retail inventory management webinar - september 2014

COPYRIGHT © SYNCRON INTERNATIONAL AB 2013

Dealer Inventory Management

Key Factor in Aftermarket Success

16th September 2014

Tony Abouzolof – Syncron co-founder


Agenda/Topics

• A Key Strategic Initiative for every OEM

• Benefits for OEM and Dealers

• RIM Overview and the flavours of RIM

• RIM Case Studies

• Challenges with Implementing RIM Strategy

• Questions


The Challenge for OEMs

• Aftermarket sales profitability is increasingly

under pressure from a number of medium

and long term factors:

– Increasing reliability of vehicles and

equipment

– Increasing competition from independent

operators

– Reduced service volumes directly related

to reduced vehicle use or equipment

sales during the recent recession

– Increased complexity, cost and range of

parts

– How to extend dealer/customer

relationship beyond warranty period.


Erosion of Availability

Central Warehouse250,000 part numbers

98% Availability

Regional Warehouse30,000 to 100,000

part numbers95% Availability

Dealer Location3,000 to 5,000 part

numbers65% Availability

30%+ VOR


Dealer Networks

Single Dealer NetworkDealer receives parts direct from Parts Distribution Centre

Multi Site Network 1Dealer receives parts into own parts warehouse and distributes to dealer locations via ICTs.

Hub & Spoke Dealer Network 1Dealer receives parts into own parts warehouse and optionally directly to dealer locations.


Dealer Research – Key Findings

• Off the shelf availability

– Worst depots at 40% OTC

– Smaller dealers at 50-60%

– Best dealers at 85% (at depot level)

• Stock turn

– Dealers closer to OEM’s Central Warehouse between 2 – 6 turns.

– Many dealers at 1-2 (some < 1).

• Stock Profile

– At least 25% dealer parts stock is obsolete (no sales in 12 months).

– In many cases 40-50% of dealer parts stock is obsolete.


Agenda/Topics






• Questions


Why OEM’s Consider RIM as a Strategic Initiative

• Enhanced customer experience, through improved availability of parts

– Improved availability will increase sales as well as happier customers

• Reduced operational cost for OEM and Dealers

– Lower freight cost

– Reduced warehouse cost

– Improved process efficiency (process automation)

• Reduced capital cost at Dealer

– Lower stock levels

• Brand enhancement

– The supply chain becomes greener, i.e. the aftermarket business will produce less carbon emissions, something that over time will grow into a more important selection criteria by customers

• Performance in the aftermarket business is directly correlated to performance in the finished goods business, although with some time delay


Dealer (VMI) RIM Opportunities

• Right Part Available Right Time

• Improved Supply Chain Visibility

• Level Volume

• Reduced intervention

• Reduce Returns

• Reduce Fulfilment costs

• Dealership Profitability

• Increase part sales

• More efficient management of inventory

• Better space utilisation

• Few lost sales and emergency purchases

• Improved service productivity and parts department efficiency

• Inventory obsolescence protection

• Supply Chain Flexibility

DealerManaged

Dealer VMI

OTC Availability

77% 94%

EmergencyPurchases

25% 15%

Returns 6.2% 3%

Parts Sales 7% 16%

Inventory Management in Dealer Oriented Industries Aberdeen Group


Case Study Automotive Company Pilot

PoC Results : Profile Stock

£-

£10,000

£20,000

£30,000

£40,000

£50,000

£60,000

£70,000

£80,000

£90,000

£100,000

Profile Healthy Profile Excess Profile Obsolete

PoC Logistics Efficiency: Order line Reduction

0%

20%

40%

60%

80%

100%

120%

83ki National All Parts 83ki APR Dlr All Parts 83ki APR Profile Parts

82ki

Order line

Level

+ 13%

- 17%

- 50%

PoC : Profile Parts Availability

40

50

60

70

80

90

100

Wk

48

Wk Wk Wk

17

Wk

21

Wk

25

Wk

29

Wk

33

Wk

37

Wk

41

Wk

45

Syncron Forecasted Availability Customer Actual Availability Check Target

OTC availability increased from 68% to +90% in 14 weeks

TOTAL - Parts Sales : APR vs National Trend

0

5,000

10,000

15,000

20,000

25,000

30,000

Profile Parts Competitive Parts

No

. o

f p

ieces

Last Year This Year

Actual + 14%(National Trend + 7%)

Actual + 13%(National Trend + 8%)

139

+30% reduction in average dealer inventory

50% reduction in logistics cost for profile parts

Pre APR: 59% availability


Agenda/Topics






• Questions


Process and Data Flow

OEM Systems

Dealer DMS

Syncron RIM

Parts Profiling Forecasting

Inventory Optimisation Automatic Replenishment

Recommendation

Collaborative Review of Parameters/ Orders

Creation of orders OEM Systems

Confirmation and Status to DMS/

Suggested Order File

Parts masterdata

Part infoSales infoStock info


Inventory Simulation


Pending (Recommended) Orders


Dealer Acceptance Tracking


Inventory Visibility (Parts Locator)


