Total Quality Management & Business Excellence

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'Postponement' in the Logistical Systems of New Automobiles Marketed in Portugal: The Brands and Quality Maria Cristina Mendonça a; J. C. Quaresma Dias b a Centro de Estudos de Gestão (CEGE-ISEG) Lisboa, Portugal b Instituto Superior de Engenharia de Lisboa (ISEL), Portugal

Online Publication Date: 01 August 2007 To cite this Article: Mendonça, Maria Cristina and Dias, J. C. Quaresma (2007) ''Postponement' in the Logistical Systems of New Automobiles Marketed in Portugal: The Brands and Quality', Total Quality Management & Business Excellence, 18:6, 681 - 696 To link to this article: DOI: 10.1080/14783360701349617 URL: http://dx.doi.org/10.1080/14783360701349617

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Total Quality Management Vol. 18, No. 6, 681 –696, August 2007

‘Postponement’ in the Logistical Systems of New Automobiles Marketed in Portugal: The Brands and Quality MARIA CRISTINA MENDONC ¸ A & J. C. QUARESMA DIAS Centro de Estudos de Gestaõ (CEGE-ISEG) Lisboa, Portugal; Instituto Superior de Engenharia de Lisboa (ISEL), Portugal

ABSTRACT Automobile production is a worldwide industry in which quality has always been a very prominent and pertinent issue. There exists, however, certain links in the logistical chain that involve local initiatives in the finishing of the final product – including final testing, repairs to breakdowns and damage that occurred during transport operations. There also exists a group of steps or links in this type of operation, designated as ‘postponement’, including delicate tasks of customisation which, if they are not well carried out, may bring into question the integrity of the vehicle, its future reliability and the image of the make or brand. These are therefore of no minor importance in the overall issue. In the case of Portugal we find that it is the transporters who secure the distribution process from gate release at the production line through to delivery to the final customer, as indicated by the local concessionaire. This long logistical segment includes the above-mentioned postponement operations, carried out at appropriate logistical platforms or support facilities. It may be considered rather surprising therefore to discover that quality certification of these platforms or supports is not a priority objective for the automobile manufacturers, for their concessionaires or even the final customer, a situation quite the opposite to that which occurs in the factories themselves on their vehicle or component production lines. Finally, strategic logistics formulation emerges like a strategy foundation supported in logistics competencies; from logistics strategy to strategic logistics. KEY WORDS : Strategic logistics, ‘postponement’, quality certification

Introduction – the Observed Phenomenon ‘Postponement’; a ‘Glocal’ Logistics Strategy Portugal imports almost all the automobiles it consumes and also exports almost all its domestic production. In the case of imported vehicles, distribution is effected from retainment platforms where value is added through ‘postponement’ processes (Bowersox &

Correspondence Address: M. Cristina Mendonça, Centro de Estudos de Gestaõ (CEGE-ISEG), Rua Miguel Lu´pi, 20, 68; 1200– 725, Lisboa, Portugal. Email: [email protected] 1478-3363 Print/1478-3371 Online/07/060681–16 # 2007 Taylor & Francis DOI: 10.1080/14783360701349617


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Closs, 1996, 473). This has implications: first, the vehicles have to be maintained in a ‘non-compromised’ state for as long as possible throughout the production process. Secondly, it also implies that lead-times vary in accordance with the finalisation tasks to be carried out at the moment of ordering by the final customer, and in order to conform to this customer’s specific wishes. This type of procedure ensures that economy of scale can be attained in the production phase and also a further economy in terms of variety or range of vehicles produced, in as much as it enables a basic standard product to be quickly and efficiently tailored to the specific wishes of any given consumer (Dias, 2001:321). In such conditions, the responsibility for customisation options (which may be more or less flexible) rests with local specialised enterprises, which are installed far from the production and assembly lines of the basic products (a phenomenon that may be simultaneously global and local and is therefore designated as ‘glocal’ (Dornier et al., 1998: 441). Inventories are therefore maintained at a level that includes a ‘buffer’ stock, which is immediately available in stategic locations to satisfy customer orders as soon as these are taken, and also enables customisation or other operations required by the customer to be carried out in the shortest possible time. We thus have a product that is adaptable in accordance with the customer’s order up to the very last moment and may therefore conclude that this type of ‘postponement’ fits in with the new ‘pull’ type of logistical chains. These are actually driven or ‘pulled’ by the customer order, and static ‘stocks’ disappear to be replaced by a kind of inventory in transit in a determined Just in Time or ‘JIT’ global system. In the case of the logistics of the automobile industry this is designated as ‘Quick Response’ (Lowson et al., 1999:89). This actually occurs with the majority of automobile brands which are imported and distributed in Portugal. In certain circumstances this type of distribution may also take the form of a channel strategy, as some of the logistical platforms in support systems that carry out the ‘postponement’ operations may deal with various brands or makes. These we shall designate multibrands. This normally occurs among the brands that have low levels of importation into Portugal or where various brands or makes are produced by one common production agency. In the case of Portugal (Dias, 2005:175–176) we find two main types of automobile ‘postponement’ operations being carried out by this type of logistical platform: . The execution of Pre-Delivery Inspection (PDI) in accordance with the specifications provided by the respective makes or brands. . Operations carried out to customise the vehicles in accordance with the final customer’s wishes. The first of these operations is more connected with mass production involving economies of scale, while the second is more related to the distribution of customized or personalized products (Christopher, 1999:33) and involves economies of scope. Quality Certification All the operations that may be carried out will influence the form and the image of the final product and may, if they are not well executed, put into question the image of the brand or make itself. For this reason, it seems reasonable to suggest that the outsourcing of such operations should be undertaken by certified entities. Such entities would be able to


