Supply Chain Assessment

Client: Aftermarket Automative Supplier

Background

This international client operated in the automotive industry and supplied engine and associated spares to both external wholesalers/retailers as well as in-house reconditioning workshops. The supply chain review was focussed on driving cost reduction and service level improvements in its aftermarket spare parts business.

Challenges

• Low/sporadic sales patterns
• Long lead times from North America
• High expedite costs – exacerbated by large/heavy inventory
• Decentralised supply chain planning team
• Reactive planning processes
• Supply chain planning tool configuration and capability
• Difficulty in planning spares for scheduled maintenance

Approach

A project was commissioned to assist the client identify supply chain planning improvement opportunities by:

• Reviewing demand and supply planning processes
• Reviewing supply chain planning policies
• Reviewing supply chain planning data
• Reviewing ERP supply chain configuration and capabilities
• Reviewing supply chain performance management framework
• Provide an assessment of the ‘inventory balance’ and areas of overstock and under  stock
• Determining a least cost ‘off the shelf’ target service level

Outcome

• Quantified a 20% inventory reduction through improved supply chain planning processes, tools  and data
• Identified the lack of an objective service level measure made it difficult to ascertain if the supply chain was meeting corporate goals
• Confirmed limitations in current planning tool  contributing to inflated inventories that are out of balance
• Identified that the new item introduction process was a  significant contributor to excess stock
• Recommended a revised inventory segmentation and associated stocking  policy
• Recommended configuration and planning data changes to ERP
• Identified that the majority of the excess inventory was in the retail network
• Recommended proactive demand and supply planning processes
• Determined the least cost ’off the shelf’ target service level
• Identified the degree to which supplier under performance was contributing to customer service level breaches