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OM in the News: Reinventing Federal-Mogul’s Supply Chain

October 14, 2015
Federal-Mogul handles more than 400 million auto parts annually

Federal-Mogul handles more than 400 million auto parts annually

For more than a century, Federal-Mogul  has handled the gritty task of producing hundreds of thousands of auto parts, sticking them in boxes and shipping them to warehouses or stores across the country. Now—aggravated by how much time is lost in the process—the company is spending $100 million to upgrade its supply chain from end to end. Improvements range from an online parts catalog with 360-degree views of products to “picking robots” in its warehouses to help ensure that parts are delivered to customers on time. The $7 billion company produces everything from pistons and engine bearings to windshield wipers and exhaust gaskets.

Over the years, Federal-Mogul has become a patchwork of IT systems adopted from the companies it acquired, writes The Wall Street Journal (Oct. 14, 2015). The push under the new plan is to move the entire company onto SAP enterprise software. “We are facing a proliferation of parts,” says the supply chain chief. “Cars are staying on road longer, so you need to keep those parts, and meanwhile, auto makers are adding more models.”

So Federal-Mogul has opened additional warehouses that feature robotics systems that allow the company to consolidate storage space and offer all of the parts the company makes under one roof. (Using robotics is a page right out of Amazon’s playbook, which has used robots to speed the picking of individual pieces of merchandise for shipping). Radio-controlled, battery-operated robots run across the grid picking up requested containers when orders are received and put them onto a conveyor that will take them to the sorting area–a much more efficient system than at the older warehouses. “You have hundreds of people walking miles every day within the warehouses to get these parts, and that takes time,” says the head of logistics. “There is also the chance that parts get mixed up or broken. Now we have the parts come to the employees.”

Classroom discussion questions:

  1. Why does the firm need the SAP system, and what will the new software do?
  2. What is the advantage to using robots in the warehouses?
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