Transformation of Global Parts Center by implementing Industry 4.0 solution
At a glance
Focus: Transformation of Global Parts Center by implementing Industry 4.0 solution
Challenge: Hero MotoCorp faced manual warehouse operations resulting in low productivity, high inventory levels with difficulty maintaining FIFO, low service ratio, an increasing number of SKUs from new models, poor parts tracking, and an absence of information flow across stakeholders and the end-to-end supply chain.
Approach: After multiple discussions with the business team and consultants, Hero MotoCorp implemented a combination of digital integration (end-to-end application integration across suppliers, operations, and customers), the Goods-to-Man concept (automated storage/retrieval to minimize manual movement), automation (automated receiving, storage, picking, and dispatch), and centralized 24x7 monitoring of equipment and warehouse conditions.
Impact: Manual operations in the warehouse were eliminated, along with a 26% increase in workspace utilization, more than doubled business volumes with half the manpower, a 32% increase in service ratio, and a 20% decrease in on-hand inventory value through better forecasting.
Hero MotoCorp Ltd
Hero MotoCorp Ltd. (HMCL) is the largest two-wheeler manufacturer in the world with presence in 35 Countries. It has a market share of about 37% in the two-wheeler category and 51% Market Share in Motorcycle industry in India. The 2006 Forbes list of the 200 World's Most Respected Companies has Hero Motors ranked at #108. It is world’s largest two wheeler manufacturer since 2001. Hero MotoCorp has more than 80 Million customers, more than 35000 touch points and 6000+ Dealers, ASC’s and ARD’s. In financial year 2017-18, Hero Moto-Corp added more than 8 million new customers in India and it provides services to more than 0.5 Million customers daily
The Journey
Major milestones in the Journey of Hero Motocorp.
Introduction to Part Business of Hero MotoCorp
Hero MotoCorp distributes 28000+ SKUs through dedicated 100+ Parts distrubutors from Global Parts Center which is based in Neemrana, Rajasthan. These distributors serve Authorized Service Netowk as well as Retailers which further service two wheelers. As Hero MotoCorp has more than 85 Million two wheelers on road, total two whellers serviced per annum is more than 180 Million, which includes service at Authorized Network or from Road-side Mechanic
HMCL has very dynamic demand which makes the spare parts business operation very complex to serve and manage. The supply chain to serve the market is even more complex considering the market reach of Hero Motocorp and availability of a wide range of products. The Global parts center dispatches average 40000 boxes with more than 100,000 unique parts. Each part has a unique code printed on its MRP Label which can be authenticated for Genuinity of Part, this further makes it more complicated
Business challenge
The huge customer base of Hero Motocorp presents many opportunities for spare parts business in India. To cater the varying customer demand, the supply chain must be responsive and information flow to Vendors and dealers is very crucial. Following are the major fields of opportunities
Some of the Major Challenges faced by Hero MotoCorp prior to implementation of Industry 4.0 solution are mentioned below:
Manual Operation in Warehouse resulting in low productivity
High Inventory Levels and Challenges in Maintaining FIFO
Low service ratio
Increasing New models, hence increasing type of SKU’s
Tracking of Parts in Warehouse
Absence of Information flow among all stake holders
Absence of end to end supply chain information flow
Industry 4.0 solution
After multiple discussions with Business team and consultants to eliminate or reduce the day to day operational problems, Hero MotoCorp decided to go for the following solutions to enhance Distribution of Spare Parts and enhance customer satisfaction by improving service ratio.
Digital Integration: Development and Integration of multiple applications for end-to-end integration from suppliers, internal operations and customers, ensuring a stream-lined supply chain to enhance service and customer satisfaction.
Goods to Man concept: Minimize the man movement and manpower by implementing the goods to man concept, by optimizing all the processes related to Warehouse such as Receiving, storage, picking and dispatch. This will also reduce the chances of error in day to day operations and lead to Manpower reduction in very short term.
Automation: Development of automated warehouse to cater day to day operation and Integration of software and equipment to replace manual actions and incorporate logical thinking wherever possible by implementing Automated Storage & Retrieval, scanning and Packing.
Centralized Monitoring: All equipments are can be monitored 24x7
Digitally integrated platform was deployed for end-to-end integration including suppliers, internal operations, distribution network and customers for ensuring availability of spare parts to the customer minimizing inventory at each stocking point and improving productivity. As shown in the diagram, system landscape includes various applications which were fully integrated
Complete warehouse is based on “Goods-to-Man” concept. Automated machines and storage-retrieval using robots/guided vehicles/programmed conveyors ensure that goods reach to the place where humans need to act. Movement of man is very minimal and the goods which needs to be checked for Quality, Packed, Picked or Dispatched are brought to man stationed at a location take necessary action. This helps in improving productivity and eliminates any possibility of manual error in various operations.
The concept of automation is to utilize the warehouse at maximum capacity, minimize inventory and reduce operations and errors related to manual operations in day to day transactions. This automation includes folowing process
Receiving Process: Unloading of Parts from Truck to Warehouse using telescopic conveyor, hence reducing transportation time, manpower and increasing productivity.
Automatic Storage in Operations: After receiving parts are stored in the warehouse by automated storage and retrieval system considering FIFO and Sales rank (Proximity of Storage location of parts based on sales volume). This includes BIN and Pallet Storage Systems
Automation in Picking and Dispatch Operation: After storage parts are stored in the warehouse by automated storage and retrieval system, Parts are picked from storage area and packed in order quantity to dispatch to Distributors. The chutes carrying the parts for dispatch will transport and sort the part based on dealers through a complex communication in WMS and WCS, leaving very little scope for decision making for users; thus reducing errors in picking and dispatch.
Operations Montiroing: The Operations of Global Part Center is very critical and hence requires continuous monitoring of different equipments and systems. All equipment are connected and are centralized monitored in a control room using multiple dashboards, which enables smooth business in Warehouse and allows to achieve high service ratio. Figure below is one of the example for monitoring Cranes and Storage Locations in of automated storage and retrieval system
Monitoring Work Enviornment: Usage of IoT technology to monitor and manage the conditions inside the warehouse to provide excellent work environment. Air for space conditioning is provided duct-lessly by two “Big Foot” air handlers and distributed via displacement ventilation inside the warehouse for cool and optimum working condition, reducing Carbon emission and electricity consumption.
Key benefits
| Area | Outcome |
|---|---|
| Operational Benefit | Eliminated manual Operations in Warehouse. |
| Operational Benefit | Increased utilization of Work space by 26% hence ready to cater increased New models and capable to store new SKU’s in the existing work space. |
| Operational Benefit | Increased Tracking of Parts in Warehouse. |
| Safety & Workforce | More than Double the business volumes with half the manpower. |
| Operational Benefit | Service ratio increased by 32%. |
| Cost Savings | On-hand Inventory Value decreased by 20% using better forecasting model. |
| Cost Savings | Improving the on-shelf availability of spare parts by catering market requirement in time, thus improving the business volumes and reducing the excess Inventory. |
| Operational Benefit | Utilization of vertical space using high rise racks through Automated Storage and Retrieval Systems, leading to reduced physical footprint. |
| Time & Speed | Faster processing of orders resulting in to reduction in time to market. |
| Time & Speed | Reduction in sorting time of deliveries because of high speed sorter system. |
| Operational Benefit | Improvement in aesthetic value of the packed Parts due to deployment of automated packaging machines ensuring Zero Discrepancy in Product delivery. |