Observations from Analyzing GM New Car Delivery Network - 2005 Data Don Ratliff Executive Director - SCL Regents and UPS Professor of Logistics don.ratliff@gatech.edu Supply Chain & Logistics Institute

GM New Car Delivery “Network Map” GM controls what gets loaded on rail Switch Yard Railroad controls train schedule TTX controls rail car allocation Plant Rail Ramp (VDC) Rail Dealer Truck Hauler controls truck allocation truck schedule what gets loaded

GM New Car Delivery “Geographic Map” Border Points Demand Areas Plants Ports Rail Ramps

Average days in each process Total = 7.3 Total = 16.4 Arrive at Dealer Arrive at Dealer Assemble Car Transport by Truck Car Available 1.36 days Transport by Truck .44 days Dispatch D Dispatch D Wait at Plant 3.10 days Wait at Plant D 5.98 days D Transport by Rail Arrive at VDC Wait at VDC 4.15 days Dispatch 8.76 days

GM New Car Delivery Single Plant Inventory cost is ignored in mode selection Trips < 1000 miles: truck = $0.50/mile/car rail = $0.32/mile/car Why was new car inventory of little concern?

Summary 2005 Plant Rail Wait Times

Inventory of cars at plant

Lag in Shipments When Plant Restarts Moraine-(Days 300-400) Lag in Shipments When Plant Restarts

Plant “rail” Inventory Same symptoms at each plant What causes big inventories at plants GM’s failure to anticipate production TTX’s model for minimizing empty movements Lack of oversight technology GM attributes problem to rail car shortage GM had no interest in trying to change the system

Summary 2005 VDC Truck Wait Times

Truck Synchronization Load building is primarily manual One day delay to manually plan truck deliveries Carriers build their own loads Fees based on origin, destination and car class Carriers have a conflict of interest since they can reduce their own costs by accumulating inventory which increases delivery time Load builders hold cars until they get “good” loads Load building is complex Carriers lack technology to automate and optimize load building GM had no interest in trying to change the system

GM Supply Chain Characteristics Competence Little supply chain knowledge Little analytic capability Heavy reliance on “experience” Many really dumb policies/strategies No interest in changing systems Complexity Very complex systems have evolved No appreciation for the implications of complexity If it is complicated, outsource it (e.g., Vector SCM – Menlo) Technology Little modern supply chain technology Little interest in changing anything Variability – up to 2 months after car is built Huge impact on dealer inventory and sales

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