SPECIAL ISSUE: GLOBAL SUPPLY-CHAIN PARTNERSHIPS - Ford: How to Maintain a 10,000-Mile Supply Line

Delivering parts to a modern American automotive plant from New Zealand must be a little like landing jets on an aircraft carrier: there's that tiny, fixed target at the end of a long journey over an endless ocean.

In the case of Australia New Zealand Direct Line (ANZDL), that means supplying Ford Motor Co. with alloy wheels and other parts on a just-in-time basis, from a source 10,000 miles away.

ANZDL has been carrying wheels from Auckland on behalf of Ford for more than a decade. Most of the product moves straight to the automaker's plants in Chicago, Atlanta and Edison, N.J., says Bob Beilin, senior vice president at the carrier's North American headquarters in Santa Ana, Calif. This year, St. Louis will be added as a destination.

The relationship began when Ford awarded ANZDL a small percentage of its aluminum wheel movements from a Ford plant in New Zealand to North America, says Tracy Flaggs, global transportation purchasing manager at the Dearborn, Mich. headquarters. ANZDL now has all of that business, Flaggs says.

Subsequently, ANZDL was handed a wide range of Ford's aftermarket parts moving out of Australia, from small items to engine components. It carries some production materials in that trade as well. Over the years, ANZDL has also participated in Ford's southbound production parts business to Australia. A new contract, which ANZDL was on the verge of signing in mid-May, involves the movement of Ford parts from Detroit to Melbourne for production of the Falcon, a family sedan, Beilin says.

Flaggs describes ANZDL as "a niche carrier" in Ford's stable of international providers, but it's a highly valued one. In 1996, ANZDL became the first ocean carrier to receive Ford's Quality First (Q1) award for non-production purchasing. Established in 1982, the Q1 program sets pre-determined service levels for all Ford suppliers. It combines ISO certification criteria with Ford's own analysis of supplier performance in the areas of continuous improvement, customer focus and satisfaction, structured team problem-solving, and business planning.

As part of the evaluation, ANZDL received a visit from a group of Ford auditors. "It was like a mini-ISO/Baldrige team," says Beilin, referring to the U.S. Commerce Department's Malcolm Baldrige award for quality. Ford compared the carrier in 24 service areas with its own strict total quality management processes. The automaker also conducts a quality operating system (QOS) assessment of ANZDL every six months, a process Beilin says he looks forward to "with relish."

	Ford treats shipments in transit as "floating inventory." Any delays must be communicated instantly to the plant.

ANZDL's own internal quality controls are based on a survey of customer priorities. They include key performance indicators related to schedule integrity; equipment that is timely, clean and cargo-worthy; accurate documentation; proactive and responsive customer service; and price competitiveness, Beilin says.

ANZDL is responsible for Ford's movements on a port-to-door basis northbound, and door-to-port southbound. The carrier is a longtime supporter of intermodal service, combining ocean, rail and truck under a single bill for shipments moving over U.S. West Coast ports and destined for the interior or East Coast.

For years, ANZDL relied on the North American stacktrain network of American President Lines, Ltd. It has continued to do so since the system was acquired by Pacer Stacktrain. Beilin says the transition was a smooth one; of the 205 APL employees who worked in the stacktrain unit, 187 came over to Pacer. APL's computer systems remain in place.

JIT networks can require perilously narrow windows for parts deliveries. Ford keeps inventories to a minimum, even for a supply line that stretches from Australasia to North America. Beilin says the automaker treats shipments in transit as "floating inventory." Any delays must be communicated instantly to the plant.

One key to success, he says, lies in tight communications between carrier and shipper. In the case of Ford, ANZDL utilizes both the internet and EDI. Information on shipment status flows between Pacer and the ocean carrier on a constant basis. Southbound, ANZDL has worked with Ford and the freight forwarder F.X. Coughlin to create a customized, web-based tracking report for the consignee in Melbourne.

The trade presents JIT shippers with a number of obstacles, Beilin says. One is the continuing instability of waterfront labor in Australia, which has been plagued by repeated strikes and slowdowns over the years. Another is the dispersal of small populations over large distances; there are just 18 million people in Australia and 3 million in New Zealand. Seasonal differences between Australasia and North America, with their accompanying holidays and weather disturbances, create additional challenges to shipping schedules.

Problems notwithstanding, the Australasian trades are going strong. Freight volumes are on the rise, after experiencing "a bit of the doldrums," Beilin says. The southbound route from North America supports the equivalent of 197,000 twenty-foot containers, a 5-percent increase over the previous year. The slow recovery of Asian economies, after the currency and investment crisis of the last two years, has given Australia and New Zealand a lift as well.

Flaggs says Ford will continue to seek improvements in its global supply chain, especially with regard to the use of electronic commerce to communicate with ocean carriers. "Our goals get more and more aggressive," she says.