DaimlerChrysler (NYSE: DCX) and Union Pacific (NYSE: UNP) announced Tuesday that they have formed a new Web-based company to track vehicle shipments from assembly plants to dealers.
The new company, Insight Network Logistics, is expected to save Chrysler approximately US$280 million over the next six years as a result of increased efficiencies.
To track vehicles, Insight will use VinVision, a product developed by UP and its subsidiary, Transentric. VinVision “provides total visibility of vehicles via the Internet and immediately identifies shipments that may have deviated from their original transportation plan,” according to UP.
“We are targeting a 25 percent reduction in vehicle delivery time within 12 months,” said Dave Hodgson, Chrysler’s vice president of worldwide supply. Vehicle delivery time currently averages 12 days from assembly plant to dealership.
Hodgson added: “In addition to cutting days out of our delivery cycle, we plan to make industry leading improvements in process control, transportation planning, information flow and shipment visibility across our entire distribution network.”
Looking at Insight
The partners expect Insight to begin providing logistical services early in the fourth quarter of this year. Insight plans to assign personnel to vehicle distribution centers around the U.S. to coordinate integration among rail carriers, motor carriers and distribution centers.
“We will move quickly to implement the technology, services, velocity and process improvements that the Chrysler Group expects,” said Dick Davidson, UP chairman and chief executive officer. “We understand Chrysler Group’s delivery network, business objectives, information systems and processes, which will help us to drive immediate improvements in delivery times.”
Insight Network Logistics is a wholly-owned subsidiary of Union Pacific, the parent company of Union Pacific Railroad, based in the Detroit, Michigan area. Roland Fortner, a Union Pacific Railroad executive, will be Insight’s general manager.
Financial terms of the deal were not disclosed.
On the Highway
DaimlerChrysler is not the first automaker to turn to the Web to track vehicle shipments.
For instance, Ford (NYSE: F) partnered with UPS Logistics Group, a subsidiary of United Parcel (NYSE: UPS) last year to create a Web-based vehicle tracking system.
The companies said in February that the initiative had already sliced four days, or 26 percent, off Ford’s vehicle transport time.
As a result of the reduced transport time, Ford said it has saved $1 billion in inventory costs and more than $125 million in inventory-carrying costs.
For its part, General Motors (NYSE: GM) made a similar deal with transportation holding company CNF (NYSE: CNF) in December.
The Big Three automakers are also using the Web to streamline supply chain management. The companies are partners in business-to-business (B2B) e-marketplace Covisint and have each developed their own proprietary Web-based supply chain management systems.
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