Scania Lots Group in China improves profitability and reduces climate impact
22 JANUARY 2018
Applying Scania flow-oriented lean processes, LOTS Guangxi improves efficiency in the flow of raw materials and products for one of the largest consumer board mills in the world. Simultaneously the operations lead the way for more efficient logistics in China.
More efficient, sustainable logistics is becoming increasingly important in both transportation and other sectors. It paves the way for better profitability and reduced climate impact for haulage companies. As part of a shift towards more sustainable transport solutions, Scania established the company Lots Group, which is now expanding into Asia and South America.
The philosophy of Lots Group is that the best way to improve profitability and create good, sustainable logistics, is to remove waste from current transport systems. Such transport waste could be unnecessary waiting, overproduction, expensive levels of stock, bad route planning or inefficient driving.
New techniques and solutions
In China, Lots Guangxi works to develop new techniques and solutions to eliminate these wastes and provide a more efficient and sustainable logistics flow for a pulp and paper manufacturer, with a lower total cost as a result.
“This is a true partnership,” Magnus Lindholm, Managing Director of Lots Group in China, says. “It´s a win-win-win situation, which is key for us in our operations: It´s a win for our customer because we improve their efficiency when optimising the logistics systems. It´s a win for our partners, as we make their fleets more profitable. And of course it´s a win for Lots as well.”
Lots Guangxi mix the latest technology with Lean working methods and governance, resulting in ever-improving results. In one way the operations in China differs from Lots operations in Sweden where, exclusively, contracted haulage companies are used.
Lower transport costs
“Here we are using a mixed fleet with Scania vehicles and our own drivers, as well as local partners. The mill became operational in June 2016 so we are in an early stage of the operations. In this operation we would like to own and operate the entire fleet, to fully control all costs in the logistics chain.”
The operations in Guangxi in South Western China, is to deliver pulp from Tieshangang Port to the nearby mill. When the high-grade carton board products are produced, Lots bring them back to the port for shipping to customers all over China. Lots also does round wood transportation from plantations in a nearby forest to the mill.
“With continuous improvements we have managed to improve the process time in the supply chain, resulting in lower transport cost for the customer,” Magnus Lindholm says.
The Control Tower
In the seaside city of Beihai, Lots Guangxi has set up a Control Tower, the logistics monitoring centre that handles route-planning and deviations. From three large screens, Flow Coordinator Shirley Zhang and her colleagues monitor – in real time – how the vehicles and drivers perform, loading and unloading at the mill or the harbour, and driving in between.
“Basically, my job is to collect fleet data and make statistic out of it,” Shirley Zhang say.
Drivers can easily identify and report deviations such as too low stock-levels or roadblocks through an app developed by Lots. This in turn triggers an andon light in the control tower, which enables real-time follow up – and an improvement throughout the flow.
Lots stands for Lean Optimised Transport System, and Lots Guangxi apply lean to their logistics operations. Digitialisation makes it easier to identify bottlenecks in flows and analyse load capacity utilisation, waiting times, major variations in transport assignments and compliance with legislation.
Need for best drivers
“We are using a Chinese social media mobile application in most of our communication, including the daily pulse meetings with our own staff and the customer. We also have great support from the Lots Digital Design Team, which help us to develop new tools we can use for continuous improvements in the logistic flow,” Magnus Lindholm explains.
Another key for more efficient logistics is the drivers.
“We have secured to have the best drivers in China to succeed in our operations here in Guangxi. And we make sure they get the best training, that they always have enough rest in between the shifts so they are ready for safe driving.”
One of these drivers is Wu Wenquan, who´s been driving 19 months in this operation. His work is to transport containers with pulp and paper between the mill and Tieshangang Port.
“I´m from a farming family in this area, but I have driven trucks for 22 years. I love driving and my dream is to be an excellent driver. I chose to work in the Lots operations because they have a good management, reasonable salary, and very good welfare and insurance.”
A tool for China
Lots operations in Guangxi raise great interest among other operators and government agencies in China. The country has an overcapacity when it comes to transport and many vehicles are underutilized, with poor transport economy as a result, explains Mats Harborn, Chairman of Lots Guangxi.
“If we can use the Lots concept in China more widely, I think this will be a very important tool for Scania in China, but also for the Chinese transport industry to make the necessary improvements that also the Ministry of Transportation and other Chinese Ministries have said they really want to put in reality,” Harborn says.