Logistics providers have played a key role in the global growth of Jaguar Land Rover, and the OEM wants to extend co-operation even further.

The growth of Jaguar Land Rover (JLR), the UK-based, Tata-owned, premium carmaker, makes for common reading nowadays in the British press. Land Rover plants in Halewood, near Liverpool, and Solihull, near Birmingham in the Midlands, are being expanded and have moved to three-shift production. The Jaguar factory in Castle Bromwich, also in the Midlands, is slated for upgrades and new models.

A walk around the Solihull plant reveals a veritable building site, as it is in the middle of a two-year expansion project that will extend the production line, add offices and warehouse space. The unassuming brick building that currently houses assembly for the Range Rover Sport and Defender—the dark red of the ground floor exterior still the original, camouflaged colour from 1937, when it was built as a ‘shadow factory’ to produce Spitfire engines—will be redeveloped later this year as the line moves across the road to a new assembly hall.


It’s a dramatic change considering that JLR and Tata were planning to close either Solihull or Castle Bromwich less than three years ago. Profits from JLR reached a record £1.5 billion ($2.35 billion) in the last financial year, but Tata is not lining its pockets—along with expanding the current plants, a £355m engine factory is planned for Wolverhampton, while this May the company took over a former Vauxhall warehouse at Ellesmere Port to support production of the Range Rover Evoque and the Freelander 2 at Halewood.

As impressive a ‘local’ story as JLR’s rise is, even more important has been the global nature of its success, ambitions and supply chain. JLR exports to 177 markets, with sales brisk in China, Russia, North America and Germany. Although its plants are in the UK, JLR’s Indian ownership gives it a foothold in a market with considerable potential—last year, for example, JLR opened a knockdown kit assembly plant for the Freelander in Pune (its fifth globally after Turkey, Kenya, Malaysia and Pakistan), and is exploring adding more models. It has also announced a joint venture with China’s Chery and its intention, pending government approval, to build a new factory in China.

Contracts of trust

Growth on this scale naturally creates supply chain complexity and logistics demand. But it is more than numbers driving JLR’s logistics team. David Dyke, global logistics director (pictured above), has helped change how the company works with providers, including more technical methodology—with a system of monitored performance and computer-generated models—and a shared, ‘open book’ approach with partners.

Dyke says that business with suppliers is now based on ‘contracts of trust’. Insofar as an outside observer can tell from reviewing the OEM’s logistics, this is not mere management patter. JLR has a logistics outsourcing strategy that stands out for the responsibility it devolves to lead logistics providers (LLPs). JLR has pulled together virtually its entire inbound network and integrated it under the control of DHL, which manages transport, stock handling and line feeding at the three plants. Similar control has been arranged with speciality provider Priority Freight for premium freight movements, and for outbound logistics with Ford in the UK; Volvo Logistics in Europe; and other providers, such as WWL, for some markets.

secrets-2The LLPs work in tandem with JLR, as DHL’s management works with inbound logistics manager Al Jeory’s team to make joint purchasing and strategy decisions. The same applies for Volvo Logistics and others who work with Gareth Williams, outbound logistics manager, and his team.

For Dyke, these relationships save on cost and increase flexibility, but they must be built on openness. “We must share confidential data sometimes with providers such as forward volumes so that they can plan on our behalf,” says Dyke. “There is no benefit to keeping providers away from the table.”

Dyke suggests that the next step will be to form even longer partnerships. “We see that if you drive 12-month contracts, you get 12-month solutions. In future we’re trying to form key relationships for a longer period aligned with our business plans, which can typically be five years in advance,” he says.

Given its growth, there has been no better time for providers to align themselves with JLR’s business plans. “If a provider delivers excellence and overachieves, I see another opportunity, such as an offsite sequencing centre, or a plant in another country, then the provider could become part of that development,” says Dyke.

As a recent example, JLR has outsourced the management of the Ellesmere Port warehouse to DHL. Upcoming projects, including the Wolverhampton engine plant and especially the China factory, could open up a trove of opportunity, although JLR says it is too soon to discuss these projects in detail.

“We want to work with the supply base on things like partnership and collaboration because that is what we see driving efficiencies,” says William “At JLR, our size also means we can be more flexible and approachable in many ways, including for things like contract duration for the right, innovative partners.”

