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  • This is the Ford Network. The lavender triangles represent the plants Light blue squares are the current mixing centers. Green and Red Diamonds represent origin and destination ramps respectively. The yellow stars are Ford Dealerships.
  • Pulling from the cost model data optimum sourcing lanes were developed. This would show which ramp should source which dealership.
  • Under the old system dealerships could be fed from multiple destination ramps. This proved to be costly and more difficult to manage.
  • As you can see the new design is much cleaner and eliminates the delivery overlap from various ramps.
  • This is how the entire U.S. looks. Again, no overlapping areas.
  • To run the cost model the demand for each type of vehicle delivered to each dealership was input. A dealership would have a demand from each plant that produced a vehicle they ordered. The production volume from each plant was assigned to a mixing center. The number of vehicles per rail car and the number of rail cars in each rail lane also had to be placed into the model. Essentially, we funneled volume into different lanes and allowed the model cost each option.
  • The model concentrated allocated volume in fewer lanes reducing the amount of destinations built by each plant.
  • While we have touched upon the benefits, let’s review them in greater detail. There are 5 primary beneficiaries that we will address.
  • 1. The Autogistics network supports the “On Time Delivery” initiative and increases its chances for success. 2. For the first time the supply chain can be accurately analyzed by segment and activity. Core problems can be analyzed and solved in less time and with much greater accuracy. The potential for reducing system variation is a reality. 3. The manufacturer that can produce a reliable finished goods network can obtain a competitive edge in multiple ways. Increase customer satisfaction Reduce the total cost of a vehicle for manufacturer and dealer 4. Allows Ford a single source for finished vehicle logistics. 5. Car Trackers ability to measure and produce reports improves accountability throughout the supply chain and eliminates the continuous finger pointing. Key to successful systems of any type is an accurate feedback loop. That is now in place. More importantly, it allows more time to be expended solving the problem. 6. Where does this improve the cost picture? Shortened supply chain reduces the amount of assets in the chain and reduces the inventory carrying cost. A shortened and reliable chain will increase the potential for custom orders and internet orders and reduce build for inventory. Also stops additional expense of shipping diversions due to equipment shortages.
  • Inventories are maintained to provide cars for the buying public. When the source is not reliable higher inventories are maintained to ensure that stock is available and sales are not lost. The improved visibility and precision in the network allows a leaner inventory while not sacrificing sales. The ability to provide a customer an arrival date and meet that date enhances the buying experience thus increasing customer satisfaction Dealerships will be better able to plan car preparation functions due information on Car Tracker.
  • 1. If velocity of the inventory increases, as it will, then the automotive rail cars will more quickly travel through the system. Reducing the amount of equipment needed will decrease the amount of future capital expenditures. 2. Using Car Tracker will enable the rail carriers to better plan and respond to the needs of Ford. 3. By combining existing UPS intermodal traffic with automotive traffic more dedicated trains can be created easing scheduling of crews and equipment. 4. The improved visibility promotes cooperation between the carriers.
  • 1. Allows haulers to reduce equipment and maintain lot sizes. 2. Haulers will no longer have to respond with no notice. 3. Without having to deliver in a narrow window the car hauler can run multiple shifts and use the same equipment. Knowledge of what is in the supply chain enables them to increase routing effectiveness. 4. The system is no stronger than the weakest link. Getting away from optimizing sub systems through Car Tracker will force cooperation.
