Here’s some food for thought and training tidbits for members of your Parts Department. I’ve had the thought of keeping “current” on my mind lately, and so wanted to share this with you.
You have the responsibility to maintain your skills and knowledge. How are you doing in that regard? Don’t miss the opportunity to attend one of our Parts Management seminars in a few weeks in Dallas.
For as long as I can remember, the No. 1 requirement for customers from an equipment dealership’s parts department is parts availability. I want to review what we do in parts inventory management, expediting and delivery systems to live up to this availability challenge.
Inventory Control Systems and Processes. The business system suppliers (DMS) and vendors have not been sitting still. The use of statistical probabilities and the demand pattern matching with various statistics models has helped dramatically. The statistical approaches vary by vendor; MMI from Volvo, Poisson from Caterpillar, John Deere with their Critical Codes, and Komatsu’s shared approach with their dealers. Yet they all are aiming at the same target: higher availability for customers via the supply chain. The main software providers have been making adjustments as well. From lead times by part numbers to abnormal demand recognition and much stronger interfaces between vendors and distributors and worldwide search patterns on shortages, systems are much more responsive to the needs of customers and dealers.
Replenishment Cycles. Over my career, the replenishment cycles (lead times) have been reduced dramatically. It starts with the order frequency being increased. Most of the major vendors today offer daily stock orders. From a biweekly or weekly stock order to daily is a very significant improvement. With the increased order frequency the order size is reduced, allowing the vendors to turn around stock orders much more quickly. Transportation logistics have also improved. Today “best practice” vendors have replenishment cycles consistently approaching two to three days. That consistency leads to differing inventory levels and much better serviceability. That is truly something to brag about in the marketplace.
Delivery Systems. From customers walking into dealer/distributor stores to using the telephone, to the Internet and parts kiosks, delivery systems have become much more user friendly. Electronic catalogs allow customers and technicians to determine their own parts requirements, and use of the “shopping cart” online order style for customer convenience and responsiveness has become much more common.
Operating Standards. The goals are more evident, clear and visible. Put away every stock order the same day it is received. Find every part that the dealer is short the day of the order, and communicate with the customer as to where the part is available before the end of the day. Ship every order the same day it is ordered. Simple goals that make a difference to the customers. Isn’t that what we are here to do?
So with all of these improvements, why shift the emphasis? I am not sure we can do much better in the support systems, but I want to move the solution closer to the customers. In the words of Jack Welsh, “When the world around you is changing at a faster pace than you are, the end is near.” Let’s look at the world around us.
Amazon offers a “club” for frequent buyers called Prime. This comes with perks for the customers – access to a lending library, access to streaming videos, elimination of freight charges, to name a few. American Express has their “member rewards” and catalog and Internet retail sales, plus entertainment venues for select card members. Visa and Master Card offer their programs, too. Everyone is trying hard to differentiate themselves in the retail world from their competitors.
I believe that the differentiation that used to exist with parts availability has been eliminated. Almost every major vendor in the capital goods industries provides similar levels of availability. The large differences have completely disappeared. Availability is good from everyone. So, we need to find enhanced serviceability standards and methods.
Perhaps convenience will become more of an issue. We could have supply items “stores” more conveniently located to the customer jobsites. We could bring our parts to jobsites with vans and “Sprinter” type vehicles, rather than waiting for our customers to order from us. We should help customers with their purchasing. We could deliver parts to the customer – what a concept.
With the Opportunity Model in the PSOH, we should know what the customer will need, discuss this with the customer, and make buying easier for them – not just easier for those of us in the distribution channel.
The time is now.