The supply chain and its history

A closer look at JLR’s supply chain reveals that it is informed partly by its ownership history, which has included the Rover Group, British Leyland, British Aerospace, BMW and Ford before Tata. BMW heritage can partly be seen from the huge range of options available on a build-to-order basis, while Ford has left not only engineering fingerprints but supply agreements, including powertrain deliveries from its UK plants for diesel engines from Dagenham and petrol from Bridgend, and even Mexico for some models (although the new engine factory will change this mix). It is also an LLP for the company for outbound logistics.

JLR’s supply chain is highly regionalised, with 350 suppliers in the UK and 450 suppliers across Europe, according to Al Jeory. There are about 50 global suppliers, split between North America, Japan and China. There has been no notable shift in sourcing towards India or South-East Asia under Tata, with only a few suppliers in India, and one each in North Africa and South Africa. “Low-cost country sourcing has not been a driver for us,” says Jeory.

Despite its ownerships, JLR’s logistics management has always kept a measure of independence, which is perhaps truer today under Tata given that it has no other automotive presence in Europe. The development of the LLP contracts and JLR’s supply chain engineering demonstrate this entrepreneurial approach. Tata even recognised JLR’s logistics management globally last year with one of its Inovista awards for reducing carbon emissions in the supply chain.

“Tata has been a phenomenal opportunity, and very supportive,” says Dyke. “If we have an idea that makes business sense, we’re able to action it and get on with it very quickly.”

A complete LLP strategy

JLR isn’t the first to adopt an LLP-style approach; interestingly its former owners also have contracts with DHL, as BMW uses the provider for its less-than-truckload (LTL) network and Ford for inbound management. But JLR has gone further, with DHL responsible for around 85% of global inbound freight, including all of Europe and the UK, with a common service for the three plants through LTL and full-truckload (FTL) shipments that hinge across three principal crossdocks in Europe. JLR shares its schedules with DHL, which then does its own route planning and carrier management. DHL is also responsible for stock management and line feeding at the plants. DHL is also responsible for stock management and line feeding at the plants.

secrets-3DHL has direct access to the loading decks at factories, where it delivers the parts and manages stock with its own staff at the ‘marketplaces’. When line-side stocks are low, workers press a button that prompts a DHL worker to replenish supplies.

“It is a total, accountable supply chain from start to finish where we understand total cost and we can drive and share best practices across our plants and get the synergies because of the size of the operation,” says Dyke.

Thanks to computerised modelling and high levels of visibility, Jeory says the network is highly efficient, with FTL utilisation rates around 91% and LTL at 88%. “We have very good computerised monitoring tools that are giving us an edge in terms of improving those figures, including GPS tracking and in-cab technologies,” he says. “We monitor them daily and monthly with DHL.”

Furthermore, the LTL model across Europe has opened doors to inbound collaboration with other carmakers, reveals Jeory. “About three or four years ago, we began actively engaging in sharing routes with other manufacturers,” he says. “We are currently working with two other OEMs and sharing DHL facilities in the UK and Europe.”

Jeory and Dyke each stress that both companies have made adjustments to work from a mainly “open book” cost model, where purchasing decisions about transport and resources can be made together. As well as understanding the cost basis of what DHL manages for JLR, Dyke says it is important for the carmaker to appreciate that the LLP needs to make a profit. “Both of our companies need to be successful and once you work to find the right balance, you can focus your energy on finding efficiencies,” says Dyke.

Such a close alignment can be as risky as it is bold. During lengthy and protracted pay negotiations earlier this year between DHL and Unite, the union that represents DHL drivers and workers in the UK, industrial action threatened supply at JLR.

While JLR will not comment on the situation, citing it as an internal DHL matter, Dyke stresses that it does not represent a hitch in the JLR-DHL relationship. Indeed, Dyke says that JLR’s increased inbound flexibility has been essential to its ability to nearly treble volume over the past three years. As an example, Dyke says that in the past, JLR used to be locked into a three-month planning cycle for freight deliveries. “Now, I can replan my whole freight plan every two weeks,” says Dyke.

Likewise, JLR has needed to be fast when it comes to ramping up production and supply chain capacity. For the Ellesmere Port warehouse, Dyke reveals that the company has only eight weeks to start active operations. “It’s quite an exciting journey,” says Dyke.

Reducing premium freight spending by 80%

Another area in which the company has extended the LLP concept has been for premium freight shipments with Priority Freight. “Similar to DHL, we deliberately set about the process of setting up Priority Freight as a bespoke team to us, so that they would understand our needs,” says Jeory.

Rather than a generic freight company used to contract expedited shipments, Priority Freight monitors and addresses situations before they arise, according to Jeory.

