the entire auto industry through intelligent and lean approaches is an opportunity both for companies and for cities. As a long-term partner of the auto supply chain, Prologis has taken an initiative to provide best-in-class warehousing solutions to serve our customers’ demands related to auto parts import, export, distribution and deliveries."