International--Successful Network Redesign Equals Lower Transportation Costs, Increased Productivity

Using the LLP and ODC concept, Penske has reduced International's inbound transportation costs by more than 17 percent - exceeding its original goal of 11.7 percent.  Premium freight expenses have been reduced by approximately 12 percent.

Penske's value can be seen at the plant level as well.  By consolidating shipments, plants can now assemble and deliver trucks more quickly.  Plant production levels have significantly increased, reducing the average number of days inventory remains at the plant.  For one plant, Penske's operations have reduced this average from 21 days to 11 days.

For International's plant in Mexico, Penske has drastically eased the shipment of parts through the U.S./Mexico border.

In addition to its LLP operations, Penske continues to exceed cost down objectives in its production support responsibilities at International's Garland and Monterey plants.  Under this contract, Penske is responsible for picking goods stored at the plant's adjacent warehouse and delivering them to the assembly line.  Additional responsibilities include putaway and replenishment of all inventories.

Using refined processes and warehousing techniques, Penske has enabled both of these facilities to substantially increase productivity using less labor.  In the Garland plant, productivity has jumped from 35 trucks per day to 120 trucks per day.  In some instances, productivity has increased by nearly 250 percent with only a 25 percent increase in headcount.

Penske has also delivered its cost savings to Blue Diamond, a joint-venture formed by International and Ford Motor Company.  As LLP for both Ford and International, Penske utilized its existing logistics network infrastructure and processes established under these customer relationships to reduce logistics network costs.

The success of the Southwest Corridor program has increased the breadth and depth of services Penske provides for International.  In December 2003, International expanded the LLP program to include all vehicle assembly plants throughout North America.  The partnership between Penske and International has proven to be one of the most successful LLP ventures to date for Penske.  Maintaining its team approach, Penske continues to refine inbound materials processes throughout the supply chain to provide the customer with a competitive advantage in the marketplace.