Greater visibility is the key to a more streamlined supply chain says Dennis Manns of North Motors Group

Dennis Manns has a possibly unique expertise and breadth of experience in the automotive industry, and particularly in logistics. Simon Duval Smith caught up with him recently and asked him to outline his view of the state of the finished vehicle industry and how his company can help all the players in the industry

Starting in sales at various Honda dealers in the Southeast, Central US and Mid Atlantic regions of the US, Manns moved through national sales and marketing at Honda to become the lead executive for the North American distribution and finished automotive logistics for the Honda and Acura brands. He created the first multi-mode shipment of products from Mexico, created the industry’s first rail consolidation, benchmark distribution system for Honda and Acura brands. Following two years at Road & Rail Services, Manns has established North Motors Group, an advisory service for OEMs and logistics providers. 

Simon Duval Smith (SDS): Tell us about North Motors Group, what are its aims and what does it offer the industry?

Dennis Manns (DM): I created the North Motors Group to address the challenges facing the finished vehicle business in North America. I feel there are areas in some OEMs' and service providers' [logistics companies] activities that I think I can help to make better and more efficient. I can help fill some of the gaps in connecting the operator groups, be they port operators or government groups that connect with our industry. The idea behind creating the North Motors Group was to get the OEMs opportunities to better assess opportunities from a systems standpoint rather than on a daily operational standpoint.

SDS: It is very expensive to ship a vehicle from A to B, there are so many handoffs between the plant, the processors, the railroads, car hauliers, and the dealers. With all these handoffs, there are many opportunities for claims for damage and delay. Also, these stages all take time and this costs a great deal of money and time. What can be done to alleviate these issues?

DM: The OEMs I speak with want to optimise their performance by eliminating those gaps, generally, improve their transporting performance. My group helps lend a fresh set of eyes on the issues and this approach can often reap great benefits for them and all the parties in the logistics chain.

SDS: Speaking of handoffs, is there a good system of transferring responsibility for vehicles, similar to the bill of lading in shipping?

DM: This is where we have seen some great advances in the last ten years in our industry. There are a lot of wonderful system providers in the industry that can help with more streamlined handoffs. At the North Motors Group, we can help by connecting these suppliers with potential customers, helping them explain what their offerings to the market can do for logistics providers. We also help the tech suppliers and logistics providers improve their branding and their marketing method, help them tell their story better.

SDS: There has been much talk of how the logistics industry lags behind the world in IT terms. What is your take on this?

DM: You cannot survive in today's logistics business world if you do not have great information and data sets on your business. Whether a product [a finished vehicle] is moving or not moving, you have to be able to evaluate where it is, why is it not moving, what is it costing in opportunity cost as well as sheer dollars. All this information needs to be transparently available and flagged up quickly, to all users. The information streams out here are the best they have ever been but there is always room for improvement.

SDS: How will the changing legislation in the US, such as the TMEC, affect the sector?

DM: The legislative picture is not clear yet, T-MEC is a 2.0 version of NAFTA, which I think is 26 years old; there were updates needed but the important thing is that all three countries involved - Mexico, the US and Canada - all have to benefit from any changes. The changes in the content [rules of origin] requirements, going from 62.5% to 75%, plus the average labour content going up to $16 in 2023 puts a lot of pressure on the attractiveness of doing business in Mexico. There will be a shrinking of margins, by a number of the players. 

To put it one way, you don't want to draw three logistics circles around the three countries, you want to have a circle around all three, in order to keep communication borders open, in spite of what may happen with physical borders.

SDS: Will we see growth in local Mexican-owned transporters?

DM: Truck hauling of new vehicles is fraught with dangers and difficulties; with every mile, there are opportunities for damage from debris etc on the roads and theft. So rail transport is always better. One of the challenges with Mexico is that most of the OEMs' plants are quite centrally-located, they are not near the borders. Due to this, rail or short-sea shipping is really the optimal way to carry finished vehicles so I do not see a lot of growth in the cross-border trucked loads of finished vehicles. 

SDS: Compared to the rail system in Europe and in many other parts of the world, Mexico and indeed the US and Canada has a paucity of routes. Will this ever change?

DM: Indeed, the European rail model is so different from the US, Canada and Mexico routes; I think the network used by the two Mexican rail carriers, and even the ones in Canada, is pretty much set in stone and is not going to be significantly added to in the future. But transit times, the speed of the trains and so on, there are things that the railroads themselves can improve, particularly in Mexico.

SDS: What about the other parts of the Infrastructure, car-carrying wagons and drivers?

DM: Railcar supply is a real challenge; the US auto industry is at an unprecedented point in its history because, for more than 100 years, the industry has been predominantly making sedan-sized vehicles. Now we are making many more trucks [larger passenger vehicles] and SUVs; if you are an OEM without a heavy line-up of SUVs and trucks, you are simply not in the game. We are now at more than 70% truck/SUV production and sales so car hauliers are getting six or seven of these larger vehicles per load where previously they could carry 10 sedan-sized vehicles on the same transporter.

When you multiply this by the 17 million vehicles made in North America, the sum difference is enormous and of course this puts even more pressure on the driver shortage that everyone is talking about. The railroad industry faces a similar challenge; many of the tri-level car-carrying railcars now have to be modified into bi-level, to take the larger vehicles and of course, they carry fewer. The industry has done a pretty good job of catching up with these changes, and the overall number of railcars has not changed a great deal.

SDS: The scale of the finished vehicle network has changed, with Mexican production really coming on-stream, what influence has this had on the network and its speed?

DM: As you stretch out production from Canada, the Mid-West, the Southern states and on into Mexico, the network is now a very long oval and this is where system design has been severely challenged and that is where the OEMs are looking for some new thinking. This is where the North Motors Group can help OEMs improve the velocity of their finished vehicle routes.

SDS: The US has seen good sustainable growth in vehicle making in the last few years but the future is by no means assured, what are your predictions?

DM: The numbers look good for the future but they are not record-breaking and this will lead to a dialogue between the railroad customer and the railroads to continue to push for that growth in equipment supply.

Vehicles sitting still, not being delivered, are lost revenue for the OEM and we must have more transparency of the delivery network and that is where the systems providers that are available right now can make a big difference.

SDS: If you had a magic wand and could produce a billion dollars to invest in the finished vehicle distribution industry, where would you spend it? Infrastructure, lobbying, more border points with Mexico, more short-sea shipping?

DM: The quick answer would be to invest in a system that covers the whole industry, giving visibility of all the system providers. This lack of visibility is the challenge that we have; supplier A has his system with good transparency until it connects with supplier B who connects with supplier C and so on. If we had system connectivity across the board, we could address challenges such as production interruption, ocean vessel availability and interruptions, railcar supply and so on. If I, as an OEM or logistics provider, I had a complete dashboard of all available modes and routes, I could manage my business so much better. 

Automotive Purchasing and Supply Chain Magazine - Issue 32

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