Dealers in North America are calling for a better understanding of the upstream delivery process from OEMs and logistics providers as they seek greater visibility on what they can expect and when in terms of vehicles and service parts.
“I would ask the OEMs to come up with a one-pager that diagrams how the vehicle gets from the plant to the dealer and show some timings on it,” said Albert Gallegos, director of International Affairs at the National Automobile Dealer Association (NADA) (pictured). “Pass that out to the dealer when they put an order in and provide them with information on which to base their expectations,” he told delegates at last week’s Automotive Logistics Global conference in Dearborn, Michigan.
Gallegos said that in an ideal world deliveries would be timely, including for service parts which are a big part of dealer revenue, equal to $42.6m a year. He called for a better two-way relationship between dealers and LSPs with feedback on expectations going in two directions. He added that shipments should be traceable and that dealership personnel should be educated about the logistics processes, not least to be able to provide better forecasts and cogent explanations to a more discerning customer.
Customer expectations are now being affected by a number of factors, most pressingly the unstable economic climate, and making sure they are satisfied is crucial to an industry with its own pressures to bear.
Mike Nelson, national manager for Highway Logistics at Toyota Logistics Services, said that there were economic issues beyond the automotive industry that were affecting the way consumers bought cars. The average age of the US car parc is now around 10 years–an historic high–and there has been a shift from purchase based on need rather than want. This change has had an obvious impact on how they used the dealer.
Purchasing a vehicle that can be between $30,000 and $50,000 in the current economic climate is now something done by a more discerning but less frequent consumer added Steve Rand, CEO of North American vehicle processor Amports. “That raises the bar for all of us,” he said “It makes the OEMs produce better quality vehicles…but as we try to get a bigger piece of a smaller pie, the bar gets raised and expectations get higher for everybody.”
From a dealer perspective delays to a consumer feeds into overall satisfaction and this is influenced by shift in the industry from push to pull manufacturing. Lean inventories now mean that every car delivered to the dealer is important. This has implications for the whole industry.
“When we were dealing with a push model you could convince a customer to take what was on the lot because there was plenty of it,” said Gallegos. “That is the dilemma right now, there isn’t that much up in the lot. So accuracy is really critical.”
This was backed up by representatives from both GM and Lexus who placed accuracy ahead of speed in the current climate. Both were important, admitted GM’s Vicki Streukens, director of vehicle logistics, but she said that “right now the topliner is definitely accuracy”.
“I couldn’t agree more,” said Hugh Dyer, vehicle supply manager at Lexus. “It is definitely accuracy at the top. Our customer satisfaction issues revolve more around it.”
But while inventories had become leaner, there was little to suggest that consumers in the US were shifting from their traditional buying patterns of buying cars from stock to buying cars on a European-style built-to-order basis, with waiting times of several months. Christine Krathwohl, executive director for global logistics at General Motors, also pointed out that, although this shift had been expected in recent years, even more consumers were buying out of stock, which continues to put pressure on delivery expectations and lead time requirements.
Dyer said that Lexus did try to provide its dealers with production schedules and quantities so that they were fully aware of the situation but admitted that it had yet to filter down to the customer.
Streukens added that there were a number of factors influencing the accuracy of information in the supply chain including weather-related or shutdown-related issues, as well as quality assurance. “We all look at our vehicles before we release them so there is some added time there,” she added.