Logistics Management, Milk Run Logistics, Milk Run System, Logistics Systems, Logistics Company

TTKL [TTK Logistics] and e-Kanban : Toyota Motor Thailand

Title : Milk-run logistics by Japanese automobile manufacturers in Thailand
Author(s) : Nemoto, Toshinori; Hayashi, Katsuhiko; Hashimoto, Masataka
Citation : Procedia Social and Behavioral Sciences
Issue Date : August 2010

Profile of TTKL :
TTKL is a logistics company established in December 2002 to manage the Milk Run logistics of TMT. Stockholder composition is 51% Toyota Tsusho Thailand, 26% Toyota Tsusho, and 23% Kimura Unity. Its activities are divided into transportation and logistics operations. The transportation operation is composed of the Milk Run logistics of locally procuring automobile parts, which is the main activity, and other activities which include optimal route planning. The logistics operation, on the other hand, consists of Complete Knock Down (CKD) parts packaging (multi-sourced parts) for export,parts consolidation (vendor to vendor), and general warehouse works. The truck centers which maintain a total of 616 trucks and 40 forklifts are located in Amata Nakorn, Samrong, Eastern Seaboard, and Gateway.
The Milk Run logistics for TMT was started by Toyota Tsusho Thailand in 2001, and succeeded by TTKL in 2003. The Milk Run logistics became full-scale with the beginning of IMV production. The number of trucks used for the Milk Run logistics expanded to 565 trucks in May 2007 while the number of drivers expanded to 1,081 people. At present, the Milk Run logistics is being implemented for three factories of TMT.About 50 delivery routes are established to each plant, which could be changed in the case of traffic congestion. Six-wheel trucks (4.3 tons loading capacity) are usually utilized but at regions which can accommodate heavy trucks, ten-wheel trucks(12 tons loading capacity) are used.

Information Linkages between Toyota Motor Thailand and TTKL :
TTKLBecause the Milk Run logistics relates closely to the automobile’s production plan, a close cooperative relationship between TMT, TTKL, and the suppliers is established. The Samrong factory operates two shifts, and parts are ordered through e-kanban by regularly dividing the daily amount into 36 orders per day. The production and the operational plans determined from the working plan, parts information, and information on goods delivered are transmitted by the TMT to the TTKL.
TTKL collects basic information on running times and transport distances necessary in determining the routes and provides them to Toyota Motor Thailand. TMT then calculates the transport volume everyday based on parts information, the production plan, and container sizes, and determines the routing and scheduling plan using an optimization system on operations management. Based on these results, TTKL prepares the stowage plan, truck diagram, and the schedule of the host terminal.
At present, this planning is the most time consuming process. There are cases when the calculated schedule might not be followed due to non-standard container sizes of parts suppliers and inconvenient unloading time at the host terminal. Therefore, the operation is re-checked manually to determine if the operation is actually possible.
Milk Run Logistics Operation : Operational plan and management ;
In actual operation, a guide containing the driver check sheet, route code card, terminal card, and basket label is prepared by the TTKL’s operations manager for easy understanding of the operational plan. The operation manager assigns a driver for each route, and registers the route information in a geographic information system.
The driver fills-in the check sheet at each stage of operation. During the operation, monitoring is performed every minute and the operations manager acquires GPS information and manages the movement of the truck. In cases of non-conformities with the schedule, such as delay or over-speed, or if there are differences in the route, the information are displayed in the computer terminal of the operation center and the operation manager rectifies the situation by calling the driver on his cellular phone. In cases of traffic congestion, a detour is selected from the alternative routes set beforehand. Furthermore, in cases of accidents, an emergency truck is dispatched to the site and goods are transshipped and delivered to the destination in accordance with the scheduled delivery time.
At TTKL, it was evaluated that the investment in GPS was appropriate taking account of fuel efficiency, accident reductions, and insurance rate discounts. Trucks do not require on-board computers, and management is simple by just filling-in the check sheet. It is possible to sufficiently manage the operations by comparing the GPS data and the check sheets. It is also possible for the driver to be guided accordingly. The benefits produced by such improvement are therefore shared between TTK Logistics and Toyota Motor Thailand.

Cargo collection :
The parts supplier loads the parts based on a stowage plan. In order to prevent the collapse of goods during transportation, TTKL protects the goods with protective boards and safety belts. Goods are collected from several parts suppliers according to a collection schedule, and delivered to a specified truck bay in the TMT plant. Allowed arrival times are within plus or minus ten minutes of the scheduled time. For example, if the arrival time is about 15 minutes over the scheduled time, the event is recognized as compliance deviation concerning schedule. The rate of compliance deviation concerning schedule, which is one of Key Performance Indicators(KPI), is around 5% in TTK Logistics.

Unloading operations at the TMT plant :
The driver unloads the goods to the receiving and checking area using a forklift, and loads empty containers instead. A standard time of 36 seconds is given for each loading and unloading activity above.Once the processing of the documents is completed, the driver exchanges the forklift keys with the truck keys, and returns to the TTKL terminal. The returning driver then confirms the contents of the check sheet with the operation manager. If there is no irregularity, the operation is succeeded to the next driver.

Transport responsibility :
Because Toyota Motor Thailand takes care of the trucks utilized in Milk Run logistics, it is natural to think that the responsibility belongs to the parts supplier before loading the goods onto the truck, and the responsibility shifts to TMT once they are loaded onto the truck (FOT: Free on Truck). In reality, accidents during transport and concealed damages are covered by the transport insurance of TTKL, and insurance is paid to TMT. However, because TMT cannot receive and check the goods at the parts manufacturer’s place, TMT insists that property rights shift after receiving and checking are completed at the Toyota Motor Thailand arrival plant. Hence, the Milk Run logistics is vague in the issue of responsibility turnover.

Freight accident rates as perceived according to the number of transported pieces is 12 PPM (12 pieces per million). When a freight accident occurs, it is not just a problem of settling compensation for damages. Because the production line might stop if parts do not reach the plants, emergency transport is performed. Five employees out of those who manage the drivers usually form a patrol team, and response to the emergent situation.

TTKLFlow of Parts in the Plant and Synchronization Mechanism
Parts collected by the Milk Run logistics are carried into the host terminal. As for small parts delivered in returnable boxes or containers, several e-kanban orders are delivered collectively based on loading efficiency and operational schedule. These orders are divided and placed according to P(progress) lanes. The P-lane serves two functions: lot division and progress adjustment for synchronization. For example, one order is composed of parts for 20 vehicles with ordering frequency of 36 times a day, while 9 e-kanban orders (180 parts) are delivered in the same Milk Run (4 times to the supplier a day). The functions are accomplished by dividing the orders into e-kanban order, putting them into the 36 lines, and bringing them to the assembly line in order to synchronize the production schedule.

Large-sized parts are composed of those that are put into the direct line, those that are divided into lots via the P-lane and put into the production line, and those that are put into the sequential area. In the sequential area, large-sized parts and parts in case units are set in the vehicles based on an instruction sheet at the assembly line, and put into the mixed flow production line after undergoing ordering and synchronization.