It’s a long road from the factory to the customer

12/14/2004

Valtra’s business has tripled over the past ten years. In the early ‘90s, the Suolahti factory produced 3500 tractors a year, whereas today annual production is over 10,000 units. This significant increase in production has been made possible largely due to the ongoing development of logistical operations at Valtra under the supervision of Matti Salminen.

“There is always plenty to do, as we are continuously thinking of ways of how we can improve things further. Continuous improvement is a typical Valtra value,” says Matti Salminen, who has been responsible for logistics at Valtra since 1990.

Up until the end of last year, Valtra belonged to one of several major Finnish groups: first Valmet, then Sisu and Partek, and lastly Kone. Transportation contracts were made on a group level, but Valtra had a major say in decisions concerning logistics due to the quantities it needed to transport. According to Salminen, Valtra is now in a new situation. Parent company AGCO has yet to impose any transportation regulations on Valtra, although maximising the efficiency of logistics is naturally in the interest of the new owner as well.

Approximately 80 percent of Valtra’s Suolahti plant´s production is exported, while approximately a quarter of all tractor components are imported. This makes the company’s logistics particularly interesting, especially concerning the location of the factory in Central Finland.

“If you draw a circle around Suolahti with a radius of 300 kilometres, you can see that we are right in the heart of Finland’s industry, including all the major ports. Our Finnish suppliers are also located within this circle: Metso delivers metal castings from Jyväskylä, we get tyres and wheels from Nastola, cabins from Ylihärmä and engines from Sisu Diesel in Nokia. In terms of logistics, these are the major tractor parts, but Valtra also used around 150 other Finnish suppliers,” Salminen explains.

Materials arrive by road

Despite the fact that the Suolahti factory has had its own railway feeder line since the late ‘60s, the amount of materials that arrive by train is marginal. These consist primarily of containers that arrive from other continents, carrying items such as air-conditioning units from Canada and transmissions for smaller tractor models from Brazil. Most materials arrive by road.

“Each day an average of 17 full trailer loads arrive to the factory by truck. Deliveries from Finnish suppliers are handled by Transpoint, which also transports spare parts to Valtra’s Finnish sales offices,” says Salminen.

Several component suppliers are located around Suolahti, including Relicomp, Laukaan Hitsaustyö and Suomen Jäähdytintehdas. These companies usually deliver materials to the factory themselves. The drivers report to the delivery bay, after which Valtra’s own forklifts unload the trucks.

Deliveries from overseas come mainly from Germany, England and Italy and have long been handled by DHL Express (Danzas). For example, trucks carrying front axles leave from the Dana factory to Suolahti four to five times a week.

Most tyres are also supplied from abroad, as Finnish manufacturer Nokian Tyres is specialised in cross-weave industrial and forestry tyres. These are delivered by Transpoint from the tyre factory in Nokia. Transpoint itself has an interesting logistics system for foreign tyres. The transportation company’s terminal in Jyväskylä has a warehouse with up to 4000 tyres. Deliveries are made to the Suolahti factory on a Just-On-Time basis three times a week.

Wheels are supplied primarily by GKN in England on a daily basis. The main supplier of batteries is German company Varta, which has a central warehouse in Hultsfred, Sweden. These are delivered by transportation company DFDS.

Logistics support custom manufacturing

Valtra’s customer order system would be impossible without advanced logistics. “We prefer to collect orders rather than a large inventory,” says Salminen.

Nearly every tractor Valtra build is customised in terms of performance and equipment. The customer makes his choices with the salesperson based on our catalogue of specifications and options. This guarantees that the customer gets the perfect tractor for his needs.

“With our Just-On-Time logistics system, our suppliers know exactly when and how to deliver components to the factory. We have a ten-day fixed production program in place at the factory, which cannot be touched by anyone, even the bosses. This guarantees material flows and eliminates the need for us to stock components at the factory,” Salminen explains.

The Suolahti factory produces around 50 tractors a day. The factory operates in two shifts, meaning that 25 tractors are produced during each eight-hour shift. Depending on the order book, it takes between six and nine weeks to complete each tractor from the time it is ordered. Most Finnish customers visit the factory with their families to see their tractor “being born”. The factory sends out an invitation around two weeks before final assembly, when the tractor is part of the fixed production program.

Some Finnish customers receive instruction at the factory on how to use their new tractor, after which they can even drive the tractor back to the farm. Most new tractors, however, are delivered to their owners using different transportation methods.

By container overseas

Should a customer in Finland choose not to drive home in their new tractor, delivery is usually made by truck. Valtra has long-term transportation contracts with a handful of trucking companies who deliver the tractors straight to the customers’ yards. Transportation company Hannu Kleimola Oy is an interesting case, as it delivers cabins made by Maaseudun Kone Oy in Ylihärmä to the factory and returns to Northern Finland with new Valtras.

Deliveries to Scandinavia have been made by truck for the past few years. DFDS Transport Oy handles deliveries to Sweden and Denmark, while Kalottihuolinta delivers tractors to the Norwegian market.

Other EU markets are supplied using a train-ship-truck combination. A train departs from the Suolahti factory nearly every weekday afternoon with tractors bound primarily for the Port of Helsinki. From there they are shipped to Travemünde by Finnlines, after which German transportation company Spedition Herbst delivers the tractors to Valtra dealers throughout Europe, with the exception of England and Austria.

The transportation time from Suolahti to Valtra dealers in Western Europe is approximately nine days. Valtra dealers in Eastern Europe usually send their own trucks to pick up tractors from Suolahti.

Matti Salminen relies on long-term contracts and close co-operation with transportation companies. “Cheap transportation becomes very expensive if it is late,” he warns. “We send our tractors to Greece and Turkey in containers, as road conditions in Eastern Europe are still unreliable. We also use containers to ship to North America, New Zealand and Australia. Major project deliveries, such as have been made to China to Iran, are also shipped in containers.

In order to load the containers, there is a special hole in the factory wall where open containers are lined up. The rear wheels are removed from the tractors, making room for two tractors in a single 40-foot HC container. Container transports are handled by DHL Air & Ocean Finland Oy.

“Last year 800 containers left the factory. We have our own Valmet/Sisu/Kalmar reach stacker, which is in heavy use everyday. We also employ a number of Kalmar outdoor forklift trucks,” says Salminen.

Internet tracking

For the past couple of years, Valtra has utilised an internet-based Traval tracking system. This monitors the progress of truck transports and is thus a huge benefit for Valtra dealers and importers throughout the European Union. The system also informs transportation companies in advance when tractors will be ready and where they need to be delivered. This way it is possible also to plan return trips with supplies.

There is a separate transportation system for spare parts. Dealers and importers usually restock once a month, but sometimes it is necessary to make express deliveries. If the order arrives at the spare parts centre before three-o’clock in the afternoon, the parts are delivered in Europe the following day. These deliveries are handled door-to-door as express freight by DHL, TNT and UPS.

“Teamwork is important,” Matti Salminen summarises. “When 80 percent of materials are delivered on a Just-On-Time basis, a mistake anywhere along the line can be fatal. The biggest threats for us are potential strikes at ports and bad ice conditions. Finland is like an island, and this has to be kept in mind.”

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