development which would be expected in a more traditional,
longer-established country. It is much more challenging
implementing systems in places like China, because what those
manufacturers need to do <rst is to address the implementation
of the main ERP systems.
Once that is done the vendor can start looking at VMI and
RIM and the more advanced solutions we offer,” said Abouzolof.
But it’s very challenging and they need to address the ERP, the
core systems that they need, before they start thinking about
collaboration systems or better managing inventory for dealers.
We have had many discussions with companies in China and
India, but the main challenge is that if they don’t have these core
systems they cannot implement more advanced solutions.”
The typical automotive parts warehouse is characterised by a
high volume of small orders with many items stored in bulk. The
additional complication of differing sizes and awkward shapes
impacts on the ease and speed of picking. I asked Abouzolof if the
current range of warehouse management tools is suf<cient to
optimise ef<ciency in this area.
I would say that, due to the characteristics of the automotive
sector, warehouse management tools have been developed in
order to deal with this issue. Usually very bulky items with very
awkward shapes are stored more centrally – they’re not stocked
close to the dealer or the customer. They tend to be larger
warehouses with the right equipment and the right structure to
deal with these items. If you need a part or product that is big or
requires special logistics or warehousing, usually the vehicle has
to be off the road for a few days to <x it or replace it. So it doesn’t
matter if you keep the parts far away from where they are actually
needed. There is plenty of time to ship parts from a central
warehouse in Europe to the dealer. Usually, the parts which you
need to stock close to the customer are those needed for a
normal service and those typically are smaller parts – easy to
stock and easy to manage.”
Modern vehicles are better-engineered and have potentially
longer useful lives. This means that OEMs and dealers need to
deal with slow-moving parts which may be service parts for legacy
models.
We have worked extensively with a number of OEMs on
slow-moving parts and most of them do not manage the life cycle
of the products when managing inventories,” said Abouzolof.
They look at each part individually and decide to stock it or not
according to its movement - but they never consider if the part is
for an old model or a new model.
What we have done with speci<c OEMs is to link the part to
the equipment or the model that it is supporting. If it is for a
legacy model produced 10 to 15 years ago, they want to manage
that part differently compared to a part which is for a current
model. If someone has a very old vehicle then he will have to wait
for a few days for the slow moving part. Compared to someone
who just bought a vehicle off the production line, he has a higher
expectation.
In certain less-advanced countries it is more dif<cult. There,
vehicles can be used quite differently from in Europe. If the part is
slow-moving for an old vehicle it is stocked in a central
warehouse somewhere not close to the customer and, if
necessary, it is shipped. The customer will understand that this
part is for an old vehicle, and that he will have to wait for a few
days.”
Abouzolof cited an excellent example of how intelligent IT
can assist with environmental awareness issues. “Syncron was
involved in a very large project for a company with a large
warehouse in the Middle East. They have suppliers in China,
Europe and the US and were ordering 70% of parts using air
freight and only 30% using sea freight. We introduced a better way
to manage forecasting and the stocks and so now only 30% of
parts are transported by air freight and 70% by sea freight. This is
a prime example of how you can use intelligent tools and IT to
reduce air freight and not only save cost but reduce the
environmental impact of air-freighting parts across the world.”
The two areas where Syncron is experiencing the strongest
growth in demand for its aftermarket solutions are parts price
optimisation and VMI. “As a result of the slow-down of global
economies over the last few years, most manufacturers are
focusing on improving their pro<tability and increasing their
volumes,” explained Abouzolof. “They’re focusing on introducing
what is generally referred to as value based pricing.
When manufacturers sell parts to the dealers, and ultimately
the end customers, they price the parts, not according to their
cost but according to their perceived value to the end customer.
Most manufacturers understand that if they implement value
based pricing they can improve their pro<tability, as well as
revenues. This is one area in which we have seen huge growth in
the last few years.”
Asked for examples of how Syncron has driven improvement
in the automotive sector, Abouzolof cited the supply chain where
20%-30%
stock reductions can usually be achieved.
We also measure things like sales increases,” he said. “With
VMI projects we can measure 45% increases in sales because,
when you have the right part in the right place, you will sell it. If
you don’t have it available there is the risk that someone else will
make the sale.
We also focus on logistics and warehouse costs. In many
cases those can come down by 10%-15%. Air freight orders tend
to be for small quantities, so it leads to more picks in the
warehouse. If you can change that, your warehouse costs come
down. Finally, we expect a reduction in administration needed to
manage inventories which can realise a cost reduction of 30%-
40%.”
a
Tony Abouzolof, co-founder and Managing Director for Syncron UK
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