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85% of 2001-Model Vehicles Improve OTD Times

August 2001, by Jose Tingson

Reflecting the overall improvement in order-to-delivery (OTD) times by key model cars and trucks, forty-six out of 54 models reduced their delivery days in the 2001-model year, according to the third annual OTD survey by Automotive Fleet. Among truck models, Ford F-350 posted the most significant improvement by an average of 39 days, from 102 OTD days in 2000-MY to 63 days in 2001-MY. GMC Jimmy also showed marked improvement, lowering its lead-time to 36 days in 2001-MY from 74 OTD days in 2000-MY. For the third consecutive year, Dodge Intrepid, with 34 OTD days, continued to record the fastest average delivery time among intermediate-sized cars in 2001-MY. These results are based from data provided by five fleet management companies: ARI, CitiCapital Fleet, LeasePlan USA, PHH Arval, and Wheels. The survey tracked 140,701 new-vehicle deliveries for 70 models up to June 22, 2001. The vehicles in the survey, for the most part, had more than 1,000 registrations to commercial fleets. The OTD average for cars is calculated from the day an order is placed with a factory up to the time it is delivered to a dealer (not driver pickup). Truck OTD average is determined from the day an order was placed with a factory to when the vehicle is shipped to an upfitter, or, if no upfitting is required, to a dealer.

Fleet Management Companies See Overall OTD Improvement

Overall, few models had longer OTD cycles in 2001-MY compared to 2000-MY, says Donna Jordan, vice president of purchasing for CitiCapital Fleet. This can be attributed to focused efforts by all the manufacturers to shorten OTD, as well as the softened demand for vehicles on the retail side, Jordan said. Jordan said that Ford’s OTD times had significantly improved in 2001-MY. She said Ford was “not plagued with the combination of outside influences (floods, rail car shortages, etc.) that slowed transit times for everyone last year.” General Motors continued to improve its overall OTD performance this year, Jordan said. “Cycling times shortened across product lines, but the most dramatic improvement was seen in truck delivery times.” Jordan said that DaimlerChrysler continued its “steady performance in delivery times with prompt delivery of sedans,” and added that “some minor slowdown was seen in Dodge Ram cycles.” Jim Creighton, manager of vehicle acquisition distribution services for ARI, echoed the comments by Jordan regarding the Big 3’s overall improvement in OTD times in 2001-MY. “GM had improvement on virtually every model, which was very encouraging,” he said. “DaimlerChrysler continues to have the fastest order-to-delivery timeframes. They were always the fastest and they’re still the fastest from an order-to-delivery standpoint. Ford seems about the same on the cars, but they made a lot of improvements on the truck side, specifically on their F-Series.” Creighton attributes the overall improvement in lead times by GM, Ford, and DaimlerChrysler to “a combination of their scheduling and transportation systems getting more efficient.” Creighton said that GM showed the most significant improvement in the 2001-MY. “The bulk of our fleet orders for GM –- the Centurys, the Impalas, the Grand Prixs –- had improvement year-over-year, as compared to a Ford Taurus, which had pretty much stayed the same. If you look at the comparable Chrysler vehicles, the Intrepid still had improvement but not as great as the GM products.” On the truck side, Creighton said Ford Ranger showed the most significant improvement, along with the F-Series trucks. He added that the Venture and Montana also showed improvement. Creighton noted some problems with the Ford Explorer. “Ford had some quality control and some transportation issues that probably contributed to some of the longer lead times on the Explorer. But Ford did a good job keeping in touch with us.” Lynn Labuda, senior vice president/COO for LeasePlan USA, and Helen Tozer, purchasing director for LeasePlan USA, also saw similar overall improvement from the Big 3. “A major component of the reduction of the OTD times has to do with fewer constraints and more availability of parts and components for producing the vehicles,” said Labuda. Agreeing with Creighton, Labuda said that GM has shown the most significant improvement in OTD times. “GM has put more focus on the OTD, especially for the 2001-model year,” said Tozer. Labuda said that the whole Buick line, Impala, Ford Taurus, Windstar, Lincoln LS, Pontiac Grand Am and Grand Prix, and Toyota Camry have shown dramatic improvements. She said she didn’t see any significant slippages in average OTDs among the key models. Tozer said Ford’s alliance with UPS -- UPS Autogistics -- has contributed to its overall improvement in delivery times, specifically in OTD times for Ford trucks. “We feel positive about the changes that are being made by the manufacturers and we know that they are making a difference,” said Tozer. Linda Tiberi, manager, motor company relations for PHH Arval, said PHH focused its analysis on their highest volume models and identified improvements in OTD times by the Big 3. She added that “all improvements point to advances in scheduling and production of vehicles.” Tiberi said GM’s lead times improved for both cars and trucks, with trucks showing the most significant improvement, specifically the Astro. “These improvements can be attributed to efficien-cies gained through the VOMS/POMS order management tools as well as fewer constraints on optional equipment.” Significant improvements were also seen on Ford’s trucks, specifically F-Series and Econoline models, she said, due to “increased allocation of popular powertrains to fleet production.” Tiberi said DaimlerChrysler, which started the 2001-MY with a lead-time advantage, also showed improvements in car cycle times; however, it “experienced a modest setback with lead-times in-creasing on the Ram pickup and certain minivan models.”

