General Motors is handing off supervision of its worldwide parts delivery and vehicle shipments to a new joint venture company it has formed with supply chain specialist CNF Inc.
GM wants the new venture, Vector SCM, to reduce the time to deliver vehicles to dealers. One-party management of the company's global logistics could trim four to five days off delivery times within two or three years, said Gary Kowalski, Vector CEO. In North America, GM's delivery time is about 13 days.
GM officials wouldn't disclose expected cost savings in its $5 billion annual logistics budget but indicated they would be significant.
Vector will manage the shipment of parts to plants and of vehicles to dealers. The partnership is expected to slash the number of GM's logistics providers. GM also wants to use common computer software throughout the new venture to better track vehicles and parts.
Coordinating supply chain activities is a tall order. More than 180 million pounds of material from 12,000 locations are delivered to GM daily. The automaker's 70 assembly plants ship about 8 million vehicles annually.Logistics functions will be turned over to Vector on a case-by-case basis, with concentration first in North America. Most activities are expected to be under Vector's control within three years.
By putting parts delivery and vehicle shipments under the same logistics umbrella, the initiative may be a first for the industry, said Bruce Ferrin, assistant professor of integrated supply management at Western Michigan University.
But GM has long needed change in its supply chain approach.
'In the last 15 years, Ford and Chrysler have been way ahead of what GM has done in the supply chain, so it's about time for GM to take some pretty aggressive steps, and it sounds like this is what they've come up with,' Ferrin said.
CNF, a $6 billion supply chain management company in Palo Alto, Calif., owns a majority of Vector SCM, which will operate out of Troy, Mich. Vector employs about 100 people and is expected to hire more than 200 within a few months.
GM, meanwhile, plans to gradually reduce its logistics personnel - by 800 worldwide and 300 in the United States - through attrition as logistics management responsibility is gradually turned over to Vector.