Mercedes-Benz revamps its global car production network

“We want to continue to grow and will significantly increase our production capacities in the coming years,” said Markus Schäfer, member of the Divisional Board of Mercedes-Benz Cars, Production and Supply Chain Management, during a media event at the Mercedes-Benz Sindelfingen plant. “At the same time we want to permanently and sustainably strengthen our competitiveness with a high-performance organisation.” 

This year alone, Mercedes-Benz is managing 18 vehicle ramp-ups at eight locations worldwide, among them the start of production of the new C-Class sedan on four continents. 

Until 2020, Mercedes-Benz will introduce 12 new models which will not have a predecessor. Besides stepping up its international activities, the luxury automaker is strengthening its German plants with investments of more than €3 billion (Bt124.5 billion) this year. 

At the Sindelfingen plant, more than €1 billion is being invested primarily for future vehicles. Another €1 billion is going to the Untertürkheim core plant, among others for the expansion of engine production. The Bremen plant’s capacity will be increased with the aid of around €750 million. More investment is being poured into the Rastatt compact-car plant, where the fully electric B-Class has been seamlessly integrated into series production. 

The automaker’s new manufacturing organisation, Mercedes-Benz Operations, is based on global production networks and centralised responsibility for logistics and quality. 

“Under our previous production structure, individual plants operated largely autonomously. Now, manufacturing will be organised according to product architectures, independent of individual locations,” explained Schäfer. 

These product architectures comprise rear-wheel-drive architecture, front-wheel-drive architecture, architectures for SUVs and sports cars as well as the powertrain architecture. Each vehicle and powertrain architecture will draw on a system of modules and components. 

The new C-Class is the first model series to be built entirely in accordance with this principle. The C-Class is Mercedes-Benz’s highest-volume model series and went into production on four continents within just six months earlier this year: Bremen came first in February, followed by the East London plant (South Africa) in May, the Tuscaloosa plant (USA) in June, and the BBAC plant in Beijing in July. 

Within the global production network, Bremen is the lead plant and manages all aspects of C-Class production – from the tooling strategy and quality assurance to the training of colleagues from other sites worldwide. 

The company is “ensuring that the highest standards are met at all production sites right from the outset”. Around 500 employees from plants outside Germany have received intensive training so that, as multipliers, they can pass on their knowledge to others in their home plants. 

“Our German passenger car and powertrain plants form the backbone of our global production network. The achievements of the teams in all four plants are second to none: they have done an outstanding job in launching the C-Class at four sites in such a short space of time,” stated Schäfer. 

Another key factor in the new organisation is the centralised supply chain management, in which all stages of the supply chain must be seamlessly integrated – from the supplier right through to the end customer. 

“We still face great challenges in this field. At the same time there is also huge potential for reducing costs and increasing efficiency,” Schäfer said. 

Global production networks bring Mercedes-Benz closer to the different markets and its customers and enable it to respond more quickly to changes in demand, because production can be adjusted in individual plants. At the same time, manufacturing in other currency areas enable exchange-rate volatility to be evened out. 

“Given the expanding range of models, steadily increasing unit figures, and greater complexity than ever before, we have to become significantly more flexible,” said Schäfer. This includes having different variants on the same assembly line, factory equipment being used for several vehicle generations, and working hours that can be varied depending on demand. 

By standardising and modularising its plants, Mercedes-Benz intends to contain the level of capital expenditure needed and reduce fixed costs. 

“It is essential that we achieve continuous improvement in all disciplines and raise our productivity,” he said. 

In the expansion of alliances, establishment of joint ventures and use of capacity at contract, manufacturers play an important role in Mercedes-Benz’s growth strategy. 

At the end of June, Daimler announced it was setting up joint-venture production with the Renault-Nissan alliance, stepping up their existing cooperation. The partners intend to build a new generation of compact cars at a new factory in Aguascalientes, Mexico, which will have an annual production capacity of 300,000 cars.