MTMC leaders briefed on new transportation concept.

When Vector SCM transporters looked at the General Motors supply chain, they found a huge bureaucracy.

"It was bigger than the government's (supply chain)," said Michael Nadolski, Director, Procurement and Contract Compliance, of the Novi, Mich., firm.

"They build up naturally."

Nadolski, and a cadre of supply chain specialists, visited MTMC Headquarters Alexandria Aug. 20 to brief key transporters on a unique new initiative--Fourth-Party Logisitics.

Results have been impressive at General Motors--which has 18 Third-Party Logistics operations. In fact, General Motors is so enthusiastic about the concept that it owns a portion of the supply chain firm.

In a step-by-step process, Vector SCM executives say they are transforming General Motors transportation. To date, Vector and General Motors supply chain cycle time from more than 60 days, to 15 to 20 days. General Motors ships eight million new vehicles to more than 120,000 dealers every year. In addition, the giant corporation ships among the firm's assembly, distribution, new vehicle dealer, and parts and service components.

"Fourth-Party Logistics is the design and management of Third-Party Logistics networks," said James Commiskey, Vice-President, Global Services, of Vector SCM, a subsidiary of Menlo Worldwide, Redwood City, Calif.

In Third-Party Logistics, a firm manages and synchronizes another organization's freight shipments. The firm uses the transportation assets of other commercial transportation firms.

MTMC is currently operating a Third-Party Logistics pilot. A contractor, Eagle Global Logistics, of Houston, is managing shipments from Defense Logistics Agency depots in Georgia, Alabama and Florida.

"It's outsourcing to a new level," said Commiskey. "It combines the best capabilities and technologies from logistics companies and other service organizations to deliver value through the total supply chain."

A number of elements are used to enhance the supply chain productivity, said Commiskey. They include standardization, communications, and teamwork.

"With a common process you use around the world, you should improve efficiency and speed," said Commiskey.

Vector's work is "focused on total supply chain business solutions," he said.

"We identify gaps (in seamless transportation)," said Commiskey. "We leverage lessons learned."

More synchronized operations have produced speed, reliability and fluid operations, said Commiskey.

"We've save [General Motors] a ton of money," said Commiskey.

To receive reimbursement for their services, Vector SCM uses a unique method of "gain share." In this system, the customer compensates Vector for a predetermined portion of the transportation and storage savings achieved. The remaining savings go to the customer.

"I think this is the most exciting thing I've seen in a while," said Maj. Gen. Kenneth L. Privratsky, Commander, MTMC. "You've got something here."

Frank Galluzzo, Director, Distribution Analysis Center, agreed.

"MTMC needs something like this," said Galluzzo. "We should do the same thing in our ocean contracts."