Inventory Control in the Automotive Industry
ONE CALL (THE PROBLEM)
Supplying the automotive seating market, a well-known manufacturer in Shelby, Michigan, operates with only eight hours of inventory on hand to keep its production line going. While this minimizes the need to warehouse materials, it maximizes the need for on-time deliveries.
Like most manufacturers, the company was challenged to manage freight costs for the components shipped from vendors across the country. Beyond that, when a product does not ship on time, it created line-side shortages.
RIGHT SOLUTION (THE SOLUTION)
ICAT offered a way to manage both costs and outcomes for the automotive manufacturer. This company was interested in ICAT’s LTL Optimizer, a software program that gives clients comparisons of different shipping rates. Presented with various options for addressing its concerns, the team chooses the level of service that makes the most sense to them.
“ICAT gave us a clear roadmap of all the ways we could save business costs by using them as a logistics partner to get materials to our plant,” said Aaron Pallas, Materials Manager at the company. ICAT assigned an operations specialist to handle the business and build relationships with their suppliers to more closely track potential shortages and find ways to address them.
DONE! (THE RESULTS)
Since starting with ICAT Logistics, the automotive manufacturer has reduced its freight costs more than 35%—from $65 per $1,000 worth of component material shipped, to $44 per $1,000. That 35% translated into $105,000 in transportation cost savings over the first 15 months. ICAT also negotiated with one of its partner carriers to discount the rate an additional 10% for one of their supplier lanes. This represented savings of another $20,000 over the next 12 months.
Besides dramatically reducing costs, ICAT has continued to help keep their supply chain in motion. ICAT took what was a 6-day transit lane using their former carrier and turned it into a 4-day transit. By analyzing various lanes and matching them with the appropriate carriers, ICAT was able to reduce transit times an average of 1-2 days across the nation. In the ongoing flux of supply and demand, when an emergency arises that requires more than is available, ICAT intercedes by expediting only what is needed.