Setco Automotive benefits from Lancaster University post grad management project

About Setco Automotive

Setco Automotive UK Ltd, previously known as Lipe Clutch, was established in 1973 in Rossendale, Lancashire as a clutch manufacturer for medium and heavy duty commercial vehicles. The company was acquired by Setco Automotive in 2005, a major clutch manufacturer based in India.

Setco UK’s business nature has progressively changed in recent years, with less manufacturing taking place on site and therefore a higher proportion of activity focused on distributing clutches manufactured elsewhere in the Setco group.  50% of the company’s revenues now come from the UK aftermarket business, where it sells spare parts to distributers, whereas mainland Europe accounts for the rest of the business with larger orders for bigger companies.

Why was support needed?

Because of the changing nature of the business, the company was undergoing a changing process in their warehouse operations. Recently, the company has removed some of its old equipment used for remanufacturing, so that the warehouse has become much cleaner and more space has become available. In recent years, consistent efforts in improving the efficiency and accuracy of operations-related processes have been made. However, further opportunities for improvement remained. In particular, there was a discrepancy between the information available in the ERP system (SAP) and the actual stock levels in the warehouse. Because of this, Setco’s management did not have reliable information for decision making.  In addition, the company currently had traceability issues: in case of customer complaints, the team relied on paperwork to investigate the issues.

In 2017, through the Lancashire Support Package from the NAA, Setco started to work with Lancaster University to investigate possible solutions to improve the efficiency of the warehouse operations at Setco Automotive (UK) Ltd.

Exploratory research based on second literature was conducted first to examine the range of available technologies in warehouses and supply chain management. Subsequently, benchmarking visits took place at fellow NAA member’s premises, including Auto Marine Cables, MWheels and Paccar

Summary of Findings

Although all the companies visited operate in the automotive industry, they all have substantial differences. Paccar, is a distribution centre operating at a very large scale, therefore their operations cannot easily be compared to the other companies. However, Paccar represents an excellent example of the role that barcoding plays in a large and complex warehouse, together with other practices such as Six Sigma projects and the use of KPIs to track individual performance.

Auto Marine Cables provided an interesting case of a company about to implement barcoding. This add-on comes with the implementation of a whole new ERP system which gives great flexibility to the company to allow for their expansion plans. The employees will use both ‘standard’ and ring barcode scanners which are connected to mobile devices as well as tablets on the forklifts

MWheels is quite similar to Setco in terms of operations size. The company does not use barcoding: their operation processes are kept as simple as possible at the moment. In addition, as there are only three warehouse employees and that stock accuracy is quite high, there has never been a need for barcoding. However, as the company wish to expand and a warehouse will soon be opened in Germany, the implementation of barcoding will be considered in the future. Another difference between the two companies lies in MWheel’s focus on processes standardisation: all procedures throughout the company are standardised and documented, so that clear guidelines are set for all employees.

All the companies visited attempt to leverage the benefits of barcoding to help them achieve their growth objectives. In particular, Paccar PDC’s distinction between inbound and outbound processes seems to work very efficiently thanks to the integration of barcoding, and could be an interesting model for Setco. The case of MWheels shows that an SME can be successful without using barcoding.

Recommendations from Lancaster University

Following the research and benchmarking visits, the University suggested the implementation of barcodes integrated into Setco’s existing SAP system.  As they were interested in improving their warehouse key processes in material handling and putaway, picking and packing and load consolidation for shipping.   The use of a barcoding system would make their warehouse operations more efficient and effective. By using barcodes, Setco would be able to improve stock traceability and produce real time information via the SAP system, and ultimately eradicate human error.

Benefits

Thanks to the work done by Lancaster University, Setco can go ahead with the implementation of new barcoding technology to their warehouse with the confidence that it is an appropriate and cost effective solution for their business needs.  The solution has been fully costed out from several potential suppliers, allowing it to be readily incorporated into the company’s financial budget.  This research was all carried out without any significant cost or use of resources for Setco.

“The post graduate management project carried out by Lancaster University provided a perfect opportunity for the students to get valuable experience in researching solutions for our warehousing operations that I haven’t found the time to do myself.  As a result, we now have a valuable and well written piece of research carried out for Setco but at no significant cost to the company and without investing any significant time.  We are now taking the recommendations of the report further with the hope implementing the proposed solution within the next 12 months.  The student project has been a very valuable and free resource that I would highly recommend any applicable company; we will certainly be considering applying for further projects to be carried out on behalf of Setco in the future.”

Matthew Kershaw
Operations Director – Setco Automotive Ltd

If you have a business problem, that you think local students could help with, please contact martina.rodrigues@northernautoalliance