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guarantee the quality of their involvement in the process and that the cars on which their processes are carried out fulfil the same quality levels as reached as in preceding operations carried out during vehicle production. However, we find (Dias, 2001:436 –463) that not all the enterprises that carry out such tasks on these vehicles are certified by international standards ISO 9001/2000. Nevertheless, they are widely accepted by both the production sectors of the brands themselves and the final customers who buy the vehicles.

The Place of Quality in the Logistics of Automobile Distribution Quality and Logistics Due to the very fact of having as their prime objective the satisfaction of customers/ consumers, logistical systems must be subordinate to the quality criteria applied to the products that these same customers procure – in other words: satisfied customers are the ‘raison d’eˆtre’ of logistics as an integrated system of added value. The concept of Quality may thus be defined in the following manner: the aptitude to satisfy the needs of consumers or users when these needs are defined both by a contract or order that establishes requirements and specifications, and also by the potential perception of these same needs by the customer. In such a situation, which enforces conciliation between the satisfaction of the customer and the profitability of the enterprise, quality emphasises aptitude for use – in other words it focuses on the value that the customer perceives in relation to that he has received (Mendonça, 2001). Such aptitude for use signifies, from the customer’s point of view, the bringing together of aspects that include quality in the conception of the product, in terms of conformity with specifications, and also the quality and availability of appropriate services. Ever more intense global competition has lead to a higher level of expectation among customers in terms of the type of quality to be received. In the case of automobile production this expectation, when associated with questions of safety and reliability, is exceptionally high. To remain competitive and also achieve good economic performance, in other words profitability, organisations and suppliers must of necessity employ ever more efficient operational systems. These systems should result in continual improvement in quality and in the satisfaction level of the customers of the organisation, as well as other interested parties (employees and shareholders, suppliers and society in general). Customer requirements are frequently incorporated in the ‘specifications’. However, such specifications alone are not sufficient to guarantee that the customer’s requirements will be consistently satisfied if there continue to be deficiencies in the organisational systems of supply and support to the product. Such preoccupations as these led to the development of quality systems standards and guidelines that complement those contained in the technical specifications of the product. The International Standards of the ISO 9000/ 2000 family are intended to provide a generic common core of standards for quality systems, applicable across a wide range of industrial and economic sectors. The management system of an organisation is influenced by its objectives, by its products and by the specific practices of the organization. Therefore, quality systems also vary from one organisation to another. However, we can safely state that the primary objective of quality management is to improve systems and processes in such a way that continual quality improvement may be attained.


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Logistics and Total Quality are also related to each other in the constant promotion of rationality, efficiency and customer satisfaction. Enterprises that operate logistic systems attempt to systematically promote quality in a circle (or cycle) of continual improvement. Logistic quality can also be seen as endogenous in the adequate management of time, place and quantity, in other words, those factors that are commonly designated as logistical attributes or logistical strategic attributes (Carvalho, 2004:19). Four aspects can be indicated as central to the definition of logistical quality: total response to the needs of customers/consumers, timely delivery, absence of error in product and information flows, and, finally, the inexistence of stock breakdowns. Among these four aspects we may say that total support to the needs of customers/ consumers is a matter of ever-increasing urgency, based on the observation that the majority of investments in information technology have been directed towards the acquisition of ‘CRM’ or Customer Relationship Management systems. This is currently one of the main concerns of managers– how to provide the customer with exactly that which he or she desires and needs (Dias, 2005:313). JIT deliveries –in other words, extending logistical precision throughout the full length of the pipeline to the customer/consumer – is another prime management objective; to deliver to the customer not only exactly what he or she desires and wants, but also just where and when he or she needs it. To this end it is necessary to ensure the non-existence of errors in information and product flows. With respect to this, the non-existence of stock breakdowns is the minimum that can be required nowadays. A vital aspect of logistical quality is the non-existence of breakdowns in JIT systems and in the international systems that support them, as such events put at risk continuity of production in accordance with requirements in terms of time, quantity and customer location. This notion of quality as tied to the needs of customers/consumers is very wide-ranging in the areas of production and distribution and is applied to all the goods and services produced. It is cited as part of the concept of Total Quality Management, or TQM. Quality of Services and Customer Fidelity The perception of quality of a service may be taken as the conclusion that the customer/ consumer arrives at after comparing and evaluating the reality of the service received against the expectations he or she created prior to receiving the service. Another way of assessing quality performance is by the ‘gap’ between the quality of service provided and the quality of service intended. Customer satisfaction with the supplied service will become greater as the gap between the quality perceived as actually received and the quality originally desired becomes smaller. In these circumstances, the quality of service as perceived by the customer is one thing, and the performance of this service in comparison with the quality desired by the customer is another. Perceived quality is based upon a set of two factors: those concerning technical quality, which originate in the technical interaction between the customer and the supplier, and those that concern functional quality and are to do with the form in which these technical factors relate to one another. These two factor types or dimensions determine the perception of quality of service retained by the customer. We may therefore state that when we approach the matter of the quality of a given service, what is really at cause is the perception of this service



