For more than a century, Federal-Mogul Holdings Corp. has handled the gritty task of producing hundreds of thousands of auto parts, sticking them in boxes and shipping them to warehouses or stores across the country.  Now—aggravated by how much time is lost in the process—the company is spending $100 million to upgrade its supply chain from end to end.  Improvements will range from an online parts catalog with 360-degree views of products, to “picking robots” in its warehouses to help ensure that parts like its tie rods built in Alabama are delivered to customers on time.  “Supplying auto parts to stores and distribution warehouses around the country has always been a sleepy business,” says Dan Ninivaggi, co-chief executive and co-chairman of Federal-Mogul Holdings and CEO of its motor parts division. “Before, the real value was in the manufacturing and engineering of parts. Today, we handle more than 400 million parts annually, so it’s much more about distribution and getting those parts where they need to be in half the time.”  Such a move could breathe new life into an industry where businesses must keep large inventories on hand for fear of having to ask customers to try back in a couple of days or place a back order.  Federal-Mogul produces everything from pistons and engine bearings to windshield wipers and exhaust gaskets. It employs more than 48,600 workers and generated revenue of $7.32 billion last year.  Over the years, the company has become a patchwork of IT systems adopted from the companies it would acquire. The push under the new plan is to move the entire company onto SAP SE enterprise software internally while using a combination of computer software to build a customer website.  The site will be the new front door to Federal-Mogul, providing customers with a tracking system for orders and a parts catalog with pictures—something the company has never had.  “Think about it, today we still get about 15% of our orders from faxes and phone calls,” Mr. Ninivaggi says. “That has to change.”  Kathy Johnson, chief information officer, says the company also intends to offer online training and flash discounts on parts orders—both techniques the company has never offered before.  The IT changes mean Federal-Mogul can make sweeping changes to its distribution. The company now produces parts and sends them to five warehouses primarily in the middle of the U.S., from Illinois to Alabama. The problem is none of the warehouses holds all of the parts the company makes, due to the amount of space needed. Trucks must now drive to multiple sites to fill their orders.  Under the new plan, Federal-Mogul has opened additional warehouses in York, Pa., and Moreno Valley, Calif. Both will feature robotics systems that allow the company to consolidate storage space and offer all of the parts the company makes under one roof.  “We are now able to do in 100,000 square feet what would have taken us 400,000 square feet,” says Brad Norton, chief of North American supply chain and global chassis. “What we are facing is a proliferation of parts. Cars are staying on the road longer, so you need to keep those parts, and meanwhile, auto makers are adding more models. It has become a complex jungle.”  Using robotics is a page right out the playbook of Amazon.com Inc., which has used robots in several of its warehouses to speed the picking of individual pieces of merchandise for shipping.  Although employees at Federal-Mogul will still retrieve larger parts by hand, much of the picking will be taken over by robots. Steel grids of shelves will be erected with each shelf holding plastic containers filled with parts.  Radio-controlled, battery-operated robots will run across the grid picking up requested containers when orders are received and putting them onto a conveyor that will take them to the sorting area.  An employee there will pull the needed parts and send them to the shipping dock. The container then goes back on the conveyor and the robot puts it back on the shelf.  Executives at Federal-Mogul agree the robots will be much more efficient than the system that’s in place now.  “You have hundreds of people walking miles every day within the warehouses to get these parts, and that takes time,” says Tom Connelly, director of advanced logistics. “There is also the chance that parts get mixed up or broken. Now we will have the parts come to the employees.”  Robotics will go live at the York plant in the first quarter of 2016, followed by Moreno Valley. The company is considering whether to install similar processing in some of its international warehouses.  “You have to have the right part at the right place at the right time or you lose the sale,” Mr. Ninivaggi says. “We have to make sure they never lose the sale.”  Mr. Bennett is a reporter for The Wall Street Journal in Detroit. He can be reached at jeff.bennett@wsj.com.
Federal-Mogul upgrades auto-parts distribution, aiming to save time and money with the help of robots and other new technology..