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Case Study Ford Motor Company

1468 words - 6 pages


Ford Motor Company
Ford Motor Company, one of the world’s largest automotive manufacturers, has worked with Penske on several Six Sigma initiatives. As its lead logistics provider (LLP), Penske’s quality team of associates are trained in Six Sigma practices and work closely with Ford to streamline operations and create and maintain a more centralized logistics network. Together, they uncovered several areas for real cost savings as a result of reducing inbound carrier discrepancies, eliminating unnecessary premium costs and reducing shipment overages. Plus, Penske implemented accountability procedures and advanced logistics management technologies to gain more visibility of ...view middle of the document...

Penske would provide Ford with a single point of contact for all logistics operations. By working with individual plants and corporate management, Penske established a baseline of current operations and outlined the proposed solutions. The new logistics program would establish a Penske Logistics Center that included the following core functions: Network Design Optimization – implement a more efficient inbound materials strategy through order dispatching centers (ODC) Carrier and Premium Freight Management – manage all carriers and logistics companies, while reducing premium freight costs Information Technology System Integration – achieve realtime visibility of supply chain shipments, schedules and orders Finance Management – improve freight bill payment, claim processing and resolution throughout the supply chain Upon development of this new plan, the Penske/Ford team began evaluating Ford’s existing network design. Under the plant-centric approach, suppliers would make multiple deliveries of the same parts to different plants. A supplier would pick up a small load, deliver it to one plant, pick-up another small load

• Penske established 10 Order Dispatch Centers (ODCs) and consolidated shipments to plants. Approximately 1,200 trailers now ship to and from Ford’s ODCs per day, with most trucks at 95 percent capacity. Penske has reduced plant inventory by 15 percent. • Penske trained more than 1,500 suppliers on a uniform set of procedures and logistics technologies. Stringent carrier requirements and a Carrier Rating System were implemented to measure carrier performance. • Penske implemented strict accountability procedures and advanced logistics management technologies to gain real-time visibility of delivery status, routing schedules and productivity. A new freight billing system was designed to immediately capture logistics costs.

Getting Started
Today, Ford owns and produces automobiles under several major brands: Ford, Lincoln, Mercury, Mazda, Land Rover, Aston Martin and Volvo. They maintain one of the automotive industry’s most complex manufacturing, transportation and distribution networks.

of the same parts and deliver it to another plant. Carriers with half-empty trucks would often cross routes with each other en route to the same plant. Aside from being highly inefficient, this design allowed for excessive inventory and storage costs at the plant level. To centralize transportation and distribution operations, Penske implemented a new network design consisting of 10 new ODCs. The ODCs would be a central delivery point for suppliers. Different supplier shipments going to the same plant would now be cross-docked into trailers at the ODC. Loads would be consolidated and delivered on a scheduled basis to reduce the amount of milk runs, less than truckload shipments (LTL) and premium freight charges. To meet Penske’s new transportation and distribution standards, more than 1,500 suppliers were trained on new uniform...

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