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quality by the consumer. This is the factor that can be best used to provide an exact measurement of his or her satisfaction. It is therefore hardly surprising that there is currently a tendency for enterprises to invest more and more in CRM, in order to maximise the gain of customer fidelity as far as possible. It is easy to understand why there is a tendency to try to establish personal relationships with customers, as the concept of satisfaction is predicated on the customer’s actual perception of quality. Quality and Value One of the most pertinent aspects of quality is concerned with the costs of non-quality. It is an established fact that the costs of non-quality are the exact measurement of the value of quality for the consumer. In the case of logistics as an integrated system, and throughout its chain of added value, the customer’s perception of, and satisfaction with, this added value is a precious competitive advantage. A ‘non-quality cost’ can have enormous impact on the entire system, as the consequence may be the non-perception of value by the final customer/consumer. The assessment of non-quality costs in these terms gives us a clear idea of just how valuable the perception of quality can be. On the other hand, logistical quality implementation also has its own costs, which materialise in the prevention, assessment and rectification of failures. It is essential that the enterprise or organisation be aware from the outset that the costs incurred by quality improvement must be lower than the difference between initial non-quality costs (i.e. non-quality costs before improvements are implemented) and residual quality costs (i.e. the (lower) non-quality costs that remain after improvement). As logistical quality is an important source of competitive advantage in the long term, we may state that logistical quality is in fact connected with the notion of value (Dias, 2005:273). Value as such should always be measured from the customer’s point of view and may be defined as measurement of the customer’s perception of the quality of the product (goods or services), the cost, and response time of the service. The value attributed the product or service acquired by the customer/consumer will therefore increase in direct proportion to his or her perception of the quality of the service or product itself, and will be enhanced even more as lead-time and imputed costs are reduced. The recognition of the value of a determined product or service is finally consolidated when it is actually purchased. The importance of a management approach based on the compression in real time of the variables upon which the value perceptions of the customer/consumer of the logistical service are based cannot be over-emphasised. All these notions and concepts may be clearly seen as operative in logistical systems that support the production and distribution of automobiles, as analysed in the present work. Research Methodology Seven cases were researched and seven case studies produced, which between them cover about 70% of the automobiles imported and consumed by the Portuguese market. The cases referred to include the following enterprises: INTERSET, STIFA, TRIVE,


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ENTREPOSTO, RODOCARGO LOGI`STICA, SALVADOR CAETANO and OPEL PORTUGAL. The last two mentioned concern complete logistical systems, that is to say covering both inbound and outbound directions, as the enterprises are importers but also manufacture automobiles (OPEL PORTUGAL, the ‘Opel Combo’) or carry out assembly operations for export (SALVADOR CAETANO, Toyota automobiles and ‘Caetano’ autobuses): the remaining platforms INTERSET, STIFA, TRIVE, ENTREPOSTO INDUSTRIAL and RODOCARGO LOGI´STICA operate only outbound systems and operations associated with ‘postponement’. Most of these new vehicles are imported by sea, mainly through the port of setu´bal, although some brands or makes ship smaller numbers through the ports of Leixo˜es and Lisboa or through de Vigo in Spain (the case of the importation of ‘Citroe¨n’ and ‘Peugeot’ brands). Primary Research: Specific Aspects The logistical support platforms studied, which are dedicated to the postponement of automobiles, have parking capacities that average between 2000 and 4000 units. Through them pass between 250,000 and 300,000 units annually, the variation depending on market fluctuations and heating or cooling of the economy throughout the year. OPEL PORTUGAL exports the units it produces to various European destinations through the port of Setu´bal, and imports through the same port other units of the same brand name to be consumed by the domestic market. This facilitates economy of scale as the number of voyages undertaken by transporters’ vessels without payloads is reduced to a minimum. This type of optimisation is further facilitated in this port because the domestic production of AUTOEUROPA (AE) – between 100,000 and 130,000 units per year – together with the 70,000 units exported by OPEL PORTUGAL, balance the imports of the remaining brands and thus offer competitive advantages to both the port of Setu´bal and to Portuguese automobile importers and exporters. Furthermore OPEL PORTUGAL uses a rail link between its own logistical support platform at the Azambuja factory and the port of Setu´bal, which enables considerable further economies of scale, as the plant where exported vehicles are produced also integrates management of improted vehicles and their distribution into the dealership network. INTERSET, a company located close to the port of Setu´bal and which imports vehicles under the ‘Citroe¨n and ‘Peugeot’ brand names, has established logistical bipolarity with the port of Vigo, where the CITROE¨N brand has a factory producing more than 400,000 units per year for destinations in the Far East. Import and import therefore tend towards an equilibrium minimising the circulation of empty vessels. This reduction in the costs of maritime freight is sufficient to compensate for the road transport of vehicles from Vigo to Setu´bal (a distance less than 500 km). Therefore, the logical support platform for the ‘postponement’ of INTERSET is set up in Setu´bal for the distribution channels within Portugal. ENTREPOSTO INDUSTRIAL and TRIVE import and undertake the ‘postponement’ of several important makes, namely Nissan and Hyundai in the case of the former, and FLAT in the case of the latter. At STIFA and RODOCARGO LOGI´STICA, a number of makes are handled, principally Honda in the case STIFA, and Mercedes in the case of RODOCARGO LOGI´STICA.