Importance of Consistency in Lead Times by Manufacturers

Jan Freund, director of manufacturer relations for Wheels, also said that overall OTD times from the three manufacturers have improved from 2000-MY to 2001-MY primarily due to the softening of the retail market and the manufacturers’ increased focus on fleet orders as sold orders. She said that Wheels measures OTD times from a broader perspective: from the date the driver selects a vehicle to delivery to the driver. “For the fleet manager, it’s the entire process, and it’s not over until the driver is in the vehicle. We would like to see the manufacturers participate in the dealer delivery process and establish dealer programs which improve and enhance the driver experience. Ford and DaimlerChrysler have begun incorporating fleet into the dealer satisfaction programs, but more work needs to be done in that area.” Freund said that while overall OTD times improved, “there will always be unpredictable delays of some sort; it’s the 80/20 rule. It’s the 20 percent that cause great expense to the fleet customer. The manufacturers need to recog-nize and react promptly to problems. Notification and explanation of the problem/delay is key; an escalation process and providing alternatives for the customer are also crucial. GM developed a program, eFleet, to assist in handling emergency vehicle needs, and Ford is working with UPS Autogistics to improve transportation tracking. But more work needs to be done in the area of problem resolution.”

GM Customers Track Order Via the Web

GM said it estimates there will be a total of only 115 vehicles that the company could not deliver to its fleet and commercial customers by the end of the 2001-model year. For the 2000-MY, approximately 3,000 commercial units went undelivered, and an estimated 10,000 commercial units went unfulfilled during the 1999-MY. Dave Hansen, general manager, GM Fleet and Commercial Operations, said, “We looked at the entire order-to-delivery process and streamlined it and added new technology where appropriate. Today our customers can track their orders via the Web and through wireless communication. Furthermore, we’ve beefed up our customer support team to make sure our customers receive personal attention on any specific order inquiries.”

DaimlerChrysler's Customer Contact Group Monitor Status of Fleet Orders

DaimlerChrysler’s Customer Contact group closely monitored the order condition and status of fleet orders through the total order and build processes. If a component shortage threatened to cause a delay, the group quickly notified cus-tomers of available alternatives to help get on-time production. DaimlerChrysler’s assembly plant management assisted in monitoring possible parts constraints and quality issues and came up with solutions that made delays less noticeable to its customers. Its Customer Contact group worked closely with its Logistics team, and combined to help push vehicles through the traffic system to final delivery to the customer. In the few instances where poor weather threatened delays, Logistics proactively made alternative traffic plans. DaimlerChrysler said these factors, combined with some luck (no huge storms and fewer rail-car shortages), improved its OTD performance. In the 2002-MY, DaimlerChrysler will initiate a new scheduling system called FAST (Forecasting, Allocation and Scheduling Tool) that is designed to give more direct control over fleet allo-cations and orders. DaimlerChrysler said it expects that this tool can take two or three days more out of the process.

Ford Implements Initiatives to Improve its OTD Process

Dennis Baranik, sales planning and strategy manager for Ford North American Fleet, Lease and Remarketing Operations, said the company calls the order-to-delivery process “order fulfillment,” and said there are four main pieces in that process: ordering, scheduling, production, and delivery. UPS Autogistics, a strategic alliance with United Parcel Service launched in March 2000 to manage Ford’s North American delivery network, addresses the delivery end, from the point of plant release to final destination to the dealer, said Baranik. Tom Kolakowski, manager of vehicle logistics for Ford North America, said the goal of Autogistics was to significantly reduce transit times to final customers and to improve reliability. “The goal was to get from a 15-day average to an eight-day maximum.” “We said it would take three to four years to get to that number, but we would have a continued decreasing trend throughout that time. By the end of 2000, we wanted to be at 12 days or less, and in November/December, we were at 11.5. We have set for ourselves in 2001 an average for the year of 11 days, with a stretch of 10.5. Through May, our average is 10.8, so it continues to decrease,” Kolakowski said. Kolakowski said Ford is working on specific initiatives to improve those aspects beyond transit time. “For example, in fleet we’re working on a project with the upfitting companies to give them the same type of visibility where vehicles are in the transit pipeline. We’re putting together a pilot project that has them able to scan a vehicle when it comes into their inventory and then report back progress to the UPS system so there is constant visibility to the customer as to where the vehicle is in its cycle, from release from the plant, through the upfitter and back into the transit cycle.” Baranik said Ford recently piloted a “common order bank” program on a few selected vehicle lines. “We’ve joined the fleet ordering and scheduling team with similar activity on the retail side to ensure that we’re scheduling in the most efficient manner,” he said. Commodity constraints are another area that has been addressed over the past year, Baranik said. “Last year we were constrained on some of our larger engines and powertrains and some of our larger truck lines, Super Duty and Econoline,” he said. “We’ve broken through the bottleneck there for free demand availability on those components and increased the availability overall on Super Duty, which has a high fleet customer base.” Another project is full model-year ordering. Previously, Ford limited customers to placing orders only three months in advance. “Now we’re giving them the opportunity to place their orders from now up to the end of the present model-year,” Baranik said. “The customers can do all their ordering at one time and it’s efficient for them. From our per-spective, it gives us more visibility out through the model-year, which allows us to do a better job of production allocation, both for total vehicle line and for commodities.”

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