DEARBORN, MI -- February 21, 2001 After being barraged with press releases about mergers, acquisitions and the ubiquitous strategic alliance, this writer is proud to see that one behemoth alliance has resulted in a true supply chain success story.
Ford Motor Company recently announced that its 12-month-old alliance with UPS Logistics Group, a subsidiary of United Parcel Service, has successfully sliced vehicle transport time by 26 percent, or four days. The initiative is six months ahead of schedule.
"We exceeded even our own high expectations of how soon we would realize tangible results from the supply chain innovations Ford and UPS Logistics Group have implemented," said Frank Taylor, vice president, Material, Planning and Logistics, Ford Motor Company. "With the results we've already achieved, we expect to meet our goal of decreasing delivery time by up to 40 percent. The real winners are our dealers and ultimately our customers, who now have greater confidence that once a Ford, Lincoln, or Mercury vehicle leaves the factory, it will arrive when promised."
By shaving four days off the delivery cycle and reengineering the network, Ford is realizing a $1 billion dollar reduction in vehicle inventory and more than $125 million in inventory carrying-cost reductions on an annualized basis. "The savings will continue to grow as our precision, web-enabled system reaches maturity and we surface and eliminate more non-value-added activities," said Taylor.
Ford and UPS Logistics Group launched the alliance a year ago to reengineer Ford's vehicle delivery system amid rising consumer demand for on time vehicle delivery. UPS Logistics Group created UPS Autogistics as a business unit to manage the project.
"With a single network manager in place to analyze any potential problems before they occur, we've managed to avoid bottlenecks, reduce the amount of assets in the supply chain and cut inventory carrying costs," said Tom Kolakowski, manager of Ford North American Vehicle Logistics. Ford executives said the Autogistics network is running well ahead of schedule, even with record vehicle volumes in 2000. By the end of the first quarter 2001, the newly reengineered network will be fully operational in the US, Canada and Mexico. UPS Autogistics will ultimately oversee the distribution network dedicated to serving 21 Ford Motor Company assembly plants, 4 rail centers and 55 destination ramps, providing delivery to more than 6,000 Ford, Lincoln and Mercury dealers throughout North America.
The bottom line?
Chuck Spaeth notes that the initiative has been successful on a number of fronts. "There is less damage to the vehicle when it arrives -- such as dents and scratches," said Spaeth, who owns two Ford dealerships in southwestern Minnesota. "Since customers don't have to wait as long for vehicles, we make the sale sooner, our inventory turn is better and we get the trade-in vehicle earlier. So when you start adding it up, this venture is really beginning to make a difference to our bottom line."