Caso Penske

Navistar is a leading producer of commercial trucks, mid-range diesel engines and IC brand school buses, workhorse brand chassis for motor homes and step vans, as well as a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. They needed logistics services from a provider who understood the fundamental differences between the manufacturing and distribution of cars and trucks. Penske’s unique combination of automotive and trucking experience made it the clear choice. Since then, Penske evolved from a Navistar customer to its lead logistics provider (LLP).

Challenges

• To reduce inbound transportation costs by replacing disparate, plant-managed inbound materials networks with a centralized, single network

• To streamline supplier operations and provide Navistar with real-time supply chain visibility

• To improve plant productivity levels with less labor

Solutions

• Penske designed and implemented a network of Origin Distribution Centers (ODCs) to process shipments of production material for truck and bus manufacturing facilities. Inbound Supply Chain expenditures have been reduced by more than 17 percent annually.

• Penske trained more than 900 suppliers on a uniform set of procedures and logistics technologies. Penske’s proprietary logistics management software tracks orders, schedules delivery and pickup windows, determines routes, tracks order and delivery status, and automates invoicing.

• Penske’s line-side production support at two plants has increased production by more than 250 percent with only a 25 percent increase in headcount.

Getting Started

Penske had a unique combination of automotive and trucking experience through customer relationships and its trucking division. The company understood the fundamental differences between the manufacturing and distribution of cars and trucks. With more suppliers, parts and customization, the supply chain for a truck manufacturer is much more complex. Penske’s understanding of these core differences made it the most qualified LLP for Navistar’s operations.

Decentralization Proves Costly for

Navistar’s Logistics Operations

Originally, each of Navistar’s six manufacturing plants managed its own inbound flow of materials. This network model prevented Navistar from achieving a clear view of products moving throughout the supply chain. With each plant managing its own supply chain operations, Navistar’s logistics operations were proving to be inefficient and costly.

With manufacturing plants located throughout North America, Navistar’s switch to the LLP concept would not happen overnight. Navistar decided to first implement the LLP concept in the Southwest corridor of its North American operations. The Southwest corridor demonstrated the longest portion of the company’s supply chain, presenting the greatest opportunity for cost savings.

Penske deployed a team of logistics engineers to analyze Navistar’s current supply operations. Penske concluded that a centralized logistics operations strategy would net an 11.7 percent savings in the company’s overall inbound transportation costs. With Navistar’s approval, Penske developed a new network model and logistics strategy.

Bringing Supply Chain Visibility to the

Southwest Corridor

Transitioning Navistar’s operations to a centralized network managed by a LLP required unanimous buy-in from the corporate, plant and supplier levels. To facilitate a smooth transition, Navistar and Penske assembled a team representing materials managers from Navistar’s plants, IT representatives, Penske engineers and Penske operations. Together, this group was responsible for implementing Penske’s new network model and logistics strategy.

To improve the visibility of parts moving throughout the supply chain, Penske worked with the team to propose the following:

Origin Destination Centers (ODCs) – Penske would leverage Navistar’s existing infrastructure to establish ODCs to centralize inbound material shipping operations

Navistar

Understanding the business is critical in selecting a lead logistics provider

CASE STUDY

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Supplier Training – suppliers would be trained on new shipping, packing and routing procedures relative to the new ODC operations and increased supply chain visibility

Carrier Regulations – new carrier bidding requirements and regulations would be established to ensure quality carrier participation

Technology Overhaul – Penske would implement its proprietary Logistics Management System (LMS) software to schedule, route and track parts throughout the supply chain

Penske immediately began work on establishing the ODCs. The Navistar/Penske team determined

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