But while Priority Freight operates as an LLP, an element of competition remains as JLR will also use DHL for some shipments. “Before we book a shipment, we do a cost comparison between the two,” Jeory says.

With more controls in place across the entire supply chain, the results have been impressive, with JLR’s budget for premium freight declining even as volume soars. “We’ve made massive inroads with premium freight, and I think we’ve probably reduced the annual budget by about 80% during the past seven years,” says Dyke. “That is all about having confidence in your data integrity and stock control, and having people who manage your parts correctly.”

Global systems for order to delivery

JLR’s logistics innovations are not limited to inbound material movements. Outbound logistics has been characterised by a focus on several areas, including gaining better control and visibility over the order-to-delivery (OTD) cycle, as well as decreasing lead times for exports, in particular for fast growing markets like Russia and China. The company is also testing further advances, such as a two-speed distribution model that could prioritise certain vehicles.

JLR sells on a build-to-order basis for most markets, including for the UK, Europe and China. However, even for exceptions such as the US, where dealers usually order in stock, providing reliable delivery dates is a prime objective, according to Gareth Williams. He adds that this reliability has been important not only for customer satisfaction but for managing inventory and cash flow in terms of wholesale and retail deliveries.

To improve the OTD cycle, JLR has installed new global ordering, pipeline and distribution systems. According to Williams, the OTD systems have come together during the last year to provide an enhanced dashboard view across the entire cycle. “The three systems enable dealers at the point of order to come through to our pipeline system to check on constraints, build slots and availability within allocations, and ultimately, based on the lead time to market and distribution offsets, to give a date when customers can expect to get the car,” says Williams.

secrets-4Following from the initial date, the system links to JLR’s logistics monitoring and is updated with the vehicle’s progress, including anything that would anticipate an early or late arrival. “We can now do this monitoring and communication for 98-99% of our dealers around the world,” he says.

JLR has also spent considerable time developing a vehicle tracking system aligned to these three systems, providing updates at every segment of the distribution process and allowing statistical analysis of outbound metrics. “It’s about process control rather than waiting for someone to ring up and complain about delays,” says Williams.

The OTD systems have been integrated across marketing, manufacturing and distribution. According to Dyke, the metrics to improve the reliability of the ‘ABS on time’—which is when the vehicle is slated for release from the plant for distribution—are thus driven across the entire organisation. “We work across all the manufacturing teams. The plants, for example, have clear metrics in terms of building the car on the right day, the level of work in progress and its age,” says Dyke. “We’ve managed to get those responsibilities disseminated right through the management down to the track team leaders, and it’s on everyone’s corporate scorecard.”


Williams reveals that JLR is also exploring a two-tier distribution model. Currently, the company treats sold and stock vehicles the same. But with more focus on providing customers with reliable delivery times, JLR has created the ability in its OTD system to expedite sold cars. While not yet implemented, the system is being piloted in some deliveries.

“We’ve developed two routes to markets in the system, almost like a first and second class post,” says Williams. “It can be completely different transport modes and providers.”

A collaborative outbound strategy

JLR runs a mixed model between centralised distribution, LLPs, national sales companies (NSC) and importers. Williams and the JLR purchasing team generally have central control over carriers and contracts in the UK and Europe, for example. In larger overseas markets, like the US, there are NSCs, but these organisations work with the UK in a “networked alignment”, according to Williams. A large amount of the purchasing and logistics decisions are carried out jointly according to strategies developed centrally in the UK.

secrets-6Further afield, specialised importers control certain markets and take responsibility for the vehicles at ports of entry. However, as a market develops JLR will often develop an NSC and align it more closely with the central organisation—this was the case in China in 2010 as well as in Russia.

JLR’s management is supplemented by LLP contracts for different regions. In the UK, for example, JLR uses Ford, an arrangement agreed when the company was sold to Tata, which has worked well for several years. As a volume seller, Ford has a certain economy of scale in the UK, including an in-house fleet of car hauliers and its own jetty and terminal in Dagenham (see Finished Vehicle Logistics p16). While JLR exports many cars from the UK, Ford imports a lot of them, allowing backhauls between ports. “Our relationship with Ford is an excellent example of an effective working partnership where we’ve built trust with another OEM,” says Dyke.

For continental Europe, JLR uses Volvo Logistics, the 3PL arm of the Volvo Group, as an LLP for contracting short-sea carriers and land transport. Williams says that volumes are often combined with those of Volvo Cars, as well as other manufacturers. “We don’t mind co-loading with other OEMs if it improves efficiency,” says Williams.

