DETROIT - Ford Motor Co. is turning to United Parcel Service to untie knots in its vehicle distribution.
A new venture between the two companies aims to reduce by six days the time needed to ship a vehicle from Ford's factories to dealers. Currently, Ford's average transit time is about 15 days, although shipping can require up to 30 days in some instances.
Cutting vehicle delivery times is a key step in Ford's plan eventually to allow customers to order custom vehicles quickly and efficiently. Automakers and retailers want to save billions in inventory costs and satisfy customer demand by slashing vehicle delivery time.
The complex logistics of automotive manufacturing and delivery coupled with an inefficient rail transit system have hindered efforts. Indeed, Ford began a global program to speed deliveries in 1997.
Now, Ford is calling in outside help. Ford and UPS Logistics Group, a unit of United Parcel Service, are forming a venture to revamp and manage Ford's vehicle delivery.
The new entity will report to Dan DiMaggio, CEO of UPS Logistics Group.
The first phase of the Ford program begins in March. It will involve Ford, Lincoln and Mercury vehicles built in assembly plants in southeastern Michigan and St. Louis and shipped to dealerships in the western and southwestern regions of the United States. Ford expects the entire network to be operating within 15 months after launch. The rollout includes Canada and Mexico.
'There is tremendous waste in the system now due to lack of speed and precision,' said Frank Taylor, Ford vice president of material, planning and logistics. He declined to specify project savings.
For the first time, Ford will be able to track easily by vehicle identification number every vehicle it builds and ships. Ford will use an Internet-based system that will allow dealers to monitor individual vehicle orders from production through delivery. Eventually, Ford will permit customers to track individual orders via the Web.
A big payoff for dealers and customers will be delivery predictability, said Jerry Joyce, Ford director of global logistics. Eventually, dealers will be able to reduce on-site inventory as faster delivery times encourage more custom orders, Ford said.
'I don't see any real cost savings for the dealer. We don't pay floorplanning costs until the vehicle gets here,' said Jerry Reynolds, owner of Prestige Ford in Garland, Texas, and chairman of the Ford Division National Dealer Council.
'But I see a ton of benefits from the customer standpoint. If we can get a special order in quicker, the customer is happier.'