The Critical “Last Leg” of the Parts Supply Chain: The Dealership’s Role

The final step in the parts supply chain, often referred to as the ‘last leg’, is handled by the dealership and plays a crucial role in determining dealership profitability, customer experience, and employee job satisfaction. This critical moment impacts not only the entire dealership but also reverberates upstream to the OEM’s Parts Distribution Center. Whether it’s getting a part into the hands of a technician or customer, the ultimate success of this complex and sophisticated journey of any given part is determined at the dealership level. This is the decisive moment when a part is requested and what happens next matters immensely.

The Journey of a Part

Consider the journey of a part: a supplier manufactures it, then it is stocked, stored, and shipped. It could originate from anywhere in the world, traveling via boat, plane, train, semi-truck, or a combination of these modes of transport. Upon arrival at an OEM Parts Distribution Center, the part is received, receipted, and stocked. It is then picked, packed, and shipped out once more, eventually arriving at the dealership where it is again received, receipted, and stocked.

After all this, the dealership is responsible for the final handoff, similar to the crucial moment in a relay race where the baton must be successfully passed to the technician or end-user customer. Some dealers excel at this, while others have significant room for improvement.

Financial and Operational Impact

This final step can have substantial financial implications, potentially equating to thousands of dollars per month in profit or loss. It can mirror the sales and profit potential of adding more technicians. Many dealers today claim they could increase their fixed operations sales if they could only find a few more technicians or add additional service bays. However, many don’t realize that similar efficiencies, sales, and profits can be achieved by optimizing their parts operations and executing near perfection in the last leg of the supply chain.

Perfecting the “Last Leg”

Top performing ADMI partnered Dealers have perfected this, and this is what we teach, implement, and sustain:

1. Anticipation of Needs:
To date, the best predictor of future demands are recent previous demands. Analyzing previous demand trends and using data analytics to forecast future needs accurately ensures that dealers have the necessary parts in stock before customers or technicians even know they need them.

2. Inventory Management:
Effective inventory management is crucial. This includes maintaining optimal stock levels, managing lead times, and ensuring that high-demand items are readily available. Sophisticated inventory control systems that track stock levels in real-time and automate reordering processes are essential.

3. Efficiency in Fulfillment:
With the right parts in stock, the next step is to ensure quick and accurate delivery. This involves streamlined logistics, efficient warehouse operations, and robust order processing systems. Every step from picking, packing, and shipping must be optimized to minimize delays and errors. For Technicians, this means getting the right part into their hands as soon as possible. The faster and more frequently we can do this, the more parts and associated labor we sell.

4. Continuous Improvement:
Dealers must continually refine their processes, learn from past experiences, and adapt to changing customer needs to maintain a high level of preparedness and service. Reviewing off-shelf fill rate, Service Effective Fill Rate, and other data points show when and where to modify processes next.

Summary

Having parts in stock and being able to deliver them quickly, accurately, and efficiently is the “Last Leg” of the Supply Chain and involves:

• Predicting customer needs through data analysis and trend forecasting.
• Maintaining optimal inventory levels with sophisticated management systems.
• Streamlining logistics and fulfillment processes to ensure swift and precise delivery and technician hand-off.
• Continuously improving processes to adapt to changing demands.

ADMI offers dealers and OEMs multiple solutions to implement and sustain everything necessary to perfect this most critical moment, the “last leg” of the supply chain at the dealership parts department level. For more information, contact us today or sign up to receive a free copy of our brochure.

By Jay Graham