The encyclopedia · Strategy & Leadership · Operational decision · 1990-2001
Saturn gave one 3PL its whole inbound line, and made it pay for misses
Saturn outsourced its entire inbound parts logistics to Ryder, designing the plant so parts arrive pulled by use, with the late party footing the bill.
Saturn Corporation · Ryder Dedicated Logistics
the move
Saturn, launched by GM as a separate division, wanted to build cars with almost no inventory on the line, which meant parts had to arrive in the right order at the right minute.
Instead of running its own inbound delivery, it handed the whole job to one dedicated logistics provider, Ryder, which invested 14 months and $25 million before the first car rolled off in 1990. Two dedicated fleets do the work: 24 shuttle tractors feed the assembly-line doors, and 190 over-the-road trucks bring parts from suppliers in the sequence they will be used.
The plant is a pull system that replenishes what the line has used, and the contract makes lateness costly: the party that misses its window pays for the expedited carrier.
why it works
- One partner owns the whole flow, so someone is accountable for an on-time, in-sequence delivery rather than a tangle of carriers.
- Dedicating a fleet and designing the plant doors around the line removes the wasted time and touch points of traditional inbound delivery.
- A pull system (replenish what was used) means no forecast to be wrong and far less inventory on the line.
- Putting the expedited-carrier cost on whoever is late turns a schedule into a self-enforcing rule without a manager chasing it.
what transfers
If you can't afford to own a complex operation, hand the whole thing to one partner and write the lateness penalty into the contract. Design the asset around the flow, not the flow around the asset.
what came after
Saturn turned down lower-cost carriers to stay with the partner that knew its business, and the model spread: dedicated shuttle fleets, reusable parts containers and tight supplier windows became normal in US auto plants, and GM later tried to bring the lessons into its older lines. For Ryder it was a step beyond truck leasing into running a customer's whole inbound system, a business that grew to rival its traditional lease business.
references
spotted an error? The archive wants to know.