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Car Distribution – A Rethink The automotive industry has long been recognised for its approach to bringing material into factories. Lead times are short and supply chains are visible and predictable, while at the same time flexible and responsive to change. Just in Time, Kanban and Pre-noting are all commonplace. The philosophies applied to inbound could be passed over the wall to outbound. Vehicle Distribution methodologies could be developed, using these principles, to serve customers more effectively. Current SituationThe physical movement of a vehicle from its manufacturing site to a dealer is cumbersome. A vehicle may be stored at manufacturing plant, a holding area prior to onward shipment, at dock, in the receiving port and prior to final delivery to customer. The reality is that this piecemeal approach leads to increased delay and cost. Each time a car is handled it is liable to damage, it will usually be inspected and potentially repaired. For long periods in the vehicle’s delivery cycle it is not recorded on any system and is simply ‘in transit’. Information is managed manually and transferred from system to system, IT is cumbersome and outdated. Although many distribution companies are involved in the government backed Three-Day Car programme the solutions offered to clients have not evolved very much. This is for two reasons; automotive manufacturers buy in a compartmentalised way only contracting small elements of the supply chain, and logistics service providers have become accustomed to offering low cost solutions based on low service levels. Future PotentialThis segmented approach needs a modern supply chain strategy. Manufacturers must take the lead in this because until they start to purchase the service end to end the compartmentalised supply chain will prevail. However car distributors should be acting with an eye for improvement and suggesting the options for business process improvement. If just in time and waste reduction philosophies are applied there are opportunities to improve customer service and reduce cost. The manufacturer can gain cost improvement through reduced handling leading to less inspection and less damage. In turn this should result in better lead times and improved predictability leading to lower stock levels. Improving the visibility of vehicles in transit using track and trace will allow the dealer to manage their customers more proactively. Car Distribution companies must act as third party Logistics providers, giving information, controlling processes and managing business improvements as part of their service. The Manufacturer should provide them with up front volume information to allow them to plan their resources efficiently. The Distributor should be developing and responding to Key Performance Indicators that are not only focussed on their own business economics, but on the service levels their customers are getting. Lead times should be measured and variability reduced. Manufacturers and Distributors should be looking to exploit all opportunities, using IT and data constructively, possibly using shared user networks where traffic density is low (Wales, inland Spain and France). Many automotive companies are examining their distribution supply chain, with a little of the innovative thinking that has shaped their inbound supply chain customers could experience a different and better service.
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