JCB, the UK based manufacturer of earth moving vehicles, opened a new logistics centre last week near its main UK production location. It is an example of how one OEM (original equipment manufacturer) chooses organise its logistics and specifically, its outsourcing.
Known as JCB World Logistics, the new facility will co-ordinate the flow of in-bound components to JCB’s assembly plants in the English Midlands in particular but also to a lesser extent to JCB factories in Germany, India and Brazil. The hub is particularly focussed on managing the minority of components sourced from outside of the UK whose management makes greater demands on in-bound processes. The new facility which replaces seven older consolidation centres is designed to improve these processes.
Physically it is a 383,000 sq ft warehouse which will manage 25,000 pallets locations handling 5,000 stock keeping units and with a through-put of 40m parts in its first year of operation.
Although the building is leased by JCB operations have been outsourced to DHL Supply Chain. JCB has been bold in agreeing single-sourcing arrangements for aspects of its logistics operations and this is an example. Looking to leverage the economies of scale within DHL Supply Chain, JCB operates a globalised production network which covers North America, South America and India as well Europe in inter-locking supply chain networks. In contrast to most mechanical engineering supply chains – such as in the production of passenger cars – this can often require moving major components across the globe. Consequently JCB needs an effective means of cost and service control for global transport.
It is worth noting however that JCB did not opt for either a dedicated DHL facility nor a shared user facility, implying that the vehicle manufacturers wants to retain its options for the future.
The warehouse is leased from Gazeley, who built it as part of their ‘Blue Planet’ development at Chatterley Valley near Newcastle-under-Lyme.