Ford, UPS Logistics slash vehicle transport times
Ford Motor Co.’s alliance with UPS Logistics Group has slashed vehicle transport time by 26 percent, or four days, the automaker announced Wednesday. The initiative, launched on March 1, 2000, is six months ahead of schedule.
The alliance has also enabled Ford to achieve a 29 percent reduction in average daily vehicle inventory in its distribution pipeline.
By shaving four days off the delivery cycle and reengineering the network, Ford said it is realizing a $1 billion 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,” said Frank Taylor, vice president, material, planning and logistics at Ford.
“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,” Taylor said. With the results we’ve already achieved, we expect to meet our goal of decreasing delivery time by up to 40 percent.”
By 2003, Ford expects to deliver 95 percent of its vehicles to dealers within a day of scheduled arrival. The automaker also wants to achieve an eight-day maximum for deliveries within North America.
Ford and UPS Logistics, a subsidiary of United Parcel Service, launched the alliance 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, Ford’s manager of 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. Canada and Mexico were added late last fall, according to a UPS spokeswoman. Some information technology pieces are not yet online.
UPS Autogistics will ultimately oversee a distribution network dedicated to serving 21 Ford assembly plants, 4 rail centers and 55 destination ramps, providing delivery to more than 6,000 Ford, Lincoln and Mercury dealers throughout North America.
UPS Autogistics is working with a vehicle delivery subcommittee comprised of Ford and Lincoln Mercury dealers. Chuck Spaeth, who owns two Ford dealerships in southwestern Minnesota, said the alliance has reduced in less damage such as dents and scratches when vehicles arrive from the factory. In addition, faster deliveries have improved dealers inventory turnaround.
“So when you start adding it up, this venture is really beginning to make a difference to our bottom line,” said Spaeth, a member of the subcommittee.
The report on the UPS alliance came just one day after Ford announced a deal with FedEx to provide round-the-clock critical-parts support to the automaker’s commercial truck customers through a parts distribution center near the FedEx hub in Memphis.
