Ford Motor Company and Caterpillar Form Logistics Alliance to Speed Parts Delivery

Tue December 04, 2001 - National Edition

Ford Motor Company and Caterpillar Inc. have entered into a software alliance to develop a world-class logistics information system to increase the speed at which service repair parts are delivered to market.

Ford and Caterpillar will jointly define the alliance’s strategic direction and develop an operating blueprint for the future, with the new system and processes phased in over the next few years.

"Customer satisfaction is Ford Motor Company’s ’number one’ priority, and this software alliance with Caterpillar and the logistics services Cat will provide will be key enablers in achieving our best-in-class customer service satisfaction objectives," said Don Johnson, director, Global Parts Supply & Logistics, Ford Motor Company.

The new technology will support Ford’s expanded efforts to work with its dealers to provide improved service to the end customer. As announced in July 2001, Ford will place service parts inventory closer to its 5,000 U.S. dealers through its "Daily Parts Advantage" delivery network—21 new parts distribution centers that will facilitate daily restocking of dealer inventories, reduce order-to-delivery times for service parts by 80 percent, extend dealer order cut-off times by eight hours to 11 p.m., improve fill rates to dealers and reduce backorders, and reduce shipping and handling damage to parts delivered to dealers.

The new technology will also allow Ford and its dealers to share parts inventory information in real time. This will improve customer service turnaround time and will eliminate waste and cost across the entire supply chain—from dealers’ parts departments to Ford’s suppliers.

"Ford believes Cat Logistics is the best in the service-parts logistics business, and by combining our strengths, we will ensure the fast and accurate distribution of parts to Ford dealerships and customers," Johnson said. "This alliance is a critical element of our strategy to transform service-parts logistics into an improved and sustainable competitive advantage for Ford Motor Company."

The new logistics information system is being specially designed to accommodate the needs of global companies with diverse product lines, such as Ford and Caterpillar, and will have much greater capability than service-parts logistics systems that are currently available. The software alliance will oversee development and maintenance of the system, drawing talent from Ford and Caterpillar as well as external software providers.

Through its Cat Logistics subsidiary, Caterpillar will provide a wide range of aftermarket logistics services to Ford, helping Ford serve its dealers and customers throughout the world.

"These services are a natural extension of the software alliance and the successful long-term third-party logistics relationship between Cat Logistics and Ford Motor Company’s Land Rover brand," said Steve Wunning, head of Caterpillar’s Logistics Division and vice president at Caterpillar. "By leveraging our joint know-how and our 6 Sigma methodologies, we expect to implement best-in-class methods for significantly improving parts service to dealers and customers and, at the same time, reducing costs throughout the entire distribution channel. Our logistics capabilities are directly transferable to other industries and provide a source of significant diversified growth for Caterpillar."

In addition to implementing the new logistics information technology at Ford and Caterpillar, the alliance will also market the capabilities of the new system to other customers.