Ford Motor Company’s
Download
1 / 44

Ford Motor Company s Finished Vehicle Distribution System April 2001 - PowerPoint PPT Presentation


  • 459 Views
  • Uploaded on

Ford Motor Company’s Finished Vehicle Distribution System April 2001. Ellen Ewing Project Director UPS Logistics. Dr. John Vande Vate Exec. Director EMIL ISyE Georgia Tech. Agenda. Introduction 1999 Environment Solution Approach Network Design Implement New Strategy Results to Date

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Ford Motor Company s Finished Vehicle Distribution System April 2001' - sachi


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Slide1 l.jpg

Ford Motor Company’s

Finished Vehicle Distribution System

April 2001

Ellen Ewing

Project Director

UPS Logistics

Dr. John Vande Vate

Exec. Director EMIL

ISyE Georgia Tech


Agenda l.jpg
Agenda

  • Introduction

  • 1999 Environment

  • Solution Approach

  • Network Design

  • Implement New Strategy

  • Results to Date

  • Summary


Objectives motivation l.jpg
Objectives/Motivation

  • Novel application of cross-docking: Rail-to-Rail

  • Cross-docking for Speed

  • Role of modeling

  • Load-driven System

  • Modeling Inventory in Network Design


The need for speed l.jpg
The Need for Speed

Financial Incentives: Capital Utilization

  • In 1996

    • Ford produced 3.9 million vehicles in the US

    • Avg. transit time 15+ days

    • Avg. vehicle revenue $18,000

    • Value of pipeline inventory: > $2.8 Billion

    • One day reduced transit time:

      • $190 Million reduction in pipeline inv.

      • 1,400 fewer railcars


The need for speed5 l.jpg
The Need for Speed

  • Demand for land

  • 22 Plants

  • 54 Destination Ramps

  • ~1,200 Load lanes

  • ~8,400 vehicles waiting at plants

  • $166 Million in inventory


The need for speed6 l.jpg
The Need for Speed

  • Other Incentives

    • Damage

    • Flexibility

    • Others?


The price l.jpg
The Price

  • Inventory at the cross dock

  • Added distance traveled

  • Handling at the cross dock

  • Capital costs of the cross dock


1999 vehicle network delivery conditions l.jpg
1999 Vehicle Network Delivery Conditions

  • Record production levels

  • Demand shift from cars to trucks

  • Overburdened rail infrastructure

  • Deteriorating rail service

  • Shortage of transport capacity

  • Mixing centers

  • 15+ day transit time

  • High inventory cost

  • Dissatisfied customers


High 1999 level statistics l.jpg
High 1999 Level Statistics

  • Assembly plants 22

  • Mixing centers 5

  • Destination rail ramps 54

  • Dealer locations 6,000

  • Production volume 4.4 Mil./Year

  • Freight expense $1.5 Bil.

  • Dec. ‘99 avg. transit time 16.8 Days

  • Pipeline Inventory $4.1 Bil.


Ford distribution network l.jpg

St Paul

Canada

Michigan

Edison

Chicago

85% of all Vehicles go via

Ohio

Rail to a Hub (Mixing Center

or Destination Ramp)

St Louis

Norfolk

Kentucky

Kansas City

15% of all vehicles go

Haulaway Direct to

Atlanta

Dealer within 200-300

Miles of the Assembly

Plant

Mixing Center

Origin Plant Groupings

Destination Ramp

Planned Ramp Closure

Ford Distribution Network


Old delivery design l.jpg
Old Delivery Design

  • Push Network

  • Vendor sub systems optimized for individual segments

  • Little to no visibility

  • Mixing Centers not used effectively


Ford goals l.jpg
Ford Goals

  • Speed

    • 1999: Average 15 days transit time

    • Goal: Maximum of 8 days transit time

  • Precision

    • 1998/1999: 37% on time within 1 week

    • Goal: 95% on time within 1 day

  • Visibility

    • 100 % Internet vehicle tracking from plant release to dealer delivery

    • Guide the flow of vehicles

    • Respond to variations

    • Inform customers


Design process l.jpg
Design Process

  • Truck vs Rail delivery

  • Allocate Dealers (FIPS)

    to Ramps

  • Route Flows through

    Rail Network


Single sourcing allocation l.jpg
Single-Sourcing Allocation

  • Var Assign{FIPS, RAMPS} binary;

  • Minimize TotalCost:

  • sum{fip in FIPS,ramp in RAMPS} Cost[fip,ramp]*Assign[fip,ramp];

  • s.t. SingleSource{fip in FIPS}:

  • sum{ramp in RAMPS}Assign[fip,ramp] = 1;

  • s.t. ObserveCapacity{ramp in RAMPS}:

  • sum{fip in FIPS} Volume[fip]*Assign[fip,ramp]

  • <= Capacity[ramp];


Old ramp allocation southern us l.jpg
Old Ramp AllocationSouthern US

Dealers sourced bymultiple ramps


New ramp allocation southern us l.jpg
New Ramp AllocationSouthern US

Dealers sourced by single ramps



Flows through the rail network l.jpg
Flows through the Rail Network

  • Objective is NOT Freight cost!


