Assessing the In-house Logistics flows in the automotive industry

Abstract

The Internal Logistics Routing Management (ILRM) system in a car-assembling company consists of a set of logistics activities that a company does to guarantee that the workstations in an assembly line do not run out of materials. In this work, we present and study one of these activities, the design of the supplying routes in SEAT S.A., a subsidiary company of the Volkswagen Group. The ILRM is an operational and strategical system because it impacts the company’s performance and involves the employment of both complex operational processes and systems. We evaluate the company’s current ILRM system using fixed routes and propose new scenarios to be implemented, in which variable-routing concepts are considered. Concerning the demand aspects, we evaluate three scenarios: the current demand, an automatic ordering system, and a forecasting demand obtained through a representation of a Manufacturing Resource Planning (MRP) system. To evaluate and optimize these scenarios, we propose an Integer Linear Programming (ILP) model and an Iterated Local Search (ILS) algorithm to calculate variable routes to ILRM systems. Furthermore, we present a simulation procedure to evaluate and compare all these scenarios in a realistic environment using real data from the company. From the optimization point of view, the ILS was able to reduce the total distance covered throughout the considered time horizon and generate no backorders. Finally, we describe the advantages and challenges of each scenario. This proposed methodology may be applied and extended to any manufacturing company.