GM Hopes To Save Big in CNF Joint Venture
December 15, 2000
General Motors is hoping to realize big savings in shipping costs through a new joint venture with CNF, a global supply chain management company and the parent of regional LTL carrier Con-Way.
Vector SCM (or supply chain management) will become GM's lead logistics service provider. GM Global Logistics will remain accountable for all of GM's logistics activities and retain responsibility for core competencies, strategic management and benchmarking.
The transition to Vector SCM will occur over three years in North America, and will include inbound production material, vehicle distribution, premium transportation and international export/import. The new venture is jointly owned by the two companies and is headquartered in Novi, Mich., a Detroit suburb.
According to the Wall Street Journal
, GM receives more than 180 million pounds of material daily from 12,000 places and ships more than eight million vehicles a year. It uses a number of third-party logistics providers, each with its own information system.
GM plans to shrink the time it takes to ship cars across the country and globe and to get better at knowing precisely where those vehicles are. Currently, it takes an average of 13 days to ship a GM vehicle in the U.S. Under the joint venture, GM hopes to reduce that to eight days.
The announcement "completes the loop" in GM's electronic-business initiatives, Harold Kutner, GM's group vice president of world-wide purchasing told the WSJ
. GM, like other auto makers, is trying to reduce the cycle time for custom-ordered vehicles to between 15 and 20 days from the present onerous 60-day wait. By implementing so-called order-to-delivery programs, Mr. Kutner said GM aims to cut in half its $40 billion in overall inventory costs during the next three to five years.
CNF is based in Palo Alto, Calif., and operates Con-Way Services, Emery Worldwide and Menlo Logistics.