Decentralization Proves Costly for International's Logistics Operations

Prior to 2002, each of International's six manufacturing plants managed its own inbound flow of materials. This network model prevented International from achieving a clear view of products moving throughout the supply chain. With each plant managing its own supply chain operations, International's logistics operations were proving to be not only inefficient, but very costly.

With manufacturing plants located throughout North America, International's switch to the LLP concept would not happen overnight. International decided to first implement the LLP concept in the Southwest corridor of its North American operations. The Southwest corridor demonstrated the longest portion of the company's supply chain, presenting the greatest opportunity for cost savings.

Penske deployed a team of logistics engineers to analyze International's current supply operations. Penske concluded that a centralized logistics operations strategy would net an 11.7 percent savings in the company's overall inbound transportation costs. With International's approval, Penske developed a new network model and logistics strategy.

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