Ford hands off vehicle delivery to third party

By Staff -- Logistics Management, 3/1/2000

In one of the largest logistics contract deals in recent memory, Ford Motor Co. has announced it will turn over responsibility for the delivery of finished vehicles in North America to UPS Worldwide Logistics Group, the logistics subsidiary of United Parcel Service.

The partnership calls for UPS Worldwide Logistics Group to manage delivery of Ford, Lincoln, and Mercury cars and trucks in the United States, Canada, and Mexico. The third-party logistics company will not take over physical delivery of the vehicles but instead will manage the system on Ford's behalf. "We are re-engineering the Ford delivery network--introducing new management practices, eliminating bottlenecks, minimizing delays, and providing information-technology systems that greatly improve the monitoring of vehicles across the entire journey to the customer," says Dan DiMaggio, CEO of UPS Worldwide Logistics Group. "We see this as a shift from a mass distribution system to a plan for every car."

The companies say they expect the alliance will reduce the time it takes to move vehicles from Ford's plants to dealers and customers by up to 40 percent. That would take several days out of the cycle, which now averages 14 to 15 days, according to Ford. The automaker expects the change to generate substantial savings, although it will not quantify how much it expects it to yield.

Ford's goal is more than cost savings, though. "We decided speed was a competitive advantage," said Frank Taylor, Ford's vice president of material, planning, and logistics, in a press release announcing the deal. "We decided to take the next step. We want to be in front of this speed equation. ... By pursuing speed and precision, we can satisfy and excite customers."

The transition to UPS Worldwide Logistics Group is projected to take 18 months, but Ford expects to see results sooner. Taylor says the company should realize improvements in inventory reduction and asset utilization as changes are implemented. "There's tremendous waste now due to lack of speed and precision," he says. "While the full implementation will take a year and a half, we will see immediate benefits in pieces of the system at the launch."

The alliance also will provide Web-based information systems that allow Ford and its dealers to track individual vehicle status from production through final delivery. Eventually the tracking tool will be available to customers. "Ford customers who shop online for cars and trucks will be delighted to learn that they soon will be able to use the Web to track their vehicle delivery as well," says Taylor.

The new operation was launched this month. The first phase will focus on the Western and Southwestern regions of the United States, then expand throughout the United States, Canada, and Mexico.