Dealer Inventory Management: What, Why and How

COPYRIGHT © SYNCRON

Dealer Inventory Management:

What, Why and How

Erik Lindholm – Presales director


Syncron is the global leader in aftermarket service

optimization

• Dealer 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:

• 15 years experience of

inventory management

• Product manager for

inventory management

application

• Program manager for

several dealer inventory

management projects

Erik LindholmPresales Director


Introduction to dealer inventory management

What is Dealer Inventory

Management?

How to implement?

Why should you implement?

Implemented correctly, dealer inventory management can

help you:

• Increase end customer service levels

• Grow sales

• Reduce capital tied up in stock

COPYRIGHT © SYNCRON INTERNATIONAL AB 2014

Common approach: Dealers Retain Control Of

Inventory

• Dealer owns and has full control of

inventory and ordering

• OEMs suggest replenishment

recommendations to dealers

• Incentives for dealers to join program

– Buy back guarantee

– No emergency charges

• Compliance requirements on dealers

– Dealer places X% of orders

suggested by the system

• OEM requires audit and follow up on

dealer performance

What?

OEM Distribution Center

Dealer 1 Dealer 2 Dealer 3

Figure 2: Dealer drives forecasts and recommends new order levels

Forecasts & Order Recommendations


Availability of parts at the dealer drives future

purchase of OEM equipment

Central Warehouse250,000 part numbers

98% Availability

Regional Warehouse30,000 to 100,000

part numbers95% Availability

Dealer Location3,000 to 5,000 part

numbers55% Availability

60%+ Rush orders

Why?


Dealers and local subsidiaries indicate that there is

tremendous opportunity for improvement

Off the Shelf Availability

Stock Turns Stock Obsolescence

Stock / Emergency Order Ratio

Worst Depots 40% < 1 40–50% 10/90

Smaller Dealers 50–60% 1–2 30-40% 30/70

Best Dealers/Subsidiaries

85% 2–6 25% 70/30

Why?


OEM has a lot of vital information directly relevant to Inventory Management

close to the Customer:

• Recommended stock lists

• Initial/critical stock lists

• Master data (supersessions etc)

• Experience from other markets

• Stock visibility

Dealer will benefit from OEM information

OEMSubsidiary

Dealer

There is often no or a very fragmented approach to ensuring that these dimensions are considered in the inventory management process close to the end customer

Why?


Dealer/Distributor has a lot of vital information directly relevant to Inventory

Management at DC/RDC level:

• Visibility of true customer demand.

• Local sales and marketing campaigns

• Visibility of local stocks.

• Local competitive landscape.

OEM will benefit from dealer information

OEMSubsidiary

Dealer

Often such intelligence is not used in the inventory management processes at the DC/RDS’s.

Why?


Key benefits are reduced stock, increased sales,

higher margins and lower lossesWhy?

Release cash by reduced stock levels• Dealers can provide similar or better levels of off-the-shelf availability with

large reductions in stock• Varies by Dealers, but reductions of 25% or more

Increase sales through better availability• Industry analysis suggests that a 2% increase in off the shelf availability

can lead to a 1% growth in sales

Improve profits by reducing freight costs• Landed cost factors for airfreight can be up to 40%, while sea freight can

be as low as 10-15% • Allow the dealers to increase their competitiveness or to increase margins

Reduce losses from dead stock write-off• OEM takes back parts ordered by the Dealers when not sold in 12 months• Returned with no penalty or handling charge • Stock replenishment rules are agreed between the Dealers and OEM


Accessible Adaptable Reliable

Most OEMs will need a solution that met the requirements of an extensive

globally dispersed independent dealer network. The solution needs to be:

1. Secure and easy to access.

2. Have a low cost of ownership.

3. Support multiple languages.

How?Select a solution that is Accessible, Adaptable and

Reliable


SaaS services allows OEMs to implement quickly

and access from anywhere at a low cost

• Easy to adopt: simple web interface

• Faster ROI: Rapid deployment and configuration

• Eliminates maintenance: Syncron maintains the software and servers on your behalf

• Reduces upgrade costs: Functionality is identified and implemented for all of Syncron’s customer by product experts

– Single point of responsibility for delivery of servicemeans economies of scale

• Lower total cost of ownership: Avoids internal IT costs including system training and support; hardware expense of infrastructure and backups

– Subscription license model. Only pay for what you use!

