German automakers driving transport management
For Rory Anne Hepner, general manager of vehicle logistics and distribution at Mercedes-Benz, making sure both truckers and ocean carriers are performing at the highest level of service is the utmost importance.
Hepner has started sharing key performance indicators (KPIs) with Mercedes’ truckers and plans to soon start sharing measurement data with ocean carriers, once she has a strong enough sample size for that input to be useful.
“When you’re bringing transparency, which is what we’re trying very hard to do with all of our partners, it makes us able to get better at what we do,” she said.
A significant aspect of this strengthening relationship with carriers has helped Mercedes plan more in advance. The German automaker has recently been able to move from three-year contracts with carriers to five-year agreements. These longer commitments, which were requested by Hepner’s U.S.-based operations and eventually approved by parent Daimler in Germany, allow the manufacturer to develop a stronger bond with each carrier and institute changes that speed up the pace of logistics.
“What we look for with our carriers is communication and transparency,” she said. “We’re trying to communicate much better than we’ve ever done before in providing monthly reports, in working with them in setting up how we bring cars into the country, and how we distribute cars out to everyone.”
For example, Hepner said the recent change in contract duration has helped convince the carriers to make bigger, long-term investments in Mercedes. Officials are now sorting cars at the origin port in Germany before they’re loaded on vessels, leading to a faster turn-around on the domestic end. Hepner also talks with truckers to get more information about market capacity and equipment availability.
“It seems common sense, but we didn’t do that before,” she said. “We always were just trying to process cars, and then they sit. Dwell time, it doesn’t do anybody any good.”
After a 23-year stay at Florida’s Port of Jacksonville, Mercedes is now celebrating its fifth year at the Port of Brunswick in Georgia. The move, Mercedes said, helped streamline its logistics processes.
In Jacksonville, the Mercedes facility was located off port; in Brunswick, cars no longer have to be trucked off port to be processed, saving time and reducing the number of times each car is handled before it makes its way to the dealership.
“That is what we believe is the right setup for the distribution of vehicles. If you don’t have to have that truck shuttle, it eliminates one more time you’re touching that vehicle,” she said.
Hepner also keeps her finger on the pulse of customer trends, translating those desires to both ocean and trucking providers. The manufacturer has been striving to take over a younger market with entry-level models, and these new consumers are more apt to want to know everything they can about the transportation of their cars to the dealership. She said these younger consumers will look up shipping information on the cars, which are coming to domestic ports from Bremerhaven in Germany, and find their own vehicles on each vessel.
“These guys want to know when their car is going to be at the vehicle preparation center and then at the dealership for them to pick up,” she said. “Either we can put our heads in the sand on that or we can start to find ways to make our transportation information to our dealers and to our customers more transparent.”
Better tracking and communications is also important to Ed Wilson, general manager of vehicle logistics at Volkswagen Group of America, who said his customers are looking for the same level of tracking detail that some pizza companies provide their customers with online, to-the-minute tracking tools.
To improve tracking, Wilson has been rethinking how his cars get from the port to the dealership. He explained the trend toward larger vessel sizes has pushed more volume into the supply chain less frequently, which creates its own issues. Where a few years ago, he might see 1,500 cars on a vessel, now he may have to deal with 3,000 cars in a single shipment.
“It’s a challenge to us because we still need to maintain the service level agreements we have with the brands,” he said.
To speed along the process on his end, Wilson implemented detailed surveys of the cars before they are loaded on ships at the origin port. If there are damaged cars, this allows him to order parts and be ready to repair them once they roll off the ship, saving lots of time than if the whole process was done once the cars arrive in the United States. Volkswagen also improves turnaround time by installing accessories on the cars at the port.
As the car market changes and customers demand more from their manufacturers, Mercedes and Volkswagen are making numerous changes to stay ahead of the curve. Better forecasting and identifying changes in the market before they become trends is what these high-end automakers are after.
“We’re feeling pretty good about our growth,” Hepner said. “But the competition is fierce from everywhere.”