DaimlerChrysler Allies With Union Pacific to Cut Order-to-Delivery Times by 50%

A new and still-developing system created jointly by DaimlerChrysler and the Union Pacific Railroad has already cut three clays from the company's average order-to-delivery times. Future advances in the system promise to pare order-to-delivery times by 50 percent From current averages.

Ed Sprock is director of logistics for DaimlerChrysler. He says one of the major responsibilities of his department is to reduce transit times for all Chrysler Group vehicles in the U.S., Canada, and Mexico. An important component of the company's moves in that direction is a new system called Insight.

The system is based on a concept: called "Vin Vision," developed by the Union Pacific Railroad. In its original concept, it was developed to allow tracking of vehicles through the rail shipping process. As expanded by partner DaimlerChrysler and developed into the jointly-owned subsidiary called Insight Network Logistics, it can track vehicles in real-time from the moment the order is received at the factory to the moment the vehicle rolls off the truck at the delivering dealership.

Sprock said that the goal is to cut overall transit times by 50 percent over the life of the contract DaimlerChrysler has with Insight. "In the first 12 months, we've already cut it by three days," he commented.

Vin Vision Was the Seed

Sprock explained that in Union Pacific's Vin Vision system, they had the seed of a comprehensive tracking process. Vin Vision is the Internet process Union Pacific has developed. It is its operating system for tracking a vehicle through their network. "When we ship a vehicle," he said, "they can track it through the system by VIN number."

Sprock noted that some other manufacturers outsourced both the contract responsibility and the rate responsibility, others de-sourced their entire internal logistics network, but DaimlerChrysler views logistics as a core competency.

He said that they now know a lot of information they never knew before. "We know when the car was released, we know what train it's on, we know-how fast the train is moving, we know the estimated time of arrival at the next junction point, we know if the train is stopped or delayed." Sprock said that initially, as step one, they started tracking that through the Insight network. "Now for step two," he said, "they have released all that Information to us through our intranet site. Now everybody internally at DaimlerChrysler, the sales division, the marketing division, the logistics people, the plant personnel, can log on to an intranet-based tool and see how fast, how many, and what lime."

The next step, he said, will be to move that capability to the zone offices, the people closest to the dealerships. The step beyond that would be to move the tracking capability to the dealerships.

The ultimate goal, he said, came when they decided, "What the heck is wrong with letting John Q. Customer track the second-largest purchase of his life, live on the Internet? I can track my Dell computer that cost me $800, why can't I track my $30,000 Jeep Grand Cherokee?"

He said that Insight has talked to the sales division and proposed, "We'd like you to evaluate the possibility of allowing our customers to log on and be able to say, 'Look at my vehicle, it's 40 miles west of Grand Platte, NL, it's moving at 40 mph, and it's destined to be at the dealership at 4:51 p.m. tomorrow.'"

Sprock noted that the concept has incredible power. "It really makes people confident in you and happy to know that we're in control of the process. If it's a black hole, they think we don't know what we're doing. The dealer always says 'four to six weeks,' and sometimes it gets there in two and sometimes it gets there in eight." He said that his philosophy in logistics is that if you give people data and tell them the truth, "Generally speaking they're pretty accepting of the situation, and that's what we're trying to accomplish here."

Sprock added that Insight is in a separate building, about three miles from DaimlerChrysler headquarters in Auburn Hills, Ml. "It's relatively important, that they not be faced with the day-to-day problems we face here and the issues we knock heads with, but rather to be purely able to concentrate on our network. We have 100,000 vehicles on the 'hoof at any one time, and a one-day delay on one rail car, if it's a 60-car train, can cost us 1,100 days of transit lime for a variety of customers."

Sprock explained that even though Insight basically comes from a railroad, they are concentrating on everything involved in the movement of vehicles. Some of the issues, he said, include how fast vehicles are released from (he plant to the initial carrier, how fast that carrier hits the various interchange points, and what the best lime is to release vehicles from Detroit or our other plant locations so that they hit their interchanges perfectly.

"Our target for the North American Free Trade Agreement (NAFTA) region is for a six-day distribution network," Sprock said. He added that that would be the average. "We'll deliver a car in Detroit from the Detroit plants in a day, and to California in 10 or 11, but the six days is the North American average. It's going to be difficult, because we do cross borders, and we deliver things to the southern tip of Florida. But we think it will be a competitive advantage for us."

He added that the three days Chrysler has taken off overall transit times this year is relatively important because it saves money for Chrysler as well. "It saves the dealers inventory; it saves us carrying cost on the vehicles while they're in transit. We think people like the fleet division can parlay that into a competitive sales advantage."

'Wallets' Help Fleets Track Vehicles

Sprock noted that most fleet sales don't come one unit at a time. They come six units, 12 units, or 100 units or more. "We've created a little 'wallet' for these people," he said. "Let's say you're trying to track 100 vehicles going to a dealer in St.Clair Shores, MI. Every clay you've got to log on and type in 100 VIN numbers and say 'where's my ear?, where's my ear?, etc.'"

He explained that typing in 100 VIN numbers can take one, two, or three hours, depending upon how often the phone rings. "At least you don't have to type in a 17-digit number each time," he said, "because here at DaimlerChrysler you can get the uniqueness from eight digits." Sprock explained that that doesn't hold true across the entire industry, however. "But that's still a lot of typing, a lot of fat fingering, wondering did I get the right one, etc."

Sprock says this has given fleet customers the power to set up one wallet that says, for example.

"OK, here's my hundred vehicles for X-Motors." They are loaded into the wallet one time, when the orders are first loaded into the DaimlerChrysler network. Then, every day, the fleet can log onto the system, open the wallet, and view a status report that might say "the first 10 have come down the assembly line, the next 10 are in schedule, and the 10 from last week are being unloaded from the rail car today." Sprock says it's a five-minute job to see where vehicles are as opposed to what could in some cases be a five-hour job.

The Power of Good Data

In conclusion, Sprock explained how the new system has helped put his philosophy into practice. "We know more about our vehicles in the first five months of this launch (ban we ever did before. In the time frame in which we're operating, I had all that data, but the average vehicle didn't completely fill up all its legs, and we didn't have complete data on hat had happened to that vehicle for three months after the vehicle had been delivered. Thai's no good in the modem world. That's not the way to expedite vehicles.

"The power is in the data, the power is in the real time, the power is in knowing the train number, the train speed and the train location. And, the power is that the network is forced to update FTAs. If you tell a customer that a car is going to be delivered four hours later than originally promised, they'll accept that. But if you hide it. or worse, if you don't know it, they lose their confidence in you."

One Beacon Insurance Sees the Results

One Beacon Insurance in Boston, runs a fleet of roughly 500 vehicles, mostly sedans with some pickup tracks in it as well. The company reports it is seeing results from Chrysler Group's Insight system.

According to Mark Coffey, vice-president of corporate services for One Beacon, "We moved to DaimlerChrysler about a year and a half ago. In our initial year-and-a-half, we have improved the cycle time by two to four weeks at least. We have sometimes been getting vehicles in as little as 25 to 28 days. It was phenomenal, we were in the 40- to 60-day range with the other manufacturer, now we're in the 30- to 38-day range."

Coffey noted that One Beacon's orders are very uniform, because they have a standard order platform. "We don't allow a lot of customization or options that drivers can order. We start out well equipped. We offer drivers the Dodge Intrepid sedan, with the alternative being the Dodge Dakota truck." One Beacon orders between 25-30 vehicles at a time.

Coffey said that for the most part One Beacon's drivers are in the sales, marketing or claim environment, where they use the Intrepid. "We also have some technical services people and inspectors who use the Dakota," he added.