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How to improve customer uptime with Parts Retail Inventory Management

Page 2 COPYRIGHT © SYNCRON 2014

Syncron is the global leader in aftermarket service optimization

• Dealer Management and

Aftermarket Specialist

– Inventory management

– Price Management

– Analytics

• Customers are multinational

companies

– Active users in more than 100

countries

– R&D intensive, investing >20% of

revenue

Meet the Presenter:

• MD Syncron Inc.

• Dealer Inventory

Management Specialist

• 15 years experience of

driving global supply

chain transformation

initiatives

Tomas Wennerstein Managing Director, North America


Table of contents

• Parts Retail Inventory Management, what is it?

• Why there is often a high ROI potential

• Daimler Trucks Case Study

• Some practical examples of RIM planning


The availability challenge

Central Warehouse250,000 part numbers

98% Availability

Regional Warehouse30,000 to 100,000

part numbers95% Availability

Local Service Location3,000 to 5,000 part

numbers55% Availability

60%+ Rush orders

“customers are up to 50% less likely to consider the manufacturer in a future purchase if they have a poor repair

experience”


Drivers for Retail Inventory Management programs

Retail Inventory Management aim is to:

• Increased availability and especially for Critical items

• Increase part sales

• Ensure dealer loyalty

• Financially stable dealers

• Reduce stock obsolescence in the network

• Reduce warehousing costs at central depots

• Reduce distribution costs by reducing air freight costs

• Have clear management information across the network

• Reduce manual effort by dealers for managing inventories


RIM the solution

DC Level

Suppliers

Regional Level

Branded Distributors/Dealers

Multi Brand Dealers

Sales Companies/Consignment (Service vans)

Region A Region B Region C Region D

End Customer

Scope


RIM the solution

OEM

Dealer DMS

RIMSolution

Order Confirmation

Confirmed sales order - OEM

Confirmed purchase order - DMS

Parts masterdata

Part /stock infoSales info

Access via browser

Access via browser

• Dealers and OEM send necessary information to the solution an agreed interval

• Via web browser, the Dealers and the OEM access the functionality and the data that that involves their respective relevant Use Cases


Table of contents






Key Reasons for high ROI

Inventory Management skills are negatively correlated with distance from OEM/DC and the number of tiers away in the Supply Chain

System support is often lacking at the dealer/subsidiary level

1. OEM has a lot of vital information directly relevant to Inventory Management close to the Customer

2. Dealer/Distributor has a lot of vital information directly relevant to Inventory Management at DC/RDC level



OEM has a lot of vital information directly relevant to Inventory Management close to the Customer:

• Recommended stock lists

• Critical stock lists

• Supersession information

• Experience from other markets (If existing)

• Stock and excess stock Visibility Etc..

There is often no or a fragmented approaches to ensuring that these dimensions are considered in the inventory management closest to the customer

OEMDealer



OEMSubsidiary

Dealer

Dealer/Distributor has a lot of vital information directly relevant to Inventory Management at DC/RDC level

• For certain product groups and slow moving items, the aggregated dealer forecast differs on average more than a factor 2 in a given month.

– Not picking up sales on new items

– Not understanding in time what items that are not being consumed and will be returned

• Above is no news. Despite that, most OEM are managing their DC/RDC forecasts based on purely Demand from Dealer/Distributor to DC.

Even with the most simplistic methods, large savings can be harvested by incorporating this information


Table of contents






DTNA RIM project - Scope

• 2013 – Large Pilot with selected dealers

• 2014/2015 – Roll out Syncron RIM to all 600 dealers in USA and Canada

• Ongoing – Syncron delivering analyst services to support the dealer community in achieving the DTNA objectives

Phase 2013 2014 2015

Pilot

All 600 dealers

Analyst services


DTNA RIM project – Effects from pilot project

• In general very positive reaction from pilot dealers

• Very good acceptance of forecast and replenishment orders from dealers

• Fill rate increased up to 30%

• Inventory reduction up to 15% - after 3 month’s use of the system

• Significantly reduced time to review the daily orders

• Redistribution very appreciated

• Many dealers have decided to let Syncron plan also non-DTNA parts

• Dealers are queuing up to join the program


Table of contents



• Case study



The obvious improvments

• Better and dynamic forecasting

• Better Inventory Management including

– Support a segmented IM strategy

– Better and dynamic Inventory Parameter calculations

– Mange the local Demand and non-demand driven challenge

• Reduced administration related to Inventory Management


DTNA RIM project – Key functionalities

• Replenishment policy approval

– Review changes to parts instead of orders

• National demand affecting local stocking policy

– High national demand parts stocked sooner at dealers

• Mission critical parts

– Mission critical parts inventory management incorporated in program

• Redistribution

– Automatic redistribution of excess stock within a dealer family

• Non OEM parts

– Support for managing non DTNA parts at the convenience of the dealers

• Automatic returns of excess and obsolete stock


Key work streams in a RIM initiative

• Anchoring of concept on high Management level and in the different Regions will be success factor for global coverage

• Understand what business requirements that are vital for your business and what can be achieved by a RIM initiative

• Establish Terms and Conditions. Make sure to remove operational responsibility from the dealers/subsidaries

• Pilot

• Establish templates before starting the rollouts

• Group rollouts based on Regions and DMS/ERP systems

• Interfaces to ERP/DMS should preferably be established prior to the start

• Ensure that Rollout projects can be run in parallel.

• Selecting the right software (RIM is different)


Q & A


• Stocking policy for a default spare part

• Stocking policy for a “National demand” Spare part

Above is an example of a possible segmentation of Dealer Inventory Management strategy

National demand affecting local stocking policy



Multi Site Dealers - Redistribution/Balancing

• One redistribution order of 5 will be created, supplied from the Prio 1 warehouse.

• One redistribution order of 2 will be created, supplied from the Prio 2 warehouse.

• The pending order of 8 will remain but the OQ will be set to 0.

• Redistribution/ Inventory Balancing functionality can be run as mandatory or as recommendations. The later has been necessary for certain dealers in RIM projects from a Change Management perspective.

Redistribution region

OEM

Excess = 4

OQ = 8UOQ = 7

Excess = 5 Excess = 6

Prio 1

Prio 3

Prio 25 2

Example:


Replenishment policy approval – New module

Approve changes to the policy – Let the system order automatically