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Controlling the Chain of Value One of the most interesting aspects of the platforms under analysis concerns integration with their respective logistical supply chains. While in the case of OPEL PORTUGAL subcontracting to the logistical partnerships that the enterprise itself considers most convenient is the practice, in all the other cases control of added value occurring at the logistical support platforms where ‘postponement’ is carried out is actually undertaken by the transport companies that are contracted for both European and regional distribution of the brands. Other exceptions may be seen in the case of the brands that are imported, and production that is exported, by SALVADOR CAETANO through the port of Leixo˜es in the North of Portugal, or in the case of ENTREPOSTO INDUSTRIAL. These enterprises are held by economic groups that are connected with automobile production or, in the case of ENTREPOSTO, automobile distribution. However, in all the other cases it is the transport operator who ensures control of distribution from the logistical support platforms where postponement takes place. Thus, in the case of RODOCARGO LOGI´STICA, the company is held by another enterprise, RODOCARGO TRANPORTES, of Portuguese origin and one of the largest transporters of automobiles in Iberia, STIFA is held by a rail transport consortium comprising Portuguese, Spanish, French and Italian partners. In the case of INTERSET, the majority shareholder is SUARDIAZ, an important Spanish ship owner. In the case of TRIVE the main shareholder is the Italian ship owner GRIMALDI. In all these cases the support platform is integrated into the logistical segment or section of the management systems of the distributors themselves. As we have seen, these distributors are simultaneously either manufacturers or else integrated into the transport sector as maritime enterprises, rail companies or, in one case, a large road transport company.

Port Intermodality: ‘Roll-On/Roll-Off’ When integrated into the logistical systems of the automobile industry, one of the most important factors contributing to the competitiveness of the maritime transport system (Stopford, 1997:33), designated as ‘Ro-Ro’, is the inherent mobility of the actual cargo carried and the ease with which port operations may therefore be carried out. In these cases ships designated as ‘car carriers’ or ‘Ro-Ro’ basically function as enormous floating vehicle parks. The quayside operator will send a team of 12 to 30 persons to the loading and/or unloading locality to shift the vehicles parked on the quayside into the interior of the ship or vice-versa. The composition of this team, if we take a maximum number of 30 as a basis, would be more or less as follows: . 16 parking drivers (an average of 10 cars per hour per man); . eight workers to secure the vehicles in the interior of the ship by tying them down with special straps, or untying them in the case of unloading. The number of workers undertaking this operation is usually about half the number of drivers. . Four shuttle vehicles with drivers who will move the parking drivers back and forth between the ship and the parking area (one way they carry four parking drivers, returning empty);


