Logistics at heart of automotive production

THE AUTOMOTIVE industry is about producing cars, of course. But beneath the surface, it is about logistics: keeping alive a complex system that enables various supplies from disparate locations to get to the right place at the right time in the right volumes so that a manufacturing plant can produce cars effectively and cost efficiently.

Auto suppliers abound within a 150 kilometre radius of Bratislava.
photo: Courtesy of Gefco

THE AUTOMOTIVE industry is about producing cars, of course. But beneath the surface, it is about logistics: keeping alive a complex system that enables various supplies from disparate locations to get to the right place at the right time in the right volumes so that a manufacturing plant can produce cars effectively and cost efficiently. A late shipment of seats, for example, can grind a whole production line to a halt. Logistics, therefore, is at the heart of the industry.

The Gefco Group, headquartered in France, is among Europe's top 10 logistics firms. A subsidiary of PSA Peugeot Citroen, the company established a branch in Slovakia about a year ago to become the exclusive provider of logistics services to French automaker PSA Peugeot Citroen in Slovakia.

The Slovak Spectator spoke with Gefco Slovakia's general director, Olivier Large, to talk about the company's future plans and activities in Slovakia. According to Large, Gefco's reasons to set up shop in Slovakia are only partly motivated by PSA Peugeot Citroen's presence. He says the country's strong automotive industry as a whole helped tipped the balance.

The Slovak Spectator (TSS): What did you expect when you came to Slovakia?

Olivier Large (OL): When expanding into Slovakia we followed three targets. The first was to develop Gefco internationally. Until 1999, Gefco was primarily a European company operating in France. The second was to follow and support PSA Peugeot Citroen wherever it was doing business. Although PSA is a big project of ours in Slovakia, keep in mind that it is just one of our projects here. The third target was to cooperate with the local automotive suppliers in Slovakia.

Slovakia's concentration in the automotive industry is a great opportunity for us. Many of PSA Peugeot Citroen's main suppliers are already Gefco's customers abroad. We are confident that they will want to have the same services in Slovakia as in other parts of Europe.

For Gefco, it is very important to be in Slovakia. Firstly, it is not so far from Western Europe. Secondly, the industry is booming here. Within a 150 kilometre radius of Bratislava, you can find a large number of important producers and suppliers.

TSS: What services are you currently providing to PSA Peugeot Citroen's new plant in Slovakia? What services will you provide in the future?

OL: PSA Peugeot Citroen is working with thousands of suppliers and it wants to strictly concentrate on its core business, which is car production. Other companies provide all activities outside this core business.

First, Gefco Slovakia will transport all the produced car parts from various suppliers' plants to the PSA Peugeot Citroen car plant, which aims to make more than 200 trucks per day.

Secondly, we also organize internal logistics within the PSA plant. This means moving parts between individual production halls and finally bringing all the needed parts to the assembly line. Within the PSA plant, 60 Gefco people will manage and operate a 17,000 square metre area (cross dock).

Delivering the right parts at the right time and in the right volume is absolutely crucial. You cannot create backlogs of car parts in the plant. At the same time, there cannot be a situation in which you are waiting on parts at the assembly line. For example, every ten minutes we deliver seats to the assembly line. If seats come in late to the assembly line, production at the whole plant could come to a stop.

We will use a GefBox system to secure "the right part at the right time", which is part of our rule. GefBox is a smaller alternative to a palette. It is a plastic container that delivers all the needed parts to the right places. We will need about 3,000,000 GefBoxes per year just for the PSA Peugeot Citroen plant.

Finally, we will also operate the parking area for the finished cars. From this area we will manage their transportation to the rest of Europe.

TSS: You said that PSA Peugeot Citroen might not be your only customer in Slovakia and that you would like to provide logistics services to other companies. Can you elaborate?

OL: Gefco Slovakia is establishing a logistics centre in a supplier's park near the PSA Peugeot Citroen plant. This centre will have about 25,000 square metres and will be available for potential customers other than PSA Peugeot Citroen.

This logistics centre will have three halls. One will be reserved for added-value services, such as parts assembly, sequencing and security stocks. The second hall will be where we wash GefBoxes. The third one will be a cross-dock hall. [Cross-dock is a practice in logistics of unloading materials from an incoming truck trailer or rail car and loading these materials in outbound trailers or rail cars. This may be done to change the type of conveyance, or to sort material intended for different destinations, or to combine material from different origins.] The centre should be finished in February 2006.

TSS: According to the plans you presented, Gefco Slovakia will be growing fast. Will you be hiring, and if so, what types of skills will you be looking for?

OL: The end of this year we will have 50 employees. By the end of next year it should be 150. That number should grow to 220 by the end of 2007 and in 2008, maybe reach 300. We will be located not only in Trnava but also in other parts of Slovakia.

We will need many different profiles of workers. The scale of Gefco Slovakia's activities is really large. We need dispatchers, people focussed on customs, air freight, sea freight, quality control, warehouse specialists, sequencing, and many others. Additionally, we also want to support professions such as marketing, finance and human resource professionals.

TSS: Many of those in the logistics profession in Slovakia are young. Will you find people with the degree of experience you need in Slovakia?

OL: We have found very motivated people in Slovakia with logistics backgrounds; we just need to give them expertise in the automotive industry. Gefco Slovakia has that expertise. Our idea is to train people, taking some of them to France, even if they are 50 years old.

Additionally, we would like to cooperate with universities in Slovakia and train young people. You have very good universities in Slovakia, also for logistics - in Nitra, Bratislava and Žilina (during the former Czechoslovakia, it was the only Transportation University in Slovakia). I would like to

start long-term cooperation with them.

TSS: What are some of your short-term and long-term aims here in Slovakia?

OL: I think setting long-term targets would be too ambitious. Our mid-term target is to be one of the largest logistics providers in Slovakia. As I said, Gefco Slovakia is already working for many companies active in the Slovak automotive industry abroad. We need to be ready for those companies and to be able to offer them the same quality of services in Slovakia.

Gefco Slovakia can be a very good asset for Slovak companies that are potential suppliers for PSA Peugeot Citroen. We have a very deep knowledge of PSA Peugeot Citroen's work organization and this can be useful for them.

TSS: What is the level of logistics services in Slovakia compared to more established countries of the EU? Will you cooperate with some of the Slovak logistics firms?

OL: Currently, more than 4,000 companies are involved in the logistics business in Slovakia. They are focussed at many individual areas of logistics, such as transportation, warehouse, customs, and many others, whereas large logistics companies like Gefco are able to provide complex logistic solutions.

Gefco has contacts for about 700 Slovak firms proposing logistics services. My opinion is that many of these companies are working well. They have modern equipment because they are quite new. They are motivated and willing to cooperate. But most of them have a very local vision and they lack international experience. They are small companies working on the Slovak market.

Gefco can give companies much-needed international experience. In fact, our cooperation with Slovak logistics companies is a must. For example, we will not own trucks although we will need more than 700 of them. Our suppliers will operate them. I expect that we will cooperate with about 100 to 150 Slovak logistics companies. Right now we are testing Slovak firms to be sure they have what we need to ensure that we can deliver the quality that PSA Peugeot Citroen demands.

About Gefco Group

A subsidiary of the PSA Peugeot Citroen Group, the Gefco Group is a leading European provider of vehicle transport, logistics, and other transportation services. The company, established in more than 80 countries, posted a turnover of €2.9 billion in 2004. With its integrated network and multimodal services (road, rail, sea, air), Gefco is one of Europe's top 10 transport and logistics groups. The group has 400 business locations worldwide and is expanding its activities in three key regions: Europe, Asia and South America.

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