  • Many-to-Many:Ford

    1. 1. Ford Motor Company’s Finished Vehicle Distribution System April 2001 Ellen Ewing Project Director UPS Logistics Dr. John Vande Vate Exec. Director EMIL ISyE Georgia Tech
    2. 2. Outline <ul><ul><li>Introduction </li></ul></ul><ul><ul><li>1999 Environment </li></ul></ul><ul><ul><li>Solution Approach </li></ul></ul><ul><ul><li>Network Design </li></ul></ul><ul><ul><li>Car Tracker </li></ul></ul><ul><ul><li>Implement New Strategy </li></ul></ul><ul><ul><li>Results to Date </li></ul></ul><ul><ul><li>Summary </li></ul></ul>
    3. 3. Objectives/Motivation <ul><ul><li>Novel application of cross-docking: Rail-to-Rail </li></ul></ul><ul><ul><li>Cross-docking for Speed </li></ul></ul><ul><ul><li>Role of modeling </li></ul></ul><ul><ul><li>Role of information </li></ul></ul><ul><ul><li>Network Management </li></ul></ul>
    4. 4. Competitive Necessity <ul><li>The new BMW Sales and Production System </li></ul>
    5. 5. <ul><ul><li>Financial Incentives: Capital Utilization </li></ul></ul><ul><ul><ul><li>In 1996 </li></ul></ul></ul><ul><ul><ul><ul><li>Ford produced 3.9 million vehicles in the US </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Avg. transit time 15+ days </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Avg. vehicle revenue $18,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Value of pipeline inventory: > $2.8 Billion </li></ul></ul></ul></ul><ul><ul><ul><ul><li>One day reduced transit time: </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>$190 Million reduction in pipeline inv. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>1400 fewer railcars </li></ul></ul></ul></ul></ul>The Need for Speed
    6. 6. The Need for Speed <ul><li>Demand for land </li></ul><ul><li>22 Plants </li></ul><ul><li>54 Destination Ramps </li></ul><ul><li>~1,200 Load lanes </li></ul><ul><li>~8,400 vehicles waiting at plants </li></ul><ul><li>$166 Million in inventory </li></ul>
    7. 7. The Need for Speed <ul><li>Other Incentives </li></ul><ul><ul><li>Damage </li></ul></ul><ul><ul><li>Flexibility </li></ul></ul>
    8. 9. The Price <ul><li>Inventory at the cross dock </li></ul><ul><li>Added distance traveled </li></ul><ul><li>Handling at the cross dock </li></ul><ul><li>Capital costs of the cross dock </li></ul>
    9. 10. 1999 Vehicle Network Delivery Conditions <ul><ul><li>Record production levels </li></ul></ul><ul><ul><li>Demand shift from cars to trucks </li></ul></ul><ul><ul><li>Overburdened rail infrastructure </li></ul></ul><ul><ul><li>Deteriorating rail service </li></ul></ul><ul><ul><li>Shortage of transport capacity </li></ul></ul><ul><ul><li>Mixing centers </li></ul></ul><ul><ul><li>15+ day transit time </li></ul></ul><ul><ul><li>High inventory cost </li></ul></ul><ul><ul><li>Dissatisfied customers </li></ul></ul>
    10. 11. High 1999 Level Statistics <ul><ul><li>Assembly plants 22 </li></ul></ul><ul><ul><li>Mixing centers 5 </li></ul></ul><ul><ul><li>Destination rail ramps 54 </li></ul></ul><ul><ul><li>Dealer locations 6,000 </li></ul></ul><ul><ul><li>Production volume 4.4 Mil./Year </li></ul></ul><ul><ul><li>Freight expense $1.5 Bil. </li></ul></ul><ul><ul><li>Dec. ‘99 avg. transit time 16.8 Days </li></ul></ul><ul><ul><li>Pipeline Inventory $4.1 Bil. </li></ul></ul>
    11. 12. Ford Distribution Network Mixing Center Origin Plant Groupings Destination Ramp Planned Ramp Closure Edison Norfolk Atlanta Kentucky Ohio St Louis Canada St Paul Michigan Chicago Kansas City 15% of all vehicles go Haulaway Direct to Dealer within 200-300 Miles of the Assembly Plant 85% of all Vehicles go via Rail to a Hub (Mixing Center or Destination Ramp)
