US commercial vehicle and engine maker, Navistar, is aiming to reduce its supply chain spending by 25% by 2013 through a new strategic partnership with Menlo Worldwide Logistics.
Initial efforts following an 18-month operational review have already resulted in a 5% reduction in annual costs according to the company.
Navistar has extended its existing contract with Menlo to include an expanded range of 4PL analysis, design and management services as it pursues a five-year plan to re-engineer and improve the performance of its supply chain. It has also chosen Menlo to carry out a new 3PL assignment in which it will be responsible for global transport network design and carrier management.
Menlo will work with Navistar on the development of a “strategic collaboration model” for improvement to the company’s global supply chain which involves a redesigning of Navistar’s structure, processes and practices for global logistics, transport and supply chain management.
During the 18-month examination process that the two companies have just completed, Navistar has implemented a core carrier programme to reduce annual domestic freight transport costs by nearly 20% while improving on-time delivery and transit times.
The company has also put in place five new strategies across key areas of the supply chain: IT, sourcing, global network, finished vehicle distribution and lean material flow. It reports the launch of 19 projects designed to yield savings.
“Our goal is to build a world-class logistics capability that drives value and helps us better serve our customers on a continuous basis,” said Ed Melching, Navistar director of global logistics. “We made great strides in the past 18 months. Probably the biggest is we proved to ourselves, Navistar and Menlo, that the concept of strategic collaboration really works. Vision, strategy and process all came together. We’ve formalised the approach and restructured our team into a blend of Menlo expert resources and Navistar experience. The opportunities to build on these initial successes are exciting.”
Areas that the two companies intend to focus on under the five-year transformation plan include distribution network analysis and planning, sourcing and contract management, network execution, invoicing and payment of freight charges, and performance and compliance monitoring.