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. One operative on the ramp or gangway to coordinate the manoeuvres in the interior or of the ship by signalling; . One checker to carry out and reconfirm cargo counts. This team of 30 persons has an average loading capacity of about 160 cars per hour. In a 5-hour shift they will therefore be able to move about 800 cars (this value may vary upwards or downwards in accordance with the type of vessel, the state of the weather, etc). The actual size of the teams who undertake the ‘Ro-Ro’ operations depends fundamentally on customer urgency, quayside time available, the number of vehicles to be loaded or unloaded and so on (Dias, 2001:449). However, for reasons of safety of the actual vehicles it is difficult to move more than 200 per hour per vessel under any circumstances, even under the most favourable circumstances. We may also mention that, in accordance with national Decree-Law 298/93, the movement if cargo in the port is considered as a public service and the cars that are embarked or disembarked in the ports (mainly the port of Setu´bal) and are destined for logistical support platforms to undergo postponement operations are moved via public quays. Regarding postponement, we should mention that vehicles that have been badly tied down and have broken lose during the voyage, for example due to storms at sea, may sometimes damage dozens of others. When they are unloaded in the port they may be so severely damaged as to appear to have been crushed by giant hands. It is due to incidents like these that we can verify the overriding necessity for qualified operatives in the cargo-handling enterprises in ports dealing with automobile movements. In the case of the port of Setu´bal the main operator, NAVIPOR, connected to the INTERSET group, and which handles more than 80% of the vehicles moving through the port, is certified by ISO 9000/2000. Services Provided INTERSET, TRIVE, STIFA and RODOCARGO LOGI´STICA all offer their customers fours distinct types of services (Figure 1). Services to vehicles may, at the customer’s behest, include any or all of the segments of merchandise transport from gate release at the factory or assembly line through to portside parking and then on to whatever delivery location the concessionaire of the vehicle may determine: . . . . .

Repairs carried out on anomalies or accidents that occurred during transport. Vehicle preparation or Pre Delivery Inspection (PDI). Customisation, transformation and other operations personalising vehicles. Reception and parking of vehicles. Refurbishment of used vehicles (buy back) from rent-a-car fleets.

Accidents during transport, embarkation or periods during which the vehicles are parked in the ports (for example frost damage to vehicle bodywork) are not an uncommon occurrence and require repairs before vehicles are moved away from these support platforms. In the case of INTEREST, STIFA, RODOCARGO LOGI´STICA and TRIVE, we may find adjacent businesses concerned with the buy-back of vehicles, particularly form rent-a-car fleets, and other activities using adequate machinery and installations to undertake



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Figure 1. Model of services rendered by a ‘Postponement’ logistical platform. Source: Dias, (2001:174)

postponement tasks and all the other operations that have been mentioned in the treatment of light vehicles. We may see in Figure 2 that companies generally implement a range of operations during the vehicle’s sojourn, from the moment the vehicle enters until the moment it is rendered in a condition suitable for expedition. We will now look in more detail at each of the services that may be rendered. Vehicle Preparation (‘PDI’) Each case is subject to a specific contract or protocol (‘PDI’) between the customer and logistical support platform and may concern a given brand or model of vehicle or a given period of time (for example one year), or a given number of vehicles (for example, 15,000). The adjudicated platform will undertake all the operations for which it has been contracted. If any case arises that requires interventions not foreseen by the contract, the appropriate solutions for the case will be specifically agreed. The preparation of vehicles for delivery and sale to the final consumer may therefore be a minor task or involve more extensive interventions. This will depend on the express wishes of the customer, the concessionaire or the brand under the terms of the specific PDI contract. It is important to point out that all the technical interventions undertaken at the platform during the preparation of vehicles in the name of the concessionaire or the representative of the vehicle brand or make in Portugal have the same validity in terms of guarantee as those undertaken by the manufacturers and concessionaires themselves. This is tantamount to saying that the award of a given contract by a brand to a logistical support platform accredits the latter as an entity with the technical capacities required to intervene on the vehicles in accordance with the contract programme. As previously stated, PDI interventions may be quite light, including merely the reception of the vehicle, removal of protective wax coatings and washing, and the eventual



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Figure 2. Flowchart of operations that may be carried out on vehicles at ‘Postponement’ logistical platforms. Source: Dias, (2005:80)

repairs of minor breakdowns or damage, verification of the main mechanical components, the motor, gear box, steering, breaks and wheels and finally the fitting of the registration number and filling with a minimum amount of fuel. Such interventions may however be wider-ranging and include such control inspections as detailed verification of lights, instruments, controls and their condition and correct operation. More detailed mechanical inspections may be carried out and may range from checking the tightness of wheel nuts through to verification of active safety systems such as air-bags, brakes, steering, motor and gear box, wheels, tyres, cold start systems in the case of diesel engines, battery condition and charge and even a final road test to the vehicle. Work may also be undertaken in preparing the final appearance of the vehicle and fuelling. Curative repairs will be undertaken whenever an anomaly or breakdown or other damage is detected. Other checks may include verification of such data as motor number, chassis number, alarm codes on the radio, the colour of bodywork, etc. Finally, instruction manuals, maintenance manuals, other required documentation, sets of keys, tool sets and other accessories may be placed within the vehicles. As we can see, all these services are concerned fundamentally with the meticulous preparation of the vehicle before it is delivered to the final consumer. In fact, some of these tasks could perfectly well be carried out on the assembly lines, and others at the concessionaires or the national representatives of the vehicle brands. However, when these are carried out by an independent strategic partner, an economy of scale may be



