After one year of the logistics partnership between UPS Logistics Group and Ford, the alliance is ahead of schedule in vehicle delivery improvements, strengthening UPS Logistics' reputation. With other car manufacturers sure to follow in Ford's footsteps, UPS should win future business from firms hoping for similar results.
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. Through working with a single network manager, potential problems can be spotted and prevented before they occur.
Autogistics has managed to reduce the amount of assets in the supply chain and cut inventory-carrying costs. Ford dealers will gain large benefits from the new efficient supply chain. Since customers don't have to wait as long for vehicles, sales are made sooner, which leads to a faster inventory turn. By slashing four days off Ford's delivery cycle and re-engineering the network, Ford will save $1 billion per year in vehicle inventory expenses and more than $125 million in inventory carrying costs.
The re-engineered network has improved the time taken to deliver vehicles by considering vehicle demand, assigning production volumes from each plant to the appropriate rail and truck carriers and then determining the optimum sourcing lanes, loads and delivery schedule for each of the 6000 dealers. Previously carriers had worked independently on their own lane optimization rather than working with others to maximize loads and schedules for the entire network.
With such tangible results, UPS Autogistics has strengthened UPS' reputation as a leading supply chain engineer and supplier within the automotive industry, setting a new standard of delivery. Other companies are certain to follow Ford's lead in cutting their costs - while the benefits to its reputation will ensure that UPS wins more such custom in the future.