What are the biggest challenges related to ensuring good end customer service while maximizing profit at your auto dealers?

For an original equipment manufacturer (OEM), automotive dealers are the window to the end customer.  But sometimes a lack of information prevents a clear view of the market and inhibits success.  This can be devastating when increased competition and economic turmoil threaten a company’s bottom line.

One way to get a better look at customer activity is to centralize and support dealer inventory management.

Auto dealers have a lot to think about and, therefore, often overlook the importance of managing monitor activity across the entire network and provide dealers the expertise, clear structure and smarter method they need to improve performance.  They don’t always realize it can lead to improved customer service and increased profits for everyone in the supply chain.

Here are a few of the biggest challenges automotive OEMs face and how centralized dealer inventory management can help:

Challenge #1:  Defining KPIs

With a centralized approach, OEMs are directly connected to frontline dealers. Details pass seamlessly between the two without delay and allow everyone to speak the same language because data is being collected in a uniform manner throughout the entire dealer network and independent of dealer management systems.  This makes it easier to benchmark success and define key performance indicators – a vital first step in process improvement.

Challenge #2:  Differentiating Strategy

A meaningful inventory strategy not only takes into account location, competitive environment and customer base, but also important product groups that need to be specifically addressed and managed differently in order to get the most out of every dollar invested in dealer inventory.  For example, data from a centralized dealer inventory management system can be used to develop procedures to ensure critical parts are automatically stocked with better availability.  And, it can also provide support for adding more shelf space for high-margin parts that are routinely needed so dealers don’t miss profitable sales opportunities.

Challenge #3:  Planning Upstream

Collecting point-of-sale data in one place makes it easier to react quickly to changes in demand.  Instant feedback from the entire network helps OEMs identify parts that are increasing in need or stop selling before the parts distribution centers or individual dealers recognize the trend.  This vital intelligence can be used to tweak strategy, plan upstream in the supply chain, and modify dealer orders to avoid excess stock and make sure that parts with a positive sales trend are always available.

Challenge #4:  Decreasing Handling/Transportation Costs

Constant rush orders from dealers unnecessarily  increase handling and transportation costs throughout the supply chain.  A smarter approach to inventory management helps decrease the number of costly back orders, which in turn positively affects the costs associated with picking, packing and transportation.  Dealers will also have less capital tied up in obsolete inventory if they are stocking correctly, which means fewer pricey returns to the parts distribution center.

Challenge #5:  Continuous Improvement

Centralized dealer inventory management systems give OEMs the ability to tap into a goldmine of data that can be used to identify trends (and the reasons for them) and improve the dealer experience.  For instance, when good diagnostic information is entered into the system during a service booking, the existing service history information can be mined and analyzed to find correlations between service activities and the parts needed to complete each type of repair.  Those parts can then be ordered and on hand before the vehicle enters the workshop.

OEMs face challenges like these every day.  But those who are able to collect and leverage inventory data are able to overcome them with ease.  Forecasting becomes more accurate.  Overall productivity and profitability increases.  And customers experience faster and more reliable service, which ultimately leads to increased  satisfaction and repeat business.