Ryder’s World Class Automotive Logistics:

Lansing and Farmington Hills, Michigan USA

March 15, 2006

By

Richard Armstrong

General Motors is in the fight of its life to remake itself. It needs to radically redesign its cost structure and how it makes cars. As part of its redesign, GM is completing two new automotive assembly plants near Lansing, MI. The first plant, Lansing Grand River, is in production building the Cadillac CTS, SRX and STS. The second plant, Lansing Delta Township, will be producing later this year. Its production will be the Saturn Crossover, GMC Crossover and Buick Crossover.

As GM Plant Manger, Ken Knight explained it “We planned the process first and planned the building later.”¹ The new just-in-time facilities use no tow motors. “What really drives us is material movement,” Knight said. “We bring the whole semi truck next to where the parts are used so we use materials right off the truck.” As a sign of the seachange at GM, the new Lansing River plant has been rated as one of the best in the world by JD Powers.

Critical to General Motors’s success is the need for a supply chain control partner operating flow through parts sequencing centers close to its two new plants. GM chose its longtime logistics service provider, Ryder SCS, to design and run these critical support functions.

Ryder responded by taking over a building seven miles from the Lansing Grand River plant and one mile from the new Lansing Delta Township location. Ryder renovated the facility using a REIT plan set up by Ashley Capital Development. It is in the process of building and designing an adjacent facility. The two connected buildings will have over 1.6 million square feet and 160+ dock doors. Inbound loads of parts, most in returnable plastic containers, will exceed 300 a day. Outbound shuttles to the GM plants will be more than 1,000 per day.

Ryder’s new location (Logistics Optimization Center) is divided into two principal operations. The southern half of the building is laid out for sequencing parts. The northern half is for handling containers of bulk parts (nuts, bolts, screws, etc.).

There are over 30 cells operating in the sequencing area. In these cells, mirror assemblies, trunk kits, springs, fuel tanks and other parts are setup to be delivered in production sequence order exactly as needed on the GM assembly lines. Parts are tracked continuously to insure that assembly time windows at the GM plant are met.

Throughout Ryder, LOC scanning technology is employed with workers utilizing hand held guns. All work processes are designed to be lean and standardized. Performance is tracked and measured.

Ryder’s employees at the LOC receive about 40 hours of training before they are certified to work in the sub assembly and sequencing processes. Control is tight – error rates and rework are minimal. Inventory scanned in using two dimensional RF scanners as delivered and put a way as directed. Most locations mirror locations for GM’s assembly lines. Inventory received is reconciled to advanced ship notices (ASN’s) sent to suppliers and carriers.

Ryder built its own information technology for the LOC. Logistics Management Suite (LMS) is the overarching technology platform for transportation coordination. The WMS is LCMS.

Here’s a description of LMS:

Ryder’s supply chain planning activities using the contract management, logistics planning and data management systems are primarily carried out at Farmington Hills, MI. Farmington Hills is the headquarters for Tom Jones, long-time Automotive VP for Ryder, Jim Moore, VP of Business Development, Tom Kroswek, Senior Director-Logistics Solutions and 200 logistics engineers. This operation does the planning for 60% of Ryder SCS business.

From this location, Ryder does transportation and material planning for 48 automotive assembly plants. Sixteen of the plants are for General Motors. Ryder also operates as an automotive LLP for Toyota (4 plants) and DaimlerChrysler (all NA locations). It also provides automotive logistics for Honda, Nissan, Mazda and Ford. (Richard Jennings, VP, is key to DaimlerChrysler and many other customer relationships.)

Ryder coordinates parts flow planning with over 300 tier one plants handling over four million shipments a year. An example is Ryder’s planning activity for Mopar, DaimlerChrysler’s aftermarket parts supplier.

Mopar has 41 North American facilities, including national DCs, field distribution centers and third party packagers. Ryder manages the flow of parts to and from these facilities.

In addition, Ryder provides JIT service as an element of its “Plan for Every Part” control at LOCs for all DaimlerChrysler’s North American car and truck assembly plants.

Ryder handles all inbound planning for DaimlerChrysler’s Integrated Logistics Centers. This activity coordinates with three of the other main automotive logistics 3PLs. TNT Logistics runs the ILCs at Nashville, TN and Green SC. Exel does Portage, IN and Toledo, OH. LINC handles Detroit. Penske, Ford’s primary LLP, and Menlo/Vector round out the core group of major automotive 3PLs. These large sophisticated operations cooperate and compete regularly in insuring high quality supply chain management for North America based automotive assembly operations. The level of operation maintained by Ryder, the largest U. S. automotive 3PL and its primary competitors, has reached a point where it bars entry. Scale makes it a daunting task for any new 3PL to become a major player in this market.

A Footnote on Ryder’s Carrier Management and Freight Bill Payment

Ryder’s transportation procurement operations are located in Ann Arbor, MI. Ryder has built this location after the purchase of LogiCorp twelve years ago. This facility is ran by Tim Podvin, General Manager. It maintains and negotiates carrier contracts. It manages the rate database, audits and pays freight bills. The Ann Arbor operation handles 3.7 million freight bills a year with over 100 employees. Over 90% of transactions are now handled by EDI. 80% of audits are automated.

Ryder uses around 1,400 contracted carriers. About 200 carriers handle 80% of Ryder’s freight spend. Ryder has a web-based freight bill system (LEAPS) for 350 smaller non-EDI carriers.

The Ann Arbor facility handles $1 billion in freight payments and manages more than $2.9 billion in freight spend for its customers each year. Included in this activity is back office functionality for Ryder’s Transportation Management Center in Dallas/Ft. Worth. The TMC handles most of Ryder’s non-automotive business. It specializes in outbound transportation management and freight brokerage. The TMC is a key part of Ryder’s expansion into the Hi-Tech vertical.

[1] Detroit News.  February 22, 2004

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