Strategic BPO turns automotive manufacturer's worst facility into best

Kelly® partners with a global automotive manufacturer for a comprehensive outsourced program that turns its worst-performing facility into their best — delivering $784,000 in annual savings through efficiency.

A large, global automotive company manufactures and markets 11 vehicle lines through 1,100 dealers across the continental United States. Kelly was managing one of the manufacturer's major parts distribution facilities through a standardized business process outsourcing (BPO) model that consistently met and exceeded the client's key performance requirements. Based on this success, the client entrusted a second and third distribution center to the BPO team at Kelly. In just two months, Kelly transformed the client's worst-performing parts distribution center into its best-performing operation — earning the team a Cost Leadership Award from the client.

Challenge: inconsistent performance and rising cost pressures across parts distribution facilities.

To meet demand across its network of dealerships, the leading automotive corporation has two assembly plants in the U.S. with an annual production capacity of more than 1 million vehicles. It also runs a powertrain production facility that makes engines for its complete lineup of U.S. vehicles, forges crankshafts, and casts cylinder blocks. In turn, all of these sales and manufacturing operations are supported by the client's massive parts distribution facilities, located strategically throughout the U.S.

To provide all of its U.S. dealers and production lines with the parts they need for service and assembly, the client's facilities are divided into two categories: Mega Centers, and more localized Parts Distribution Centers (PDCs). Mega Centers receive parts directly from the factories and supply the smaller PDCs, which then supply dealerships with the parts they order. Dealers place orders on a daily basis, and the PDCs fulfill those orders before the next day is over — less than 24 hours later.

The client was seeking a partnership with an outsourcing provider to deploy best practices for safety and efficiency that would drive related quality improvements and cost savings across its major parts distribution facilities. The client had previously engaged other BPO providers, but none could achieve the client's mandated performance metrics as consistently as Kelly. After succeeding at one of its four major locations, Kelly was invited to integrate its BPO best practices in the client's parts distribution operations at two other sites, with full responsibility for production outcomes.

Solution: deploying a fully accountable BPO workforce and process improvements across three sites.

At the first of these two new facilities, Kelly inherited staff and processes from the previous supplier — yet was able to sustain performance for 12 months. The Kelly team was responsible for the site's operations managers, shift supervisors, warehouse workers, and administrative personnel.

Kelly provided 100% of the talent needed to account for any program attrition, and the processes needed to comply with the client's strict performance measurements. Metrics were focused on financial indicators and cost savings, with ongoing targets for sales, cost of services, gross profit, expenses, contribution, and percentage contribution. The team identified and implemented a number of process changes through value engineering activities to help achieve the client's goals, featuring:

• Material flow: designated a full-time packer to improve material flow.

• Safety: relocated the packing area to improve material flow and safety conditions.

• Process compliance: implemented employee performance audits versus standard operating procedures to ensure compliance.

• Inventory accuracy: deployed empty location audits to improve floor denials and identify offenders.

The most recent BPO program was implemented in the client's then worst-performing distribution center. Under Kelly management, it was quickly transformed into the client's best-performing PDC location. The team deployed additional process changes through value engineering activities at the latest site, including:

• Efficiency: instituted fast flows to eliminate breakdown on the floor.

• Workload balance: adjusted the schedule of the inbound shift to run from 6:00 a.m. – 2:30 p.m., giving outbound shifts a labor pool to pull from as needed.

• Housekeeping: created new 5S assignments for all of the supervisors and employees in the building, communicated and reinforced with 5S posters throughout the facility.

• Process improvements: implemented a new process of placing color-coded magnets for each day of the week to track the age of inbound material.

• Performance compliance: reinforced performance expectations by reviewing a daily report with each employee.

• Pain share/gain share agreements: promoted SLA attainment and drove productivity.

Result: award-winning turnaround delivering $784,000 in combined annual savings.

Kelly continuously works on a cross-training program to increase flexibility and knowledge among the group. The team hosts a weekly meeting with managers to share best practices among sites and works closely with client management on new strategies that better align with their business plan.

After just two months, the Kelly team helped to bring the new site's performance ranking from last of the four facilities, up to first place among the major PDC locations. This turnaround included $525,000 in annual savings from improved workforce efficiency and reduced overtime, along with $259,000 in annual savings from reduced forklift driver costs. All three outsourced programs have consistently met and exceeded the client's key performance requirements, as indicated below:

Sample YTD performance metrics:

The team's quick transformation of performance from worst to first in its latest deployment, along with continued success at the other two locations, resulted in a significant distinction for the BPO program: the client recognized Kelly with a Cost Leadership Award at its second national Logistics Conference. Since cost saving was a major goal of the program, it was a great honor for Kelly to be among the 15 suppliers recognized out of the 100 suppliers in attendance.

Kelly is a proven leader in business process outsourcing (BPO) solutions. From talent acquisition and retention to project management and quality control, Kelly does it all—so you can focus on what matters most.