System Dashboard


Inventory Redistribution

Rec qty Part A: 10 pcs

Central Warehouse

DistributorWarehouse

Direct DistributionLead time 3

Lead time 1Lead time 2

Excess stock on Part A

Redistribute Part A:10 pcs

DistributorWarehouse


Buy Back

• Commercial agreement with dealers

• Excess Buy Back

– Scrap or Buy Back

• Refill Buy Back

• System Reports


Key Performance Indicators and Reports

Great variety of KPI’s:

o OTC (Stock Availability)

o Stock Value

o Sales Value

o Stock Turnover

o Stock Capital tied up in days

o Customer Back Orders

o Service Index

Reports

o Risk of run-out

o Buy back and scrap

o Redistribution

o Supply chain visibility


Flavours of RIM

RIM Flavour Notes

Full RIM Requires full DMS integration, Dealer access to RIM GUI, Full RIM functionality (KPIs, Buy-Back, Re-distribution, Alerts, etc.), Low Scalability potential,

BASIC RIM Requires full DMS integration, Dealer access to RIM GUI,Management only of Dealer central stocks, Low to medium Scalability potential

SLIM RIM Limited Integration to DMS, no Dealer Access to RIM GUI, order suggestion sent by file to dealer, Medium/high scalability potential

Profile RIM Limited Integration to DMS, no dealer access to RIM GUI, calculation of MIN/MAX Levels, High Scalability Potential,

No RIM No integration to DMS is required, no dealer access to RIM GUI, OEM provides a list of Profile Parts to be stocked, Very High Scalability Potential


Agenda/Topics

• Defining RIM






• Questions


Construction Equipment

Volvo CE Customer Support

Aftermarket /Spare Parts


Independent Benchmark (2000)

Regional Warehouse

Central Warehouse

Dealer

Day 3

99,9%Day 3

99,7%

Day 2

99%Day 2

94%

Same day (OTC)

90%Same day (OTC)

60%

Spare part availability before Retail Inventory Management

Regional Warehouse

Central Warehouse

Dealer

Dealer BranchDealer Branch

http://sverige.cat.com/



Dealers running Syncron RIM September 2012

Central WarehouseDealership location

Volvo CE has systematically implemented a

conform RIM process and solution across the globe with more

than 90% of business volume connected


Independent Benchmark (2000)

Regional Warehouse

Central Warehouse

Dealer

Day 3

99,9%Day 3

99,7%

Day 2

99%Day 2

94%

Same day (OTC)

90%Same day (OTC)

91-93%

Spare part availability after Retail Inventory Management

Regional Warehouse

Central Warehouse

Dealer

Dealer BranchDealer Branch




Volvo CE is rated No 1 in customer service

“I dare to say that we havethe best automatic stock refill system on the market”

“We are rated either No 1 or No 2 everywhere in the world, in customer satisfaction, spare part availability, product catalogues, or uptime support”

“Volvo CE is the construction equipmentcompany with the highest ratings from North American dealers – for the third consecutive year”

Gösta Reinl, Volvo CE News No 3/2008


Agenda/Topics

• Defining RIM






• Questions


RIM Project Challenges

Integration to DMS Systems and Data Accuracy

Ownership of Stocks

RIM Solution Scalability

RIM Rollout Challenge

Initial Stock Cleansing

Dealer Incentive Schemes

Selecting the right pilot dealers

Stock Buy-Back Process

Project Funding


Vendor Managed Inventory


12th February 2013



We are Trusted by Leading Global Companies

http://www.maplin.co.uk/?DOY=25m10

http://www.maplin.co.uk/?DOY=25m10

http://www.global-toyotaforklifts.com/index01.html

http://www.global-toyotaforklifts.com/index01.html


Syncron Solution Portfolio


Hosting at Syncron Data Center

Syncron Data Center

SaaS Applications

SaaS Platform

User verification, access management, fail-over application servers, clustrered database Redundant

firewalls

Global Inventory Management

Global Order Management

Global Price Management

MDM

Redundant Internet

connections

I

n

t

e

r

n

e

t

Web

Legacy

Connected Warehouses

Customer A

Customer A

Inventory Planners / Purchasers

http, https

FTP,sFTPMQ….

• Audit trail on authentication and authorization changes• Support for concurrent sessions, remember-me, etc• Support for pre-authentication mechanisms: Single

sign-on via CAS, OpenID, Siteminder, NTLM, etc.• And more…

http://www.lawson.com/wcw.nsf/pub/GlobalStartPage

http://www.lawson.com/wcw.nsf/pub/GlobalStartPage


Agenda/Topics

• Defining RIM






• Questions


Dealer Inventory Management


16th September 2014


Syncron Limited UKBirmingham, United Kingdom

[email protected]+44 778 577 8800www.syncron.com

Tony Abouzolof

mailto:[email protected]

retail inventory management webinar - september 2014

Software