General Motors manufacturing facilities in China have quietly begun experimenting with a new way of logistics. Reuters reported earlier this month that the automaker and its joint-venture with SAIC have begun using DHL workers to outsource material-handling positions at plants.
The Chinese facilities feature DHL employees working alongside GM employees to handle the flow of parts. The third-party logistics operation helps GM workers focus on quality and efficiency. Typically, GM employees handle the material-handling and logistics within a facility. All 17 of GM’s joint-venture manufacturing plants now operate with third-party logistics, a senior GM executive said.
It’s a stark contrast from early days of Chinese manufacturing, where cheap labor was most appealing. Now, as mentioned in the report, the GM strategy could signal a future where automakers do less of the making itself and hand off other tasks to outside entities. Here in the U.S., the idea is less likely due to unions.
But, GM China’s manufacturing chief Paul Buetow said outsourcing vehicle production is highly unlikely.
“The building and assembling of vehicles is still a core competency for General Motors,” Buetow said. “I am not sure we would ever contract that out.”
DHL handles the materials, parts flow and produces parts kits for GM workers and delivers them in order, and just-in-time for production. DHL employees are not actually assembling vehicles.
The strategy, alongside zero-downtime robots, has boosted efficiency across GM China’s manufacturing arm by building on common just-in-time strategies. Without dishing out specific details, Buetow said the number of vehicles assembled with the wrong parts has fallen to a quarter of levels from a decade ago.