Supply chain in lockdown: Relocating our steering production in record time
Automotive-sector | Engineering | People at thyssenkrupp | thyssenkrupp worldwide | Businesses around the globe are currently facing unpreceded challenges due to the corona pandemic – and come up with creative solutions to deliver on the demands of their customers. Our automotive experts in China are no exception. Thanks to remarkable cooperation with their Mexican colleagues, thyssenkrupp Steering plants in Shanghai and Changchun successfully overcame delivery difficulties and ensured continued production of major car manufacturers.
As an important player in the global supply chain for steering components, the thyssenkrupp Steering plants in Shanghai and Changchun felt the pressure from both upstream and downstream effects of the corona pandemic. In April 2020 China had already overcome the first phase of the crisis, while the majority of the world was still expecting the peak of infections. The result: the domestic market in China was strongly affected by the impact of the virus across the Pacific although plants at home were ready to reopen.
A small component with a big impact
So at the beginning of April, the automotive experts from thyssekrupp steering China saw their customer deliveries in jeopardy. “Usually, our colleagues in Mexico supply our Shanghai and Changchun plants with outer tubes for spindles”, explains Chang Fei, logistic manager at Shanghai plant. “Parts which are then further assembled here in China and delivered to our customer.” But when the Mexican plant in the supply chain was forced to shut down due to pandemic prevention measures of the Mexican state, the plants in Shanghai and Changchun completely depended on their stocks – which could only cover one month of customer demand. A small component with a big impact for the client – as the tube sustains monthly sales of nearly 50,000 units.
“After the customer received our notification, they let us check the opportunity to produce the component in other thyssenkrupp steering plants worldwide and also scanned their own facilities around the world for spare components.”, recalls Yue Xingguo, general manager at Changchun plant. “However, they couldn’t find suitable alternatives that met their technical requirements.” As a consequence, thyssenkrupp was listed among the top 3 risky suppliers.
Teamwork across continents
The colleagues in Changchun, got ready for action immediately and informed the headquarters in Liechtenstein, who joined the mission to carry out customer communications, technical feasibility analysis and global supply chain research despite working remotely in home quarantine.
“We were confronted with loads of questions.”, remembers Chang Fei. “Due to the high requirement of the outer tube’s production process, only the equipment in our Mexican plant could meet the customer’s requirements.“ When could the Mexican plant return to normal production? How could they guarantee delivery? How could they avoid economic loss?
Even if the colleagues in Mexico could have resumed production, it would have been very difficult to compensate for the missing volume due to the bottleneck in machine capacities and – on top –would have caused large airfreight costs.
Shanghai: The last shred of hope
“At this point, the Shanghai plant became our last shred of hope to solve this series of difficulties”, explains Yue Xingguo. “In 2018, the plant had acquired similar equipment to the machine in Mexico, which produced spindle inner tube parts and could be modified to produce outer tubes.” This machine was now an indispensable prerequisite to realize the localization plan of the team.
Let’s try it!
In this tense situation, Georg Hasler, Manager of the Manufacture Engineering Department of the Shanghai Plant showed no hesitation and said: “Let’s try it!” And lead the team to realize the production of the outer tube with the existing machine in Shanghai.
With various teams and experts involved around the globe, a time difference of up to 15 hours and a raging pandemic, the ambitious mission was not a simple task.
In Liechtenstein, the colleagues needed to find the best solution in terms of business and technology and repeatedly analyzed and verified different possibilities. “Our colleagues in Mexico also did their part and sent all needed resources, raw materials, semi-finished products and tooling over to Shanghai within only one week”, recalls Chang Fei.
Trial-and-error on repeat
As soon as the material from Mexico arrived, the equipment in Shanghai ran at full capacity for trial production. Engineers, technicians, and production employees worked in various aspects of the project – from parameter confirmation and trial production to quality analysis, capacity analysis and technical customer communication. “It was trial-and-error on repeat”, remembers Georg Hasler, Manager of the Manufacture Engineering Department of the Shanghai Plant). “There was a bustling activity in the workshop and everyone gave their best to achieve the localization target as soon as possible.”
At the front-line, the colleagues from customer communications in Changchun patiently faced the customers question in daily conference calls and slowly regained the customer’s trust. Thanks to their great effort, thyssenkrupp has an even better customer relationship to the car manufacturer today.
Joint efforts lead to success
“After two weeks of trial production and close communication with the customer for almost a month, the first batch production of outer tube finally came off the line in Shanghai on May 18th”, says Georg Hasler proud. Only with the joint efforts of colleagues all around the world, it was possible to solve the shortage problem successfully. Looking back, Georg Hasler is certain: “After this experience, we can master any challenge!”