A Study Of Saturn’s Logistics And Supply Chain Management Process

The Scope of Studying the Saturn Case

1.The scope of studying the Saturn Case encompasses an entire delivery process to be adopted in a Logistics and Supply Chain and includes the need of management from the time the vehicle comes-off the production line to the time it is gets physically delivered to the retailer’s showroom (Rubinstein and Kochan, 105). Within these parameters, many viable strategies are available, depending on the geographic dispersion of distribution. In certain locations, we can find advantage in truck delivery whereas rail delivery may be more suitable in certain other areas. We can also see difficulties involved in certain locations where no clear-cut choice can be found (Rubinstein and Kochan, 106). The management of GM, after conducting an extensive search to find a suitable location for its prestigious plant, finally settled for Spring Hill, TN.

The clinching factors in making this choice were the proximity of Spring Hill to Interstate 24, 40 and 65. The proximity to a large number of potential customers and abundant transportation options available also influenced the decision to locate the project at Spring Hill. This small township, with a population of 1100 people was also just 30 miles south of Nashville (Rubinstein and Kochan, 108). The local government spent about $30 million to construct Saturn Parkway, a four-lane highway which connected the plant directly with Interstate 65. Hauling service through Rail is provided by CSX via rail spur constructed in 1988 and the project was finally completed in 1989 (Rubinstein and Kochan, 109).

2.All the concerned parties of the outbound process are required to share information and find a collective resolve to any problems before dispatching the vehicles from the plant. The management is very particular that its ultimate goal involves shipping of flawless vehicles to the retailers of Saturn. Keeping efficiency in view, the plant’s on-site staging and loading facility is located just behind the assembly plant and this makes it convenient for the management to monitor the delivery process efficiently (Kasilingam, 256). As the vehicle shipping office is also located alongside these facilities, this increases interaction between those having process knowledge and the outbound service providers, thereby reducing problem-solving real-time, enhancing capabilities and improving communication. The flowchart below, starting from Event-38, illustrates the functionality of all these sections (Kasilingam, 256).

After Event-38, when each produced vehicle comes out of the Vehicle System it goes through the emissions testing process and then a final inspection by a Saturn employee at the ‘Inspiration Point’, which are located at the Truck Loading Area as well as at the Rail Loading Area. After finding that everything is acceptable, the Saturn employee releases the vehicle to the carrier (event 40) (Kasilingam, 257).  From here onwards, the contract company, Premier Services, takes over the operations and after scanning the bar-coded card in the QAT computer system, drives the vehicle out from the plant assembly area. Information regarding the vehicle’s destination and mode of delivery are mentioned on the card (Kasilingam, 257).

Information Sharing and Problem-Resolution in Outbound Process

Flowchart Starting After Event-38 At Saturn’ Spring Hill Plant

3.The truck delivery mode is the best, from economic, management as well as efficiency point of view. Using this process, Saturn starts the delivery process at event 33 when a copy of the dispatch order is sent electronically to GM’s Logistics Information System (Kasilingam, 258). Here, the preferred mode of transportation, along with the route for retail delivery is identified by the system. In case the vehicle is to be delivered by truck, it is driven to the truck loading yard. Meticulously, all vehicles are parked in the lane, depending on the destination retailer. After staging the vehicle, VIN is checked by the QAT supervisor for authentication. This is an important step as it prevents chances of loading the vehicles for delivery to a wrong retailer (Kasilingam, 258).

From here onwards, it is the driver’s responsibility to inspect all the 12 staged vehicles for any damages and verify accuracy of VIN on each vehicle. It is the QAT supervisor who has to resolve problems discovered by the driver. If found necessary, the vehicle can be re-staged to carry-out any minor repairs on the spot and if the damage is large, the vehicle is sent back to the plant (Kasilingam, 259).