    12. 13. Old Delivery Design <ul><ul><li>Push Network </li></ul></ul><ul><ul><li>Vendor sub systems optimized for individual segments </li></ul></ul><ul><ul><li>Little to no visibility </li></ul></ul><ul><ul><li>Mixing Centers not used effectively </li></ul></ul>
    13. 14. Ford Goals <ul><li>Speed </li></ul><ul><ul><li>1999: Average 15 days transit time </li></ul></ul><ul><ul><li>Goal: Maximum of 8 days transit time </li></ul></ul><ul><li>Precision </li></ul><ul><ul><li>1998/1999: 37% on time within 1 week </li></ul></ul><ul><ul><li>Goal: 95% on time within 1 day </li></ul></ul><ul><li>Visibility </li></ul><ul><ul><li>100 % Internet vehicle tracking from plant release to dealer delivery </li></ul></ul><ul><ul><li>Guide the flow of vehicles </li></ul></ul><ul><ul><li>Respond to variations </li></ul></ul><ul><ul><li>Inform customers </li></ul></ul>
    14. 15. Why UPS Logistics Group Chosen? <ul><ul><li>Global logistics expertise </li></ul></ul><ul><ul><li>State-of-the-art technology </li></ul></ul><ul><ul><li>Rail experience </li></ul></ul><ul><ul><li>Brand identity </li></ul></ul><ul><ul><li>Financial stability </li></ul></ul><ul><ul><li>Bench strength </li></ul></ul>
    15. 16. Solution Process <ul><ul><li>Assemble team of experienced operations and network planning personnel from Ford and UPS </li></ul></ul><ul><ul><li>Evaluate current system - process mapping </li></ul></ul><ul><ul><li>Develop a new “no constraint” vision for the industry </li></ul></ul><ul><ul><li>Design a new network </li></ul></ul><ul><ul><li>Create a new organization </li></ul></ul><ul><ul><li>Implement the new network </li></ul></ul>
    16. 17. Tools Used for Modeling <ul><li>Supply Chain Strategist from i2 Technologies </li></ul><ul><li>Cost Modeling </li></ul><ul><ul><li>Cost impact measured for each sort - route combination </li></ul></ul><ul><li>Sourcing </li></ul><ul><ul><li>Determined optimum sourcing route from ramp to dealer </li></ul></ul>
    17. 18. Ford Locations Plant Mixing Center Origin Ramp Dest. Ramp MC Ramp
    18. 19. Sourcing Solution Process <ul><ul><li>Input dealer demand volumes by product family and plant location </li></ul></ul><ul><ul><li>Create candidate lanes between dealers and closest ramps </li></ul></ul><ul><ul><li>Run models to determine optimum ramp to dealer sourcing </li></ul></ul>
    19. 20. Old Ramp Allocation Southern US Dealers sourced by multiple ramps
    20. 21. New Ramp Allocation Southern US Dealers sourced by single ramps
    21. 22. New Allocation of Dealers to Ramp Mainland US
    22. 23. Cost Modeling Solution Process <ul><ul><li>Assign each plant to a mixing center </li></ul></ul><ul><ul><li>Determine rail shipment sizes for all rail lanes </li></ul></ul><ul><ul><li>Determine shipments that move direct from plant to dealer </li></ul></ul><ul><ul><li>Obtain carrier rates and perform regression analysis of historical shipments </li></ul></ul>
    23. 24. New Rail Lanes Reduced plant destinations
    24. 25. Final Outbound Rail Network with Carriers Mixing Centers Destination Ramps Union Pacific CSXT FEC BNSF Canadian Pacific Car Haul to Ramp Norfolk Southern Canadian National Edison Norfolk Atlanta Kentucky Ohio St Louis Canada St Paul Michigan Chicago Kansas City
    25. 26. Characteristics <ul><ul><li>Shipment tracking - plant to dealer </li></ul></ul><ul><ul><li>Shipment events - customizable based on route specifications </li></ul></ul><ul><ul><li>Exception event tracking - alerts & alarms </li></ul></ul><ul><ul><li>Financial event tracking </li></ul></ul><ul><ul><li>Similar to UPS Package Tracking System </li></ul></ul>