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attained that is only possible through the agglomeration of multi-brand or multi-make services. Nevertheless, the most important brands do not accept that such operations be carried out together with other brands and require that all postponement operations be carried out exclusively on their vehicles and not in conjunction with those of their competitors. Despite this, in many cases the execution of these operations by an independent strategic partner enables multi-brand operations to attain not only economies of scale but also economies of scope and differentiations between vehicles to be delivered. Transformation, Personalisation and Customisation of Vehicles The transformation of vehicles represents a service supplied to adapt the basic product to the specific consumer demands of a given market or, going even further, to personalise the vehicle in accordance with the specific preferences of a specific final consumer. The following examples may be mentioned, all of which have been gathered from the logistical support platforms were studied in the present work. Example 1 – Exterior Painting in Standardised Taxi Liveries At first glance, this type of transformation is an obvious requirement and would not appear to involve any special peculiarities, as the final consumer will be operating the automobile as a public service vehicle which has, as such, to be displayed in nationally standardised colour schemes established for such vehicles. Yet while such transformation of the vehicle involving paint operations may appear to present no major technical difficulties, as the postponement platforms are suitably furnished with the appropriate human resources, the know-how, the paint shops and all the other equipment required for these operations, we should nevertheless be aware that such operations may require a certain amount of delicacy as they are carried out on brand-new vehicles and the outcome of these operations has a major impact on the image of the brand, its builders and its representatives in Portugal. In effect the paintwork constitutes not only a decisive aesthetic factor in the appreciation of the final product by the final customer in the act of purchasing the vehicle, but also an important factor in both the initial quality and the duration of this quality throughout its useful life, due to the protective and anti-corrosion functions of the paintwork. Brands and concessionaires today offer specific anti-corrosion guarantees for the structure and bodywork of the car, which may be for three, five or even more years. A purchaser acquiring a vehicle for use as a taxi has the same entitlement as any other customer whether the paint operation was carried out by the brand or manufacturer on their assembly lines, by the brand representative in their own installations or by a multi-brand representative such as INTERSET or STIFA, RODOCARGO LOGISTICA, TRIVE. Etc. We can therefore assay just how high the level of confidence must develop between logistical partners in the case of a transformation of this nature, especially bearing in mind the exceptionally intensive use taxis normally undergo. In the case of INEREST, we may verify that rigorous daily controls of environmental air are carried out in order to ensure that the atmospheric and humidity conditions under which preparation operations, painting, drying, finishing and parking are carried out are of such a quality that it will no be possible, under any circumstances, to claim that they are the origin or cause of such phenomena as corrosion, stains on the paintwork, etc.


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Therefore, these operations are a matter of very real and major technical responsibilities for those who carry them out.

Example 2– Installation of an Air Conditioning System Among the accessories authorized for installation in the vehicles there may be an air conditioning kit. There are two important considerations here. In the first place, this type of equipment, when in operation, debits a considerable amount of power from the vehicle and must therefore be considered as a peripheral that is an important consumer of energy, hence any deficiency in its installation could provoke failures in the behaviour of the main components of the car to a degree which may compromise the guarantee. In the second place, the assembly of such units is a complex operation that involves alterations in the electronic system of the vehicle. The slightest failure may therefore be the cause of disturbances in the functions of alarm systems, electric window controls, door locking systems and even the operation of the motor itself. Once again we may point out the delicacy of the operations and the responsibility that these imply for a multi-brand operator, as well as the consequences in terms of an enhanced or diminished image of the brand and its representatives, which may result from the actuation of the installer.

Example 3– Important of a Vehicle Destined for Re-export to the Spanish Market In this specific case the vehicle in question, a monovolume vehicle (MPV), did not fulfil the legal requirements for such vehicles under Spanish legislation, as it was eight centimetres lower than the minimum required height. The decision was taken to install on the roof a baggage rack which, apart from enhancing the utility of the vehicle, would also provide the necessary increase in vehicle height. The adaptation of the vehicle to a specific market was undertaken during a strictly defined period of time during which these legal requirements remained in force. From the moment that the Spanish legislation was changed the installation of this accessory was no longer required and installation operations, heretofore carried out by STIFA, ceased.

Example 4– Adaptation of a Commercial Off-road Vehicle to the Power Requirements of Portuguese Consumers A Certain brand of off-road commercial and utility vehicles decided that it needed to increase the power levels of the motors of one of its most popular models in order better to match the preferences of Portuguese consumers. This power increase was obtained by the installation of a turbo compressor on the motor of each vehicle. This device is assembled and installed on the motor between the air intake manifold and that of the exhaust. This is quite a delicate operation with significant effects on the overall functioning of the motor. In fact, deficient installation can cause irreparable damage to the motor, to the vehicle and hence to the image of the brand itself. One of the postponement contracts identified in the case of STIFA refers specifically to the installation on these utility vehicles of a turbo compressor designed in Spain and manufactured in Japan.



