how to improve uptime with parts inventory management
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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
Page 3 COPYRIGHT © SYNCRON 2014
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
Page 4 COPYRIGHT © SYNCRON 2014
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”
Page 5 COPYRIGHT © SYNCRON 2014
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
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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
Page 7 COPYRIGHT © SYNCRON 2014
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
Page 8 COPYRIGHT © SYNCRON 2014
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
Page 9 COPYRIGHT © SYNCRON 2014
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
Page 10 COPYRIGHT © SYNCRON 2014
Key Reasons for high ROI
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
Page 11 COPYRIGHT © SYNCRON 2014
Key Reasons for high ROI
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
Page 12 COPYRIGHT © SYNCRON 2014
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
Page 13 COPYRIGHT © SYNCRON 2014
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
Page 14 COPYRIGHT © SYNCRON 2014
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
Page 15 COPYRIGHT © SYNCRON 2014
Table of contents
• Parts Retail Inventory Management, what is it?
• Why there is often a high ROI potential
• Case study
• Some practical examples of RIM planning
Page 16 COPYRIGHT © SYNCRON 2014
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
Page 17 COPYRIGHT © SYNCRON 2014
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
Page 18 COPYRIGHT © SYNCRON 2014
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)
Page 19 COPYRIGHT © SYNCRON 2014
Q & A
Page 20 COPYRIGHT © SYNCRON 2014
• 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
Page 21 COPYRIGHT © SYNCRON 2014
Page 22 COPYRIGHT © SYNCRON 2014
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:
Page 23 COPYRIGHT © SYNCRON 2014
Replenishment policy approval – New module
Approve changes to the policy – Let the system order automatically
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