Motor City Partners with Peoria

Ford, Catepillar form logistics alliance to speed parts delivery

Tempe, AZ  November 30, 2001  Ford Motor Co. and Caterpillar Inc. have entered into a software alliance to develop a logistics information system with the goal of increasing the speed at which service repair parts are delivered to market.

Dearborn, Mich.-based Ford and Peoria, Ill.-headquartered Caterpillar said that the two companies will jointly define the alliance's strategic direction and develop an operating blueprint for the future, with the new system and processes phased in over the next few years.

Don Johnson, director of global parts supply and logistics at Ford, said that the software alliance and the logistics services that Caterpillar will provide would be "key enablers" in achieving Ford's customer service satisfaction objectives. "This alliance is a critical element of our strategy to transform service-parts logistics into an improved and sustainable competitive advantage for Ford Motor Company."

Through its Cat Logistics subsidiary, Caterpillar will provide a wide range of aftermarket logistics services to Ford, helping Ford serve its dealers and customers throughout the world.

Caterpillar Logistics Services, a wholly owned subsidiary of Caterpillar, provides a range of logistics services to Caterpillar and about 40 third-party clients through a network of 75 distribution facilities. These services include warehousing and operations management, warehouse planning and engineering, inventory management, transportation management and logistics consulting.

The new logistics information system is being specially designed to accommodate the needs of global companies with diverse product lines  such as Ford and Caterpillar  and will have much greater capability than service-parts logistics systems that are currently available. The software alliance will oversee development and maintenance of the system, drawing talent from Ford and Caterpillar as well as external software providers.

The new technology will support Ford's efforts to work with its dealers to provide improved service to end customers. Ford announced in July a plan to place service parts inventory closer to its 5,000 U.S. dealers through a network of 21 new parts distribution centers. The goals of this program include facilitating daily restocking of dealer inventories, reducing order-to-delivery times for service parts by 80 percent, extending dealer order cut-off times by eight hours to 11 p.m., improving fill rates to dealers and reducing backorders, and reducing shipping and handling damage to parts delivered to dealers.

The new technology will also allow Ford and its dealers to share parts inventory information in real time, which the automaker hopes will improve customer service turnaround time and eliminate waste and cost across its entire supply chain.

"Ford believes Cat Logistics is the best in the service-parts logistics business, and by combining our strengths, we will ensure the fast and accurate distribution of parts to Ford dealerships and customers," Johnson said.

In addition to implementing the new logistics information technology at Ford and Caterpillar, the alliance will also market the capabilities of the new system to other customers.

"These services are a natural extension of the software alliance and the successful long-term third-party logistics relationship between Cat Logistics and Ford Motor Co.'s Land Rover brand," said Steve Wunning, head of Caterpillar's logistics division and vice president at Caterpillar, adding, "Our logistics capabilities are directly transferable to other industries."