The UPS Logistics Group - Automotive Services will offer supply chain reengineering, transportation network management, service parts logistics and technology solutions to vehicle manufacturers, suppliers and parts distributors around the world.

"The advent of supplier exchanges, build-to-order business models and consumer-friendly web technology are trends dramatically affecting the automotive industry and its supply chains," said Jim Thompson, senior vice president, UPS Logistics Group. "Our expertise combines technology with supply chain reengineering and advanced management practices to help reinvent the industry."

The UPS Logistics Group, a subsidiary of UPS (NYSE:UPS), has longserved auto industry heavyweights such as DaimlerChrysler, Toyota and Honda. The auto industry clearly is working hard to improve its efficiency "and that interest in supply chain improvement justifies our creation of a unit that will dedicate itself to that industry," added Thompson.

UPS Logistics Group also has created another specialized unit – named UPS Autogistics Inc. – that will assume the lead role in reengineering finished vehicle delivery networks. UPS Autogistics' first mission will be to improve the Ford Motor Co. delivery network for Ford, Lincoln and Mercury vehicles.

This task is part of a strategic alliance between UPS Logistics Group and Ford Motor Company which was announced on Feb. 2. Its goal is to reduce by up to 40 percent the time required to deliver vehicles from Ford plants to dealers and customers. The project, to be implemented over the next 12-to-15 months, also includes the development of information systems that eventually will allow both dealers and consumers to track the journey of individual vehicles to delivery. The scope of the new reengineered network includes vehicle deliveries in the U.S., Canada and Mexico.

UPS Autogistics will take the lead role in managing that transformation of the finished vehicle delivery network. The UPS Logistics Group already manages auto parts networks for such customers as DaimlerChrysler, Toyota, Honda, Volkswagen and Honeywell AlliedSignal.

"Automotive manufacturers are taking a fresh look at their distribution networks and are discovering that better supply chain management practices can streamline their operations, add reliability, lower inventory costs, cut delivery cycles, improve cash flow and enhance customer service," said Thompson. "We see this as a tremendous opportunity, not only in the U.S. but in Europe, Asia and Latin America as well."

According to Thompson, the collaboration of suppliers through automotive exchanges also will create opportunities for third-party logistics providers, like the UPS Logistics Group, because such consortiums require highly-coordinated and precise delivery networks.

"Traditionally, automotive suppliers acted independently, with various technology platforms, reliability standards and delivery carriers," he added. "Automotive exchanges will force these suppliers to act cooperatively, but integrating their supply chains and IT systems will take expertise like ours."

Potentially, these suppliers could eventually share warehouses, truckloads and IT systems for even greater efficiencies, Thompson projected. "Vendor-managed inventory and shared supply chains are already a reality for many high-tech and consumer retail manufacturers. The automotive industry can have the same benefits."

(March 8, 2000)