JLR uses LLPs in other export destinations as well, depending on the business case and if the provider might have better capabilities to exploit the market. “When we tender lanes, we offer the possibility to quote on one leg of the journey, or on the complete route, or to operate the whole region with an overseeing route manager or LLP,” says Williams.

An example is the use of WWL to distribute cars in China. WWL takes control of the vehicles from the port of Southampton, arranges shipping with Eukor (a sister company), handles import documents, terminal management and final delivery. Williams says that it works well, in part because it has given JLR a simplification of IT systems and visibility, as well as eliminating certain damage ownership issues.

secrets-7But he admits that the LLP approach is not right for every market. “We did the same quotation process with Russia, but ultimately we decided to keep it separate and to manage it ourselves,” Williams says. “We’ve also looked at [this] for other markets, such as Australia, but have kept a direct sourcing model. But every time we re-tender, we look again at whether or not an LLP would be applicable.”

While working with LLPs is a way for JLR to get competitive capacity despite its relatively small size, Williams believes that good carrier relationships have made it attractive to logistics providers. “Providers want our brand on their portfolio. Because we’re small in relation to other big volume OEMs, we can be more approachable in some ways,” says Williams. “We know that our rates are competitive but they are also not the cheapest, as we recognise the importance of a quality service that we need to meet our premium expectations and growth.”

Network planning

JLR uses up to 12 ports of exit from the UK, with European exports moving on a daily basis. The predominant ports are in the Humberside area of the north-east, Portbury in the west and the Thames Estuary in the south-east. Most deep sea exports leave from Southampton on the south coast. JLR uses mainly road to the ports, but also uses some rail services.

While it uses a considerable amount of short-sea shipping, JLR currently has no regular rail services from the UK to Europe. In the past it used the channel tunnel to rail cars to Italy, but Williams says that cost has become prohibitive.

With the increase in volume for exports, JLR has seen some capacity issues. Williams points to congestion at UK ports, while he is also worried about a lack of investment in the car transporter fleet across Europe. “With the lack of money in the distribution world, there are some capacity issues and the quality of the current transporter fleet is degrading,” he says.

JLR wants to work more closely with carriers and port authorities to address the situation, including sharing longterm forecasts. “We are in dialogue with the ports and carriers to share our volume forecasts over the next five or six years, to make sure that they are looking to invest,” Williams says.

Just as JLR reengineers its inbound network, outbound flows are also subject to changes, including shifting ports and routes to markets. JLR recently made more fundamental overhauls for two of its most important markets, China and Russia.

JLR previously relied on four importers for distribution in China, and sent its vehicles by container to four different ports. In 2010, it switched to an NSC, changing also to ro-ro shipping and consolidating at the ports of Shanghai and Tianjin (close to Beijing), using WWL as the LLP. Midway through 2011, with volumes at record levels, JLR added the port of Guangzhou, in the south.

“By adding the third port, we’ve significantly reduced lead time and emissions by reducing land transport,” says Williams.

In Russia, JLR used to import vehicles via Finland by truck to St Petersburg and Moscow. Last year, together with the newly-formed NSC, JLR held a joint tender to import directly through the port of St Petersburg, with inland distribution handled by five Russian carriers. “The change has taken about five or six days out of our total supply chain, as well as 500 tonnes of CO2,” Williams says. “It’s a good example of how we can work with our NSCs to align our distribution strategies.”

The recruitment challenge

Returning again to headlines, there has been much celebration around JLR’s job creation in a UK economy that has entered a double-dip recession. But the structure of JLR’s logistics, including outsourced warehouse and line feeding, means that nearly 1,000 of those jobs have been in logistics both within the company and mostly at providers. What has been most exciting —and challenging—for Dyke has been the need to recruit talented logistics managers.

“From a logistics perspective, we have phenomenal global opportunities,” says Dyke. “We’re keen to get people interested in logistics here. We believe logistics is often the lifeblood of our organisation.”

A search on the JLR website brings up logistics-related job offers, and Dyke makes a direct call to both applicants and potential suppliers to the company to get in touch with him. He stresses, however, that the old image of logistics management as a reactive or stagnant function is long dead at JLR. “You have to have a high degree of business acumen, and be prepared to work in a very dynamic and fast changing organisation,” he says. “It’s exhausting, but very rewarding.”