Merging manufacturing legacy facilities, acquisitions and newer ventures is a daunting challenge in any circumstances. When products move along complex assembly lines, proper management of all events can mean the difference between success and failure.
Consider the challenges of International Truck & Engine Corp.
(www.internationaldelivers.com), which manufactures trucks, buses and parts in various locations throughout North America. For truck manufacture, International has plants in Monterrey, Mexico (Escobedo), and Garland, Tex., the latter primarily for severe service products. For Class 8 trucks, the company has a plant in Chatham, Ont., Canada, while medium-duty trucks are produced in Springfield, Ohio. International’s school bus manufacturing plants, meanwhile, are located in Tulsa, Okla., and Conway, Ark.
Until recent years, truck operations were handled in the Chatham and Springfield plants. As the company has grown, more plants have meant a more complex model with International’s supply base heavily weighted in the 10 central U.S. states.
“As we grew and put more volumes in our plants in the southwest corridor, we realized the way we had managed inbound freight just wasn’t going to work anymore,” says Tom Erickson, International’s director of logistics. “Each plant before was more autonomously managed — we put the transportation pricing and carriers in place centrally, but the plants pretty much scheduled and arranged for or told suppliers when to ship. Last year we changed that method of operation significantly.”
Several years ago, Accenture (www.accenture.com) had been invited to conduct a study and offer recommendations about putting together a lead logistics provider (LLP) plan. The timing wasn’t right to move forward then. The volumes in the southwest plants weren’t mature enough at that time to justify that kind of move, so the recommendation was put on a shelf.
What opened it up again, though, was a joint venture with Ford Motor Co. (www.ford.com), which has an ongoing LLP relationship with Penske Logistics (www.penskelogistics.com), Erickson explains. International met with Penske, liked what it saw and ultimately piggybacked on the existing Ford-Penske relationship.
One reason for International’s partnering with Penske was so that the truck manufacturer could take advantage of the LLP’s systems, and not have to make software investments on its own.
“Penske provides our transportation management system and transportation resources in plants,” notes Erickson. “Additionally, they are a third-party warehouse support provider for two of our plants, running operations at our Escobedo plant and Garland.”
As the time for implementation approached, there was some initial resistance within International. Erickson pulled together the supply chain and materials managers at the plants involved in the launch so they could get comfortable with what was being done and see that the company wasn’t driving a fixed solution. Managers had the opportunity to customize as much as could be accommodated.
“When we implemented the program,” says Erickson, “visibility of material in the pipeline allowed managers to reduce inventories. They have come to depend on the consistency with which we can deliver material to their doors.”
While on-time delivery has been outstanding, International has occasionally run into problems if an order is dropped in at the last minute or there is a supplier performance issue. “The network has allowed us to react to those kinds of issues,” Erickson points out, “and it’s actually allowed us to minimize our use of premium and expedited transportation.”
International provides duplicates of its electronic data interchange (EDI) transmission to its suppliers. In that way suppliers are able bring the data into their system with minimal modification — and certainly minimal investment — on Erickson’s part.
International fully implemented the southwest corridor into the event management program at the end of May 2003, taking Conway, Tulsa, Garland and Escobedo into the network first. It is bringing its legacy plants — the truck plants at Springfield and Chatham — in this year. Springfield was launched at the beginning of February, and Chatham will join this spring.
“It’s still evolving,” notes Erickson. “We’re getting valuable information and are fine-tuning and improving our ability to find metrics on supplier performance and shipping schedules.” LT