4.I would definitely advise the Road Delivery Mode, which is the most efficient, economic and time-bound system adopted by Saturn. All vehicles are to be delivered to the retailers Monday through Friday, between 7 a.m. and 5 p.m. It is the duty of the driver to unload each vehicle and after conducting a joint inspection of all the unloaded vehicles to present the freight bills to the retailer. Any damages or problems are noted by the retailer on the freight bills and delivery receipt (Rubinstein and Kochan, 111). The retailer can file a complaint with the GM Logistics Information System for necessary action. This retail delivery process is concluded after the retailer signs the freight bills, indicating his receipt of the mentioned vehicles (event 50). The cost of delivery by road through QAT to a Saturn retailers comes at an average cost of $0.39 per mile (Rubinstein and Kochan, 111). So far, this system has reported less than 0.5% of damages to all QAT delivered vehicles. Moreover, more than 98% of the loads have been delivered on time and QAT has reported an average transit time of 1.5 days on all its deliveries

Truck Delivery Mode

5.Saturn has two overriding interests, one is to become a profitable manufacturer of small automobiles and second is to be recognized as a ‘different car company’. For achieving profitability, every activity of the company must create a cost-effective atmosphere (Rubinstein and Kochan, 106). For being truly different, the organization must create total customer satisfaction. These factors are proving to be major challenges for the Vehicle Transportation Team. The Key performance issues being faced are single dealer loads, damage rates and cost control (Rubinstein and Kochan, 112).

Saturn’s record sales are attracting more retailers and this year the Marketing Team has shortlisted 20 new market areas to locate Saturn’s new retail facilities. There are many logistical issues for the company to address before starting a new retail outlet (Rubinstein and Kochan, 108). In this connection, the most challenging decision for the company is whether to dispatch vehicles by truck or rail. The Table below can make it easy for the management to take this decision as it shows all the costs connected with outbound transportation issues (Rubinstein and Kochan, 110).

6.Increasing the proportion of single-dealer deliveries is another priority. Saturn has found that 12 unit, single-dealer truckloads result in fewer in-transit problems and less handling-related damage than do multistep loads (Rubinstein and Kochan, 112). Other positive results include increased equipment utilization and improved shipment tracking capabilities. These results translate into lower operational costs for carriers, fewer delivery delays and receiving headaches for retailers and fewer distractions for the Vehicle Transportation Team (Rubinstein and Kochan, 105).

In order to succeed at the retail level the right assortment of available vehicles is needed. The retailers desire fast, frequent replenishment of popular models. Although much of the responsibility for the replenishment of vehicles is outside the control of the Vehicle Transportation Team they have a role in the process. By the time event 40 occurs, retailers are anxious to receive the vehicles for two reasons – costs minimization and customer service (Kasilingam, 276).

7.Managing the flow of vehicles from plant to retailers requires a coordinated effort from a variety of organizations. The GM logistics information system provides key inputs to the QAT planning process and maintains a database of order processing event histories for every Saturn vehicle in the transportation system (Kasilingam, 277). Retailers have a limited role in the control process. Rail shipments are more difficult to control. The increased distance and involvement of 2-4 carriers expands the opportunity for delays, damage and other problems. Also, the rail carriers’ tracing capabilities are not yet on a par with those of motor carriers (Kasilingam, 277).

From a customer service standpoint the faster the vehicle arrives at the retail outlet the easier it is to sell. The retailer cost impact is less apparent, but no less important. Obviously, this is a critical issue to Saturn retailers. They desire fast transit times to maximize their opportunity to sell vehicles during this short grace period (Kasilingam, 278).

RETAIL DELIVERY COSTS

8.Transfers from the assembly plant, inspections and marshalling activities conducted by Premier are at an average of $2.50 per vehicle. Loading, line haul, dealer delivery and traffic management costs are included in these rates negotiated by Saturn with QAT. On average, this cost is $0.39 per mile for each vehicle with a range of $0.29-$0.45 per mile (Kasilingam, 279)

The yard activities conducted by cost Saturn approximately $8.50 per vehicle. Each I.T.S. inspection of a vehicle costs $0.90. Rail line haul cost per vehicle averages $0.32 per mile, with a range of $0.22-$0.42 per mile. Drayage from the destination rail ramp to the retailers runs at an average of $12 per vehicle. Table above provides a comparison of estimated truck costs with rail costs for four current retailers. Based on the above data, these rates offered are quite high for Saturn and I do not find it feasible for recommendation (Kasilingam, 279). 

References

Kasilingam, R.G. Logistics and Transportation: Design and planning. New York: Springer Science & Business Media, 2012. Print. Retrieved on 23 Nov. 15.

Rubinstein, S.A. and Kochan, T.A. Learning from Saturn: Possibilities for Corporate Governance and Employee Relations. Ithaca: Cornell University Press, 2001. Print. Retrieved on 23 Nov. 15.

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