Evolving Third-Party Logistics in the Auto Industry
Kerry Zielinski, Vice President, Business Development, CEVA Logistics (Automotive Site Guide 2007)
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advent of better technology in the '90s and beyond provides automotive
companies with a greater degree of control when it comes to knowing
what's going on with inventory at any given moment. And because 3PLs
have been leading the way in logistics technology development over the
past 20 years, auto companies have reason to have a greater sense of
control than ever before.
In addition to wanting a better sense
of control over their own operations, automobile manufacturers also
wanted to be able to have better controls with their supplier base.
Auto manufacturers depend on hundreds of suppliers to feed their
assembly lines with raw materials and components. Without better
control over the purchasing and logistics, it would be difficult to
realize substantial cost savings over time.
order to improve the quality of products being built, the automotive
industry realized it was essential that they focus on core
competencies. In this case, the core competency is building and selling
their products. This opened the door for non-core activities - such as
logistics - to be outsourced to those having expertise in that area.
the movement toward logistics outsourcing accelerated in the 1990s, so
did the quality of the products the automobile industry was turning out
- especially domestic U.S. brands with manufacturing operations based
in the traditional U.S. "iron belt." The shift towards quality
improvement helped improve market share for the "Big 3" and enabled
them to regain some of the ground they had lost to imports in the '70s
But something else began to happen as the U.S.-based
manufacturers became accustomed to building a better, more competitive
product. Automobile manufacturers that had previously been building
their products abroad and shipping them to the United States began to
set up shop throughout the country. Toyota, Honda, Mercedes-Benz, and
BMW, to name a few, launched manufacturing operations in the United
States in the '80s and '90s.
Raising the Bar
automakers have become increasingly strategic in how they manage their
supply chains and associated logistics. For Ford Motor Company, as an
example, these times require creative solutions and cost savings
innovation. Ford is drawing on network and plant strategies to reduce
inventory, increase quality, and reduce total costs for each unit
built. Ford is working from the online worker cell backwards to support
lean efforts at every phase of the building of their vehicles.
Logistics supports these concepts at every turn by reducing wastes and
increasing productivity to the plants. Transactions are analyzed for
waste. Time is measured for productivity.
than 20 years have passed since third-party logistics providers began
to help change the face of logistics within the automotive industry.
Many of these relationships began because of the need to lower costs,
create greater controls, and focus on core competencies to improve
Logistics outsourcing will continue to grow in the
automotive arena, but not because there will be more auto companies
that will outsource. It will be because 3PLs will continue to look
"outside of the box" and identify areas for improvement that have yet
to be fully tapped.Kerry
Zielinski is director of business development at CEVA Logistics. CEVA
Logistics designs, implements, and operates complex supply chain
solutions on a national, regional, or global scale for multinational
and large local companies. Mr. Zielinski can be reached at (248)
483-9943. Visit CEVA Logistics' website at www.cevalogistics.com.
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