Automotive Logistics Europe 2014 Aamer Rehman - Aftersales & Service Parts: Serving the customer and...
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Copyright © 2014 Kinaxis Inc. All Rights Reserved. Aftersales & Service Parts Serving the customer and the supply chain Aamer Rehman – Vice President, Industry Strategy & Solutions
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Aamer Rehman: service parts supply chains are gaining importance and that a fundamental change is required in supply chain management. OEMs and suppliers need global visibility in order to align and synchronize multi-tiered supply chains for fast responses to demand and supply changes, and to make intelligent tradeoff decisions based on real insights. In Rehman’s opinion, the automotive sector needs significant improvement in some critical enterprise competencies: Improving visibility, alignment and synchronization across functions, and more importantly across the supply chain, and with a focus on customer service. This is critical given gradual reduction in vehicle inventory in the channel and working capital reduction pressure across all supply chain stakeholders. Supply risk management – where companies need to develop core capabilities to detect supply and capacity problems, assess the impact, come up with business tradeoffs and publish the change. Speed and accuracy of decision making is critical. In this case, automotive companies need to focus on capacity planning and capacity constraint management disciplines and processes in order to remove unnecessary latency and lack of visibility across the value chain. Collaboration across stakeholders – collaboration is not merely passing data between partners. It is about context and content specific collaboration to understand who is impacted by a change and mutually resolve it inside and outside the enterprise. Companies need to eliminate information latency between strategic, tactical and execution windows and eliminate the artificial boundaries. For example, a static monthly S&OP reporting cadence is not sufficient. Tying it to weekly and daily execution is critical. A seamless flow through planning time frames is possible only if companies diligently work towards removing the patchwork of applications and Excel. S&OP, capacity planning, constraint management and inventory management processes need to be revisited to establish discipline and alignment in decision making required for globally distributed supply chains.
Transcript of Automotive Logistics Europe 2014 Aamer Rehman - Aftersales & Service Parts: Serving the customer and...
Copyright © 2014 Kinaxis Inc. All Rights Reserved.
Aftersales & Service Parts Serving the customer and the supply chain
Aamer Rehman – Vice President, Industry Strategy & Solutions
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Copyright © 2014 Kinaxis Inc. All Rights Reserved.
Prelude - Aspirations of Supply Chain Practitioners
Ensure a response service parts supply chain to provide the
highest level of customer service with minimal inventory
investment through proactive insight to market demand,
inventory rightsizing, intelligent replenishment, and bi-
directional collaboration with partners
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Copyright © 2014 Kinaxis Inc. All Rights Reserved.
Service Parts Supply Chains are Gaining Importance *
Spare Parts’ Contribution to Revenue and Profit
Service Is More Profitable than Core Business
* Source: Cognizant 20-20 Insights – July 2012
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Copyright © 2014 Kinaxis Inc. All Rights Reserved.
CUSTOMERS
Customer
Facing DC
Customer
Facing DC
Regional
DC
Global Suppliers
OEMs
Engine / Transmission
Supply
No of Sites per Region 10 No of Unique Parts 100K
% of Global Parts 80%
% of Domestic Suppliers 20%
Service Parts Supply Chains - Complex & Distributed
Domestic Suppliers
Global Logistics Centers
Dealers
National
Retailers
Local
Retailers
Fast Movers
Medium Movers
All Parts
Slow Movers
Fast Medium Movers
Premium Freight, Expedites / Transfers & Misaligned Inventory
Organized as Hierarchical or Non-Hierarchical Network
Differentiated Needs
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Copyright © 2014 Kinaxis Inc. All Rights Reserved.
CUSTOMERS
Customer
Facing DC
Customer
Facing DC
Regional
DC
Global Suppliers
OEMs
Engine / Transmission
Supply
Domestic Suppliers
Global Logistics Centers
Dealers
National
Retailers
Local
Retailers
Fast Movers
Medium Movers
All Parts
Slow Movers
Fast Medium Movers
Organized as Hierarchical or Non-Hierarchical Network
Service Parts Supply Chains Lack End to End Alignment
Legacy Supply Chain Approach is Inadequate
Incomplete understanding of Supply Chain Interdependencies
Large amount of data spread across functional silos / applications
Slow response to changes due to long and disjointed planning cycles
“One Size Fits All” Supply Chain Orientation
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… Managed with Site Specific Execution Focused KPIs
Order fill rate: customer demands that are met from stock Stock out rate: customer demands not met due to stock outs Backorder Level: number of orders in queue waiting to be filled On time delivery: number of order fulfilled with agreed upon due date
“How do we get to processes capable of sustainable return on investment and Positive EVA in all business conditions?”
Focus
×𝑺𝑺𝑺𝑺𝑺
𝑪𝑺𝑪𝑪𝑪𝑺𝑺 𝑬𝑬𝑪𝑺𝑬𝑬𝑺𝑬 𝑷𝑷𝑬𝑷𝑪𝑪𝑺𝑺𝑺𝑺𝑺 𝑹𝑹𝑹 =
𝐄𝐄𝐄𝐄𝐄𝐄𝐄𝐄 𝐕𝐕𝐕𝐕𝐕 𝐀𝐀𝐀𝐕𝐀 𝐄𝐕𝐀 = 𝐏𝐏𝐄𝐏𝐄𝐏 𝐀𝐏𝐏𝐕𝐏 𝐓𝐕𝐓𝐕𝐓 − 𝐂𝐄𝐓𝐏 𝐄𝐏 𝐂𝐕𝐂𝐄𝐏𝐕𝐕 𝐄𝐄𝐂𝐕𝐄𝐄𝐕𝐀
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Trailing behind Core Business in Supply Chain Excellence
ROI
Margin
Sales Revenue
Cost
Capital Employed
Cash
AP/AR
Inventory
Fixed Asset
Collaborative SIOP Segmentation
Segmentation Demand-Supply Balancing
Cost to Serve and Segmentation
Cash-to-Cash Cycle Reduction
End to End Visibility Segmentation Collaborative SIOP
Replenishment Modes 3P, WH Leasing
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Copyright © 2014 Kinaxis Inc. All Rights Reserved.
• Segmentation of channels / customer and parts for improved cost to serve
• Inventory & replenishment policies to sync up with cost to serve
Differentiated Service Management
• Assess supply delivery risk and its impact on fulfillment capability at the customer orders level and collaborate with supplying partners
Supply Risk Evaluation & Collaboration
• Orchestration and continuous synchronization of demand, supply, financials and NPI at the regional and global levels
• Enable business / operational insights with trading partners
Sales, Inventory & Operations Planning
• Visibility to Inventory imbalances, transfers and orders • Single view of demand, supply, inventory and financials across the
service parts supply chain Visibility & Monitoring
• Replenishment plans based on projected inventory levels, consumptions and constraints
• Allocation of constrained supply based on business rules / demand priority
Intelligent Replenishment
Required Supply Chain Competencies for Service Parts
• Optimal positioning and stocking across the multi-echelon network • Segmentation along part, usage, margin and lead-time dimensions
Inventory & Supply Management
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Copyright © 2014 Kinaxis Inc. All Rights Reserved.
Concurrent Planning Across Functions Consequence Evaluation & Alerting
Plan + Monitor + Respond x x Responsibility-Based Collaboration Business Trade-Off Analysis / What-If
Why Kinaxis is Relevant for Service Parts Supply Chains?
Copyright © 2014 Kinaxis Inc. All Rights Reserved.
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