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This Syncron webinar discusses best practices of Retail Inventory Management including: Introducing Retail Inventory Management to a global organization; Key benefits and challenges; How to integrate within different global regions (e.g. China, India); and Cost reduction through dealer collaboration.
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Page 1
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Dealer Inventory Management
Key Factor in Aftermarket Success
16th September 2014
Tony Abouzolof – Syncron co-founder
Page 2
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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
Page 3
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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.
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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.
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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– At least 25% dealer parts stock is obsolete (no sales in 12 months).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.
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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
Page 8
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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
Page 12
COPYRIGHT © SYNCRON INTERNATIONAL AB 2012
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
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2012
Inventory Simulation
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2012
Pending (Recommended) Orders
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2012
Dealer Acceptance Tracking
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2012
Inventory Visibility (Parts Locator)
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2012
System Dashboard
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2012
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
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2012
Buy Back
• Commercial agreement with dealers
• Excess Buy Back
– Scrap or Buy Back
• Refill Buy Back
• System Reports
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2012
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
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Agenda/Topics
• Defining RIM
• 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
Page 23
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Construction Equipment
Volvo CE Customer Support
Aftermarket /Spare Parts
Page 24
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Agenda/Topics
• Defining RIM
• 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
Page 29
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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
Page 30
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Vendor Managed Inventory
Key Factor in Aftermarket Success
12th February 2013
Tony Abouzolof – Syncron co-founder
Page 31
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
We are Trusted by Leading Global Companies
Page 32
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Syncron Solution Portfolio
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
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…
Page 34
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Agenda/Topics
• Defining RIM
• A Key Strategic Initiative for every OEM
• Benefits for OEM and Dealers
• RIM Overview and the flavours of RIM
• Challenges with Implementing RIM Strategy
• RIM Case Studies
• Questions
Page 35
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Dealer Inventory Management
Key Factor in Aftermarket Success
16th September 2014
Tony Abouzolof – Syncron co-founder
Syncron Limited UKBirmingham, United Kingdom
[email protected]+44 778 577 8800www.syncron.com
Tony Abouzolof