GM--Creating Collaboration Across the Transportation Network

Prior to 2002, GMM internally managed its complex transportation network, which consisted of eight operations on three sites in Ramos, Toluca and Silao.  As higher demands continued to be placed on GMM's production and distribution operations, its transportation network lacked collaboration.  In effect, each operation was making individual logistics decisions, creating costly redundancies and inefficiencies throughout the supply chain.

As LLP, Penske was challenged with reducing costs and improving efficiency in GMM's inbound transportation operations.  Penske would now manage the inbound transportation of materials to each of the plants, as well as manage GMM's carrier relationships.

Penske presented a three-phase plan to be implemented within the first year:

• Phase 1 - Benchmarking (90 days): Penske would conduct a comprehensive study of GMM's inbound transportation operations, including processes, infrastructure and personnel
• Phase 2 - Process Design and Engineering (90 days): New procedures would be developed based on inefficiencies and benchmarks discovered in Phase 1
• Phase 3 - Implementation (180 days): Penske would implement these new procedures, ensuring full ramp-up in all three plants

Phase 1 began in February 2002.  Penske closely studied every aspect of GMM's inbound transportation operations.  From carrier negotiation to routing, each individual activity within the plants was process-mapped to identify inefficiencies.

The conclusion was two-fold.  Penske determined GMM lacked overall supply chain visibility as well as quality control measures.  GMM could not accurately forecast inventory needs at plants or monitor carrier progress.  Carriers lacked an efficient way to communicate the status of inbound shipments to plant operators.  Plant operators were spending valuable time tediously tracking carrier status.  Furthermore, there was no way to effectively identify low performers within the supply chain and hold them accountable to their actions.

With the benchmarking phase complete, Penske outlined its plan for operational improvement.  Penske would implement its proprietary Logistics Management System (LMS) software to track supply chain activity.  Concurrent to the implementation of its LMS software, Penske would implement new quality control processes at each step in the supply chain to achieve supply chain visibility and accountability.  Penske would maximize GMM's trained labor force by hiring or transitioning the company's current personnel to help implement many of the new processes and systems.

Implementation began in July 2002.  Penske hired and assigned approximately 120 staff to man GMM's improved inbound transportation operations.  GMM's existing material follow-up personnel represented nearly 80 percent of this staff, thus avoiding displacement of GMM's labor force.

The implementation of Penske's technology and new inbound transportation processes delivered GMM a return on investment almost immediately.  By December 2002, transportation costs were down by an astounding 15 percent.