Ford’s US finished vehicle challenges

To get a view on some of the vehicle distribution challenges facing Ford around the world and specifically in North America, we caught up with Gerald “Jerry” Schoenle, Director, Global Trade Services. By Simon Duval Smith

Jerry Schoenle

Jerry Schoenle

Jerry Schoenle’s remit covers sales operation services to international markets and I ask him about the multiple 'pinch points' that he must face, areas where transporting finished vehicles is particularly difficult and delivery times cannot always be guaranteed. Speaking of the global picture he says that there are variations across the globe. “As you likely surmise, the pinch points vary between regions. In the US the primary challenges relate to a shortage of car haul drivers and rail cars. In Europe, there can be extensive congestion at ports and at vehicle collection locations (Vehicle Holding Centres) where vehicles are staged for further distribution within the region.

“In emerging markets, many are on long trade lanes and have less frequent carrier service. Additionally, once the vehicles clear customs, the internal distribution network and logistics infrastructure is insufficient in many developing countries to ensure timely, high-quality vehicle delivery to the showroom and then to the customer.”

Getting down to specifics, I ask Schoenle which modes of transport he finds the most challenging: road, rail or sea, and what would he like to see improved most. “The two modes we find most challenging in the US are road and rail. This is primarily due to a shortage of drivers, which is impacting many industries, not just automotive, and a shortage of rail cars.”

The US model of buying and shipping vehicles

With its highly globalised production footprint, Ford draws on vehicle stock from all over the world for sale in the US and I ask Schoenle about how the US compares to some other regions in transporting from plants to ports and other routes. “On the positive side, transport damage is lower on average in the US than in some other more developing regions,” he says, adding: “The biggest difference is the extensive distance from most US assembly plants to the port of export. This adds time, cost and variability to the order to delivery (OTD) cycle and by extension to the calculated ETA.”

The OEMs’ ideal sales and production model would be for customers to specify their new car well in advance of delivery, with no changes requested but as Schoenle says, the US model is not quite like that and I ask him how the balance between vehicles built to order and those built for stock varies globally and what are the challenges he faces in this area of the business. “In general terms, US customers are more content to buy from dealer stock, while EU customers have a greater tendency to place an order for their vehicle. In emerging markets, the extended OTD times preclude most customers from placing an order for their specific vehicle.

“There is certainly an opportunity to improve customer satisfaction if OTD times can be reduced enough to enable customers to order their vehicles and take delivery in much less time than they presently experience.”

Sales forecasting and customisation

Modern car buyers expect increasing levels of customisation and I ask Schoenle if this is best carried out entirely at the plant or does he rely on logistics providers to provide these services in some areas. “For quality control and manufacturing process reasons, the intent is to maximise the amount of work done in the plant. That said, due to complexity or the desire to add customisation closer to customer delivery, we also use modifiers located near the plants and near or on the ports.

Sales forecasting, or lack of it, is a considerable challenge for the distribution end of the vehicle chain and I ask Schoenle to what extent Ford’s dealer network 'drives' sales forecasting, using their local market knowledge and to what extent does he use research and models to predict this. “Dealer local market knowledge and feedback are important inputs both to short-term tactical marketing initiatives and longer-term product offering decisions,” he says, adding: “Modelling and other types of analysis are also important inputs. Research is leveraged more for longer-term product content and market offering inputs.”

IT and connectivity within and without the vehicle

IT advances should enable much more precise management of stock and orders for customisation and I wondered how Schoenle and his teams are harnessing the latest IT developments to increase Ford’s effectiveness in processing orders and fulfilling them. “Skill teams and business units are working closely with IT teams to improve the overall OTD cycle to reduce inventory, increase velocity and generate a more accurate and timely ETA,” he says.

Some OEMs, particularly BMW in Europe, have talked of using the vehicle's connectivity to help drive more efficient transport and tracking of new vehicles and I wondered if this was on Schoenle’s 'radar'. “This is certainly on our radar and part of our future planning discussions but there are no specifics that I can share for this report.”

On the subject of advances in technology, I ask Schoenle about the specific challenges of the new wave of EVs, hybrids and autonomous vehicles. He sees this ‘future-tech’ affecting all OEMs. “Much has been written about these challenges and in my opinion, Ford will be impacted much the same as other OEMs. In summary, investment in charging stations and charging grids is a challenge for EVs.

“Autonomous vehicles will, in time, provide an opportunity for more efficient movement in, through and out of the ports. However, many challenges will have to be resolved in terms of systems, yard management processes and workforce management.”

Port challenges

On the subject of Ford’s relationship with ports, I ask Schoenle about the challenges he finds in US ports for shipping vehicles out and what can be done to improve the situation. “In general terms, we have good multiple options for shipping export vehicles out of the US. In specific situations, we do have challenges to overcome, challenges that are being pursued. Some ports need to expand their acreage for vehicle storage and/or their processing capacity to be able to handle higher volume. Some others need to upgrade their systems to provide better quality, real-time status updates to the OEM.

“A couple of other challenges that don’t really have a fix are extended transit time to open water at some ports and the high cost of real estate in some areas (particularly around LA) that make RORO operations cost prohibitive.” 

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