Fiat to bring freight forwarding in-house

Fiat is planning to bring freight forwarding and network management in-house for its European inbound supply chain in the next year across both its automotive and industrial divisions, functions that are currently managed by lead logistics providers (LLP). The transition is made possible by investment in Oracle’s transport management system (OTM) by Fiat and its group companies.

 

In an exclusive interview in the latest edition of Automotive Logistics magazine, Paola Petrone, senior vice president at Fiat Group Automobiles, revealed that the carmaker will expand its packaging and container pooling subsidiary, iFast Container Management, to take over freight forwarding by next year (read more here). The division, with about 25 staff, currently oversees Fiat’s metal racking requirements and coordinates the flow of pallets. But staff levels will more than treble as iFast Container takes over network management at Fiat’s car factories as well as those across its industrial empire, including truckmaker Iveco, agricultural-equipment manufacturer Case New Holland (CNH), Powertrain and others, all of which have traditionally relied on LLPs to manage their inbound networks.

 

“Today, each of these companies manages a separate contract with a LLP, but by putting it together we–iFast Container–will be able to purchase in larger volumes and get a discount in price,” Petrone said.

 

She pointed out that most of the factories of the group companies are relatively close to each other or on the same routes, allowing for the potential combination of freight as well a reduction in empty backhauls. “Currently our utilisation rates are 70-80%, and we believe that we can get to 90%.”

 

Petrone said that OTM is the tool that will allow Fiat to make this transition. The system provides network routing as well as freight audit and pay functions. All group companies are scheduled to adapt the system over the next year. CNH is already using OTM.

 

Whereas Fiat companies had previously worked in relative isolation, Petrone believes OTM will allow a group-level approach to achieving the best network configuration for all transport activities. She believes in particular that an in-house approach will allow Fiat to improve truck utilisation rates better than can be achieved by outside providers.

 

“We know our own networks best and by pulling together all of our group companies, we can go beyond what any provider could ever achieve in terms of optimising both costs and service,” she said.

 

Petrone declined to speak in specific terms about the LLPs that Fiat uses, however she did say that Fiat would continue to work with its providers during the transition, while afterwards she still saw significant scope to work together to sell space inside the network to customers outside the group, since iFast Container will not seek business external to Fiat.

 

“This would mean a shift in the relationship from provider to partner,” she said.

 

The current plan is for iFast to manage freight forwarding only in Europe, although Petrone did rule out an eventual rollout to other regions. It is not yet clear if Fiat is on pace to complete the transition by next year, as planned.

 

There is so far no expectation that the change will apply to Fiat’s aftermarket network. For outbound logistics, Fiat has an in-house haulier, iFast Automotive Outbound, and Fiat already manages its own network planning and procurement.

 

Ceva Logistics has held a significant LLP role across numerous companies in the Fiat group in Europe for both inbound logistics and aftermarket logistics. It also works extensively with Chrysler in North America. Rebecca Salt, executive vice president of communications and marketing for Ceva, acknowledged that the LSP will be helping Fiat in the transition to in-house freight forwarding; she also expects Ceva to play a significant role in servicing Fiat and Chrysler’s supply chain in the future.