The objective is l.jpg
The Objective IS

  • Speed

  • Capital

  • Land


The promise l.jpg
The Promise

  • Speed

  • Unit trains bypass hump yards


The promise22 l.jpg

Laurel, Montana

Orilla, Washington

The Promise

  • Capital & Land

Time


The promise23 l.jpg
The Promise

  • Capital & Land

  • 22 Plants

  • 54 Destination Ramps

  • ~1,200 Load lanes

  • ~8,400 vehicles waiting at plants

  • $166 Million in inventory

  • Each Plant to One Mixing Center

  • ~22 Load lanes

  • ~154 vehicles waiting at plants

  • ~$3 Million in inventory


The price24 l.jpg
The Price

  • Inventory at the cross dock

  • Handling at the cross dock

  • Capital costs of the cross dock

  • Added distance traveled


Making the trade offs l.jpg
Making the Trade-offs

  • Measuring Inventory

  • In the rail network

  • At the plants and Cross Docks

  • Load-driven system

  • Railcars depart when full

  • Relationship between

    Network Design and Inventory


Inventory at the plants l.jpg

Laurel, Montana

Orilla, Washington

Inventory at the Plants

  • Half a rail car full for each destination

Time


Inventory at the mixing centers l.jpg

Laurel, Montana

Orilla, Washington

Inventory at the Mixing Centers

  • Half a rail car full for each destination

Time


Workload at the mixing centers l.jpg

Mira L.

Orilla

Laurel

Benicia

Denver

Workload at the Mixing Centers

Rail car holds 5 vehicles

  • Unpredictable

Orilla

Benicia

Mira Loma

Laurel

Denver


Workload at the mixing centers29 l.jpg

Mira L.

Orilla

Laurel

Benicia

Denver

Workload at the Mixing Centers

Rail car holds 5 vehicles

  • Balanced: Only load cars you empty

Orilla

Benicia

Mira Loma

Laurel

Denver

Orilla


Effect on inventory l.jpg
Effect on Inventory

  • Inventory at Mixing Center slowly grows

    to just over (ramps -1)(capacity -1) and remains there

  • Roughly twice the inventory of before

  • Still depends on the number of ramps the cross dock serves


Consolidation for speed l.jpg
Consolidation for Speed

  • Unit Trains of 15-20 rail cars don’t stop at

  • mixing yards

  • Trade moving inventory for stationary

  • inventory


Model l.jpg
Model

  • Paths

    • Route from Plant to Ramp

    • Mode used on each edge

  • Demand[ramp, plant]

    • Combined demand at ramp for all

      products from the plant

  • Variables:

    • PathFlow[path]:

      • Volume from the plant to the ramp on

        the path

    • UseLane[fromloc, toloc, mode] binary

      • Did we use the mode between two locations


Model33 l.jpg
Model

  • Objective

    • Minimize the number of vehicles in the pipeline

      • Moving Component (Transit times)

      • Waiting Component (Mode Size)

    • Minimize PipelineInventory:

      • sum{path in Paths} (Total Transit Time)*PathFlow[path];

      • sum{(f,t,m)} (Size[m]/2)*UseLane[f,t,m]


Model34 l.jpg
Model

  • Satisfy Demand

    • The sum of flows on all paths between a plant and a ramp must meet demand

    • s.t. SatisfyDemand[p in PLANTS, r in RAMPS}:

      • sum{path in PATHS: Plant[path]=p and Ramp[path] = r}

        PathFlow[path] >= Demand[p,r];


Model35 l.jpg
Model

  • Define UseLane

    • For each pair of locations and mode between them write a constraint for each plant and ramp

    • s.t. DefineUseLane[p in PLANTS, r in RAMPS,

      (f,t,m) in EDGES}:

      • sum{path in PATHS: Plant[path]=p and

        Ramp[path] = r and

        (f,t,m) in PATHEDGES[path]}

        PathFlow[path] <= Demand[p,r]*UseLane[f,t,m];


Model36 l.jpg
Model

  • Large Model

    • Lots of Variables: Many Paths

    • Lots of Constraints: DefineUseLane

  • The LP relaxation is nearly always integral


New rail lanes l.jpg
New Rail Lanes

Reduced plant destinations


Final outbound rail network with carriers l.jpg
Final Outbound Rail Network with Carriers

St Paul

Canada

Edison

Michigan

Chicago

Ohio

St Louis

Norfolk

Kentucky

Kansas City

Atlanta

Mixing Centers

Destination Ramps

Union Pacific

CSXT

FEC

BNSF

Canadian Pacific

Car Haul to Ramp

Norfolk Southern

Canadian National


Results l.jpg
Results

  • Cut vehicle transit time by 26% or 4 days

  • $1 billion savings in vehicle inventory

  • $125 million savings in inventory carrying costs

  • Avoid bottlenecks

  • Reduce assets in supply chain

  • Improved inventory turns at dealer


Benefits l.jpg
Benefits

  • Ford

  • Dealers

  • Rail Carriers

  • Auto Haulers


Benefits ford l.jpg
Benefits - Ford

  • On-time delivery

  • Competitive edge

  • Cost control


Benefits dealers l.jpg
Benefits - Dealers

  • Reduced inventories

  • Increased customer satisfaction


Benefits rail carriers l.jpg
Benefits - Rail Carriers

  • Improved equipment utilization (reduced capital

  • expenditures)

  • Visibility and planning capabilities

  • Synergies with existing UPS traffic

  • Increased cooperation


Benefits auto haulers l.jpg
Benefits - Auto Haulers

  • Expanded dealer delivery hours

  • Visibility and planning capability

  • Improved asset utilization

  • Increased cooperation


ad