splitting worthwhile for some very critical components.
With those thoughts in mind, we decided to perform
cost-benefit analyses for new components. If risks were
high, then we would source the components dually, from
one foreign and one local supplier. This would diversify the
supply base in terms of both alternative suppliers and geographical locations.
Thanks to our decision to implement the dual or multiple
sourcing strategy wherever possible, we avoided supply disruptions during such events as the eruption of the Icelandic
volcano and the earthquake and tsunami in Japan. We also
had some experiences closer to home. For example, in 2011
a very trusted local supplier of ours had a fire that incapacitated its plant for more than a month. Despite that disruption we kept the material flowing in, with one portion coming from the foreign supplier and the other portion from
another local supplier. And in January 2012 we faced another potential disruption when a foreign supplier of a critical
assembly part was unable to deliver it because of the extreme
winter conditions in Europe. Trucks could not move, railways were covered with ice, ships couldn’t leave ports due to
extremely high winds, and rivers flooded very near the
Turkish border. We were able to manage despite those
weather conditions because we had already split the order
between a local and a foreign supplier. The local supplier,
located just two hours away from our plant, sent its quota of
parts just-in-time, and that quantity was enough to keep
production going until the shipment from the other supplier arrived. Looking back at those situations, it is clear that
the costs we would have incurred if we had experienced disruptions would have far outweighed the costs associated
with placing orders with the second, local supplier.
PROOF POSITIVE
Thanks to the two implementations above, as well as to
many others that are outside of the scope of this article,
MBT saw a steep rise in efficiency indicators. As shown in
Figure 1, the on-time-delivery service level of parts to the
assembly line rose from 99.38 percent in 2008 to 99.81 percent in 2011. Although this 0.43-percent increase may seem
like a small nuance, it actually represents a significant cost
reduction. That’s because when parts are available where
and when needed, there is less overtime work and no penalties for late deliveries of buses to customers. As of February
2012, the on-time rate had reached 99.85 percent.
The drop in raw material and component inventories is
also a strong indicator of how EBSCP has contributed to
the cost savings Mercedes Benz Türk A.Ş. has achieved so
far. Figure 2 compares each year’s average raw material and
component inventory levels with that of 2008. We are aim-
[FIGURE 2] RAW MATERIAL AND
COMPONENT INVENTORIES HELD AS A
PERCENTAGE OF THE 2008 LEVEL PER
EACH BUS PRODUCED
100.0%
100.0%
97.9%
90.0%
87.6%
80.0%
77.4%
75.3%
70.0%
60.0%
2008 2009 2010
2011
Year
2012 2013 2014
[FIGURE 3] AVERAGE DELIVERY BACKLOG
AS A PERCENTAGE OF ANNUAL SALES
3.0%
2.5%
2.78%
2.13%
2.0%
1.67%
1.5%
1.0%
1.05%
Expected Trendline
0.5%
0.29%
0
2008
2009
2010
2011
Year
2012
2013 2014
ing to continue the trendline shown in the chart in the
coming years.
Figure 3 shows late deliveries of buses as a percentage of
the daily production rate, from the assembly line to the
respective sales organizations that deliver the buses to the
end customers. The abrupt fall from the year 2008 to 2009
was mostly attributable to the impact of the economic crisis. During that time we had more production capacity then
demand, which meant we could deliver buses with more