– Service and infrastructure are scalable

How?


Syncron provides seamless support for multiple

languages

• Syncron has team members that speak all major languages to provide support for implementation and training.

• Currently support is available for the following languages:

– English

– French

– Spanish

– Portuguese

– German

– Japanese

– Russian

• Additional languages can be added as required.

How?


Select a solution that is Accessible, Adaptable and

Reliable


An OEM supply chain and a global dealer network is often complex. The

solution will need to accommodate unique inventory practices, implement

with limited IT resources, on disparate systems and with personnel of

varying ability. OEM’s need a solution that:

1. Supports multiple inventory models concurrently.

2. Is proven in a dealer environment.

3. Is easy to implement, integrate and use.

How?


Product modules supporting requirements

• Mange different strategies and targets for

different segments/parts

• Initial / Critical Stocking

• Advanced What If simulations

• Buy back / Refill History follow up

Inventory optimization Global planningAccurate forecasts

• Automatic forecast algorithm application

based on demand type

• Seasonality Management

• Supersession Management

• Alert Management

• Coordinated Multi Echelon

• Virtual Warehousing

• Redistribution / Balancing

• Supply chain visibility

• Designed to support centralized planning

Performance Monitoring

• KPI

• Reports

• Analytics

How?


Specific dealer inventory management functionality

• Allows for different level of dealer influence

regarding depth and breadth decisions.

• Configurable buy back functionality

• Refill order tracking allowing

– Follow up of acceptance KPIs

– Connected buy back

• Part compliance management and tracking

• Designed to be easy to operate with minimum

training requirements

• Designed to automate daily tasks

• Possible to manage non OEM items

How?


Modern architecture supports your business

requirements

• Standard solution supports

repeatable set-up process and

best practises

• Highly configurable, quick

implementations

• Concurrent parallel

processing

• Business Process Platform

connects

to any business system

Figure 6: Syncron’s software is built on a robust business process platform and delivers extensive analytics

How?

COPYRIGHT © SYNCRON 2015

Designed to operate in an dealer environment

• Ability to process

millions of SKUs on a

daily basis

• Configurable as for the

data requirements on

the DMS

• Inbuilt monitoring and

alerts of scheduled

files

• Data content

validation

How?



OEM’s need a partnership with a provider that has the infrastructure,

personnel and right attitude to support their operations around the world.

OEM’s need:

1. A partner that can provide extensive support, not just

a software solution.

2. Full solution auditability and traceability.

3. High solution availability.

How?Select a solution at is Accessible, Adaptable and

Reliable


Syncron offers comprehensive project

and post-project services

• Consultancy services: Support

with the project, the impact and

the business change

• Customer Support Team:

operating in all time zones

• Analyst Services: Actively

coaching the users to maximize

benefits

• Training Support: Giving your

team the information they need

to leverage the solution and

promoting best practice

How?


Full support for system auditing

• Standard KPIs allow for global comparison

of dealers independent of DMS System

– Service level

– Stock turn

– Stock value

– Sales value

• A number of standard reports for follow-up

• Integrated BI tool allows for creation and

configuration of specific reports using

Syncron calculated data in combination

with OEM-data.

How?


Syncron Data Center: High availability, redundancy,

scalability, security

• High security classed data center facilities that

fulfills SAS 70 type II requirements

• Redundant infrastructure, automatic fail-over

database platform and application platform & Network

• Scalable environments

• High security protection and data isolation

• 24/7/365 Managed hosting – ISO 20000(ITIL v3)

Certified provider.

• Backups stored at an additional high security location

How?


Coordinated supply chain, improves service level because

planning is improved across the extended supply chain

Stocking Policy & Target Service Level

EN

D C

US

TO

MER

S



Central Warehouse 1

Central Warehouse 2

Regional Warehouse 2



Dealers

Dealers

Dealers

How?


Dealer Inventory Management:

What, Why and How

Erik Lindholm – Presales director

Dealer Inventory Management: What, Why and How

Software

Transcript of Dealer Inventory Management: What, Why and How