Case Study Ford Motor

CASE STUDY

Ford Motor Company

Six Sigma initiatives streamline operations
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 andmaintain 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 its overall
supply network.

Challenges• To develop, implement and operate a centralized logistics
network for Ford
• To streamline supplier and carrier operations for improved
performance and accountability
• To provide Ford with real-time supply chain and financial
visibility

Solutions
• Penske established 10 Order Dispatch Centers (ODCs) and
consolidated shipments to plants. Approximately 1,200 trailers
now ship to and fromFord’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
advancedlogistics 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 automotiveindustry’s most complex manufacturing, transportation and
distribution networks.

Penske Logistics began its relationship with Ford as lead
logistics provider (LLP) for Ford’s assembly plant in Norfolk,
Va. At the time, each of Ford’s 20 North American assembly
plants managed its own logistics operations. A decentralized
approach provided total control of logistics at the plant level,
butpresented costly redundancies in materials handling and
transportation.
Ford conducted studies to determine the benefits of
transitioning the company’s decentralized logistic operations
to a centralized approach. The decision was quickly apparent
– centralization of the company’s logistics operations would
increase both velocity and visibility throughout the network, as
well as reduce supplychain costs.
Shortly thereafter, Ford selected Penske as its North American
LLP. Under the contract, Penske would centralize and manage
all inbound materials handling for 19 assembly plants and seven
stamping plants.

Consolidating Logistics Operations
Penske immediately developed an aggressive logistics
transition program with Ford. Penske would provide Ford with
a single point ofcontact 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 orderdispatching 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...