    26. 27. Value Add <ul><ul><li>Management of supply chain down to individual VINs </li></ul></ul><ul><ul><li>Alerts & alarms - “pipeline bottlenecks” </li></ul></ul><ul><ul><li>Management of inventory levels </li></ul></ul><ul><ul><li>Enhanced communications </li></ul></ul><ul><ul><li>Improved accountability of rail provider, mixing center, and convoy carrier resources </li></ul></ul><ul><ul><li>Better reporting mechanism </li></ul></ul>
    27. 31. New Organization <ul><li>Announced new strategic alliance on February 2, 2000 </li></ul><ul><li>Launched on March 1 </li></ul><ul><li>Manage finished vehicle delivery network </li></ul><ul><ul><li>Network design and planning </li></ul></ul><ul><ul><li>Carrier selection and rate negotiation </li></ul></ul><ul><ul><li>Carrier performance management </li></ul></ul><ul><ul><li>Daily network operations </li></ul></ul><ul><ul><li>Freight bill payment and claims processing </li></ul></ul><ul><li>Staffed by Ford and UPS Autogistics personnel </li></ul><ul><li>Offices in Atlanta and Detroit </li></ul><ul><li>Operations personnel in key field locations </li></ul>
    28. 32. Results <ul><ul><li>Cut vehicle transit time by 26% or 4 days </li></ul></ul><ul><ul><li>Initiative is 6 months ahead of time </li></ul></ul><ul><ul><li>$1 billion savings in vehicle inventory </li></ul></ul><ul><ul><li>$125 million savings in inventory carrying costs </li></ul></ul><ul><ul><li>Avoid bottlenecks </li></ul></ul><ul><ul><li>Reduce assets in supply chain </li></ul></ul><ul><ul><li>Less damage </li></ul></ul><ul><ul><li>Improved inventory turns at dealer </li></ul></ul><ul><ul><li>By end of Q1 2001 network will be fully operational in US, Canada and Mexico </li></ul></ul>
    29. 33. Benefits <ul><li>Ford </li></ul><ul><li>Dealers </li></ul><ul><li>Rail Carriers </li></ul><ul><li>Auto Haulers </li></ul>
    30. 34. Benefits - Ford <ul><li>On-time delivery </li></ul><ul><li>Supply chain visibility </li></ul><ul><li>Competitive edge </li></ul><ul><li>Single network manager </li></ul><ul><li>Improved accountability </li></ul><ul><li>Cost control </li></ul>
    31. 35. Benefits - Dealers <ul><li>Reduced inventories </li></ul><ul><li>Increased customer satisfaction </li></ul>
    32. 36. Benefits - Rail Carriers <ul><li>Improved equipment utilization (reduced capital </li></ul><ul><li>expenditures) </li></ul><ul><li>Visibility and planning capabilities </li></ul><ul><li>Synergies with existing UPS traffic </li></ul><ul><li>Increased cooperation </li></ul>
    33. 37. Benefits - Auto Haulers <ul><li>Expanded dealer delivery hours </li></ul><ul><li>Visibility and planning capability </li></ul><ul><li>Improved asset utilization </li></ul><ul><li>Increased cooperation </li></ul>
    34. 38. Status Report <ul><li>Before </li></ul><ul><ul><li>Sub Optimization </li></ul></ul><ul><ul><li>Little Visibility </li></ul></ul><ul><ul><li>Mixing Center Concept </li></ul></ul><ul><ul><li>Rail Car Shortage </li></ul></ul><ul><ul><li>15 Day Network </li></ul></ul><ul><li>Now </li></ul><ul><ul><li>Car Tracker for Operations </li></ul></ul><ul><ul><li>Increased Bypass Loads </li></ul></ul><ul><ul><li>Clean Ramps & Mixing Centers </li></ul></ul><ul><ul><li>24 Hour monitoring </li></ul></ul><ul><ul><li>12 Day Network </li></ul></ul><ul><li>Future </li></ul><ul><ul><li>Transit Merge </li></ul></ul><ul><ul><li>Add Customers </li></ul></ul><ul><ul><li>Daily Dedicated Rail Networks </li></ul></ul><ul><ul><li>Too Many Railcars </li></ul></ul><ul><ul><li>Less than 8 Day Network </li></ul></ul>
    35. 39. The Whole Picture <ul><ul><li>Mixing Centers </li></ul></ul><ul><ul><li>Network design and planning </li></ul></ul><ul><ul><li>Carrier selection and rate negotiation </li></ul></ul><ul><ul><li>Tracking </li></ul></ul><ul><ul><li>Daily network operations </li></ul></ul><ul><ul><li>Carrier performance management </li></ul></ul>