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After an initial training period for the human resources who would intervene in the operation, this went ahead. The Spanish project manager undertook periodic audits on the work carried out, and not one single complaint or anomaly was detected after the assembly and operation over a period of time, of thousands of turbo units. Example 5– Adaptation of Vehicles to Specific Consumers As this type of operation may involve a tremendous variety and diversity of factors, not one but several typical examples will be mentioned. A customer may require some special wheel, an alarm or a special stereo system, another may require leather upholstery, yet another may require special fog lights or headlights and still another a vehicle that has been fitted with an aileron or suchlike aerodynamic customisation, as authorised by the DGV, the Portuguese General Directorate of Vehicles. In all these cases we are evidently faced with a set of tasks that must be carried out just before delivery of the vehicle to the final consumer. It is also true that most of these tasks cannot easily be carried out on the actual assembly lines, due not only by the high costs of differentiation from a general model, but also do the excessive delay that would exist between leaving the production line and delivery to the final customer. Furthermore, except in certain exceptional cases of very high volume sales, the investments necessary to undertake these final operations at manufacturing sources are not justifiable, and similarly the undertaking of such tasks by national or regional brand representatives would involve a high and excessive investment in resources for short production runs, which may then lay redundant for indeterminate periods of time and are therefore of doubtful profitability. The outsourcing of all these tasks to independent strategic partnerships permits an economy of scale, differentiation and scope which may only be achieved by multibrand type distribution channels and services. This type of operation is typical of the postponement phenomenon as it adds value to the product at the latest possible moment in the process of production and delivery, and the closest possible moment to handling over to the final consumer. Such operations are normally carried out just before the vehicle is delivered to the buyer and are the final phases in maufacturing the finished product. Reception and Parking of Vehicles (Buffers) The national representatives or concessionaires of automobile brands prefers to receive the cars gradually in accordance with the times at which customers put down deposits on their vehicles – the signal for them to be prepared and/or transformed for immediate delivery or delivery a few hours later. However, market forecasts can be fallible: if demand exceeds expectations it will not be possible for the brands to obtain rapid and efficient response from overseas. If, on the other hand, demand is inferior to forecasts, national representatives and concessionaires may be left with a backlog of vehicles on their hands which may become dead stocks. The acquisition of plots of land for the construction of representative’s installations, their ‘stands’ as they are commonly called in urban regions, can be so high that it is preferable to maintain these stocks parked elsewhere. In the case of NAVIVAR the cost of such buffer parking services may be E0.3 or E0.4 per day per vehicle.


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The function of buffering fluctuations in the market and forecast errors becomes in itself a ‘sub product’, although one that the various elements in the partnership would prefer not to have recourse to, as it is a passive service that basically does not add value. Despite this, it has to be recognised that this is an extremely useful service: it reduces to a minimum the need to occupy physical space – which represents a cost – from the moment of arrival of the vehicle through to its purchase and delivery to the final client. This holds true even on such occasions as this may be, in effect, a very rapid process and involve the minimum amount of delay possible. Integrated Services As this analysis reveals, it is rare that a service such as that of the parking facility is purchased in isolation. It is much more usual for vehicles which are to be transformed also to undergo such operations as preparation, removal of protective coatings, etc. Most of the cars that undergo transformation also require PDI preparation services. The range of services that postponement platforms may offer as part of an integrated package also includes personalised management of the sojourn of each vehicle. Even when the vehicle is, so to speak, ‘passing through’, it may need repairs for minor damage, replacement of some accessory which was lost or stolen during transit, etc. In effect, after ingress of the vehicle into the logistical support platform area, a whole series of operations are carried out to correct and rectify breakdowns, defects and any other failures detected. This control, which is normally carried out under artificial light in a covered area, is supported by a peripheral device connected to a vehicle management information system. Through this system issues a label with a barcode for each vehicle as it arrives at the support platform. This label enables all the information connected to that particular vehicle to be accessed immediately, as well as keeping a record of its position at any given moment. This information is transmitted to the central database from which a checklist (or waybill type of document), called a ‘guia de acompanhamento da viatura’ – literally translated, a ‘vehicle accompanying guide’ – is issued. This checklist or waybill, which accompanies the vehicle throughout its period or stay within the logistical platform, will be used to note all the actions that are undertaken and all the anomalies detected during this stay. On the basis of the information thus introduced into the system, it is possible to issue detailed overall reports concerning the entrance of vehicles, dates and models as well as individualised reports on anomalies detected on the vehicle upon ingress to the installations, Whenever the vehicle is moved from one zone to another the new parking space is attributed to it in advance by the computer. This locality will, in principle, remain constant until the vehicle leaves. If it is necessary to move a vehicle elsewhere in order to undertake repairs or preparations or to install any type of kit, or to undergo other transformations, this will be considered as a provisional situation and the vehicle will, after such operations, have been carried out, be returned to the parking space originally attributed to it. The computer-based information systems thus maintain detailed information on the history of the vehicle from the moment of entry into the parking area through to delivery to the concessionaire or to the transporters who will undertake final transport and delivery to the concessionaire. All these sources of information are available at the firms that manage the logistical platforms and may be placed at the disposition of any customer



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online should they so require. They may contain, among other data, the date of entry of the vehicle, its location in the parking lot, the transporters who delivered it to the parking areas, the date on which it was dispatched, the date on which it left the terminal, the number of days it remained in the parking lot, etc.

