Skoda's masterclass in logistics

Czech car manufacturer Skoda from year to year conquers bigger market share in European Union and worldwide in new car sales. Last year, a significant milestone was achieved by selling more than one million cars.

One of the keystones of the success is logistics. The company received two awards in 2014: ‘European Gold Medal in Logistics and Supply Chain” and ‘Logistics Project of the year in the Czech Republic”.

571 thousand cars were sold in the European market in 2014. It is 70 000 units more than the year before.

1068 Skoda vehicles were bought in Latvia last year, ranking in 3rd place in the manufacturer category. Only Volkswagen (2531) and Toyota (1833) sold more. Sales trends indicate that Skoda will be among leaders of the market this year as well. As per this moment 521 cars have been sold.

Skoda has considerably higher sales figures in Estonia. Importer “Auto 100” has been working in this market for 15 years and the results are class act – in a country with less population, 2040 new Skoda cars were bought in 2014.

Latvian company “Kurbads” has signed a contract with “Auto 100” for transporting services. Skoda cars are delivered from the factory in Mlada Boleslav to four distribution points in Estonia – two in Tallinn, Tartu and Viljande.

“Skoda’s impressive car sales in Europe and Baltics is not a surprise for us. We have been collaborating with the Estonian importer from 2010. Our experience shows that “Auto 100” and also the factory in Czech Republic are very demanding to themselves and also to us, their transport service company. Hard work pays off,” says Kristīne Rīmene, head of the “Kurbads” logistics department.

In average, six cargoes are delivered weekly, every one of them with at least eight vehicles. So that makes around 2400 cars a year for Estonian market. “Skoda is one of the biggest company’s client regarding to the volumes,” Kristīne Rīmene admits that numbers are big for a local scale.

The Estonian side is more than satisfied with the cooperation. Gert Rohtla, “Auto 100” sales manager: “Logistics has to work automatically, without any effort from the customer. “Kurbads” has offered such service for five years. Before our cooperation, we worked with other companies but we didn’t get the level of quality that the Latvian establishment can provide. The company is open to communication and they have time to come to visit us in Tallinn. They are really customer oriented.” 

The car deliveries to the importers are rationalised – first, cars are transported to the base in Riga and from there, specific models are delivered to the needed destination. For example, two vehicles go to Tartu, three to Viljandi, but two are headed to Tallinn.

“Auto 100” is also a dealer in Estonia for manufacturers like Porsche, Bentley, Lotus and Lamborghini.

Mladá Boleslav, 70km North-east of Prague, is the town of Skoda. This has been the home of the company from 1905. You’re unlikely to see much else being driven on the roads here.

The car manufacturer uses three factories in, all close to each other.

The Mladá Boleslav plant and the factories nearby are also a showcase centre for logistics. Impressive levels of parts handling and packaging innovations can be found, including for pallet sorting, conveyor feeds and smart tablets.

This plant is the biggest manufacturing centre where more than 20000 employers are working. Here, the most popular models are made – Rapid, Fabia and Octavia. Gearboxes, axles, 3-cylinder engines and the TSI supercharged engines for Skoda and Volkswagen are also manufactured on site. 2000-2400 cars and uncountable amount of spare parts are built daily.

Superb, Yeti and Roomster models are manufactured in Skoda’s newest plant in Kvasiny. But the smallest manufacturing centre, Vrchlabi, supplies the whole VW group with DSG automatic gearboxes.

Skoda emphasizes strongly on logistics by employing more than 1250 workers in manufacturing plants, warehouses and headquarters. Jiri Cee, head of Skoda brand logistics, beliefs on successful work: “Logistics is an extensive field, and we have a growing interest in it. You can never get bored in this field and think you have hit a plateau. After 15 years on the job I still learn something new every day.”

Skoda logistics system is based on “Simply Clever” principle aimed at simplifying processes, saving resources and reducing costs. As part of the Volkswagen Group, this includes sharing ideas, standards and best practices across other brands. “It is absolutely imperative that the systems and processes used by the individual brands of the Volkswagen Group are standardised,” Cee says. 

Shared facilities and part flows are managed together with VW group. But Skoda exclusively sources and manages the rest of distribution, especially in Eastern Europe.

Skoda’s high volume suppliers are located within 25 km radius from Mlada Boleslav plant. 44% of suppliers are based in Germany. And only 20% of the parts are coming from Czech Republic. 

Although Skoda successfully manages a large and diverse group of suppliers, Cee admits that he wants Skoda’s logistics to improve. “We wish to optimise and lower the cost of negative logistics aspects, such as an increase in the number of suppliers, longer distances from individual suppliers and the growing complexity of parts. 

A complicated supply chain is a problem for a nearly every car manufacturer nowadays. For example, Skoda has 60 different wheel types and the company works with more than 1300 suppliers. This fact confirms that Skoda’s logistics processes are working very well. “Production material deliveries must unconditionally meet a given term and the required volume for each part delivery. They must be executed faultlessly, which also applies to the documentation and the agreed quality,” the wonderful work ethic is described by Jiri Cee.

“High standards and attention to details are Skoda priorities,” says Kristīne Rīmene. “Skoda logistics works in a rational way. Communication is also constructive. Any misunderstanding we can solve rapidly, so logistics processes won’t be delayed and client would be satisfied.”

The average punctuality for meeting delivery time windows is currently 91.5%. Average loading/unloading time is 26 minutes. A staggering 1900 trucks per day come in and out of Skoda’s Czech plants alone. To improve arrival and dock processes, mobile technologies and geo-fencing are used to control both check-in and the location of trucks. System and application has also been trialed and put in place at several VW and Audi plants in Europe. 

Jiri Cee compares maintaining high quality in logistics to sports: “We are continuously in the playoffs, my team is in the finals every day, and I am proud of having the opportunity to lead an experienced team of logisticians of the Skoda brand.”