Quality Certification Among the companies that operate the logistical support platforms and which carry out postponement operations on automobiles, INTEREST stands out as the only case of certification under the auspices of ISO 9000/2000. Among the remaining cases studied TRIVE, STIFA and RODOCARGO LOGISTICA, none had overall certification, or for that matter even partial certification for segments of their operational lines. Despite this, we may state with reference to the PDI checklist inspections undertaken by the brands themselves, control of environmental air in operational spaces and all the other parameters cited, that the number of complaints is extremely low, whether on the part of concessionaires or of final consumers. This is without doubt a solid testimony to the quality of work undertaken and an indication of the confidence that is placed in these operators on the part of the owners of the automobile brands that they handle, and also of the satisfaction of the final customers who purchase these automobiles. The one certified enterprise, INTEREST, is part of a group called NAVIGOMES, which also includes a number of other certified companies, particularly NAVIPOR and OPERESTIVA, the former a port operations enterprise and the latter a supplier of port labour. Between them this group of companies can guarantee certification in any movement and operation undertaken on automobiles within the port of Setu´bal and within the area of automobile postponement logistical support platforms.

Conclusions One of the most surprising conclusions we may draw from the case studies presented in this article is that, in Portugal, automobile manufacturers (‘brands’) do not demand quality certification but only the careful fulfilment of their PDI check-lists. This is despite the fact that the interventions carried out by operators on their vehicles are often crucial to the quality of the final product, as in the case of paintwork, fitting of accessories, mechanical interventions, air conditioning and other operations which, should they be deficient, will affect the image of the brand as much as, or even more, than the operations carried out during original plant assembly of the vehicle itself or during production of major components, such as the motor or the gear box, etc. Another important conclusion is that even without quality certification, or independently of the same, the levels of satisfaction of the brands, their concessionaires and final customers are equally high. From this we may once again validate the knowledge acquired during this study concerning the variance between the concept of quality as perceived by the customer and that which is actually supplied in the act of acquisition or purchase. Bearing in mind just how important these postponement operations are in selling and maintaining the image of the brand, another surprising aspect is the high level of autonomy that the brands allow their concessionaires, and the confidence which the latter place in the logistic park operators. This applies equally to customisation or


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personalisation operations carried out in accordance with the wishes of certain, more demanding, customers who have higher buying power. Finally, in the case of Portugal, and with the exceptions of SALVADOR CAETANO, representing the Toyota brand, and OPEL PORTUGAL, we should point out the importance of the deep understanding developed by transport operators – whether maritime, road or rail – of logistical operations, and the control excercised by them over logistical operators. These transporters take on board logistics as the driving force of their strategies, therefore they change the logistics as a tool of strategy (Colin & Fabbes-Costes, 1994:65) and negotiate with the brand manufacturers the entire outbound logistical system: that is to say, from gate release at the production plants or assembly plants right through to delivery to the final customer. References Bowersox, D. J. & Closs, D. J. (1996) Logistical Management, The Integrated Supply Chain Process, (McCrawHill, International Edition). Carvalho, C. (2004) A Lo´gica da Logistica (Ediço¯es Silabo). Carvalho, C. J. M. (1996) Logistica (Ediço¯es Silabo). Christopher, M. (1999) New directions in logistics, in: D. Waters (Ed.) Global Logistics and Distribution Planning: Strategies for Management (3), pp. 27–38, (Kogen Page). Colin, J. & Fabbes-Costes, N. (1994) Formulating logistics strategy in: D. Waters (Ed.) Global Logistics and Distribution Planning: Strategies for Management, (5), pp. 63 –84, (Kogen Page). Dias, J. C. Q. (2001) A Integraça¯o dos portos Nacionais e do ‘Ro-Ro’ nos Sistemas Logisticos Globais do Automo´vel. A Formaça¯o de Bipolaridades. (Tese de Doutoramento em Gestaõ Estrate´gica) (Lisboa: Universidade Aberta). Dias, J. C. Q. (2001) Logistica Global e Macrologistica, (Ediço¯es Silabo). Dornier, P. P. et al. (1998) Global Operations and Logistics-Text and Cases, (Wiley). Lowson, B. et al. (1999) Quick Response: Managing the Supply Chain to Meet Consumer Demand, (Wiley). Mendonça, M. C. (2005) Quality in education and training. In 45th EOQ Congress, Quality: The Bridge to Global Competition. 19 –21 September. Stopford, M. (1997) Maritime Economics, 2nd edn (London and New York: Routledge).