DaimlerChrysler South Africa has launched the first phase of a new parts distribution system that the manufacturer says will increase availability, while eventually reducing the price of parts by as much as 25 per cent.
DaimlerChrysler South Africa has launched the first phase of a new parts distribution system that the manufacturer says will increase availability and reduce the price of parts.
The Distributed National Inventory (DNI) decentralises DCSA's entire parts inventory to its dealers’ parts stores. This will place all the parts closer to DCSA's customers (franchised dealer workshops, panel shops, fleet owners). Parts are allocated to each region according to four years of customer history. The idea is that all parts will be delivered to the technician within two hours of the order.
DCSA said the system would ultimately bring about a reduction of as much as 25 per cent in the cost of replacement parts. The whole project is costing DCSA R50 million, but will save R47 million a year.
The first phase was launched this week in the Western Cape, though the pilot project has been running since January. The whole project has been four years in the making.
According to independent consultant Warwick Johnson, who worked with DCSA on the project. the Western Cape was selected for the pilot phase because of the size of the region and the fact that parts previously took longer to reach the province.
He said by February the delivery time for parts had been cut to three and a half hours, coming down to two and a half hours by July. The target is two hours. The region has a unique stock inventory of 25 000, up from 11 000. The target is 26 000 unique parts.
DNI will manage the inventory through the creation of 'virtual warehouses' managed by a team of experts using a R35 million custom-designed system.
"While the manufacturing sector was making great strides in improving efficiencies by increasing the speed, integration simplicity and flow of material and information in the supply chain, very little has changed within the automotive parts businesses of the OEMs world wide,” said DCSA chairman Christoph Köpke.
“The DNI programme is set to change all of that. Once implemented, it will provide a fast, all-inclusive availability of parts to DCSA's franchised dealer technicians and fleet owners, while at the same time reducing inventory in South Africa by 40 per cent and dramatically reducing the cost of storing and moving parts.
"In practice this means that we will be able to get more than 95 per cent of all the parts we stock delivered into the hands of a technician within two hours of him requesting it," said Köpke.
"DaimlerChrysler SA currently manages to supply 77 per cent of requested parts off the dealer's shelf, a further five per cent on the same day through inter-dealer trade, and most of the remaining 18 per cent from the company's central warehouse in Pinetown the following day. This means that one in five parts is not available when needed. Post-DNI implementation more than 95 per cent of requested parts will be available almost immediately."
Once a shipment arrives, a cross-docking process sorts out the parts and redistributes the parts to the dealers' stores. “Previously parts would go through the warehouse in Pinetown, but now when orders arrive from overseas, it is immediately distributed across the dealer network to balance all dealers’ inventory,” explained Johnson.
At dealer level, DCSA will take over the responsibility of stock management and replenishment, the distribution and delivery of parts to customers, and the inter-locational movement of parts.
This will give the dealer's parts department access to an improved range of immediately available parts, and allow the department to give customers better feedback on their orders' status, and to supply accurate delivery promises. The time previously spent on inventory planning and ordering can now be used to focus on providing improved technical support to customers.
Köpke said job stoppages would be reduced from 20 per cent to five per cent, which leads to improved customer satisfaction. “When asked what time a car should be brought in for a service, the standard answer is 7am. This gives the technician time to assess the parts needed for the job. DNI gives the customer relief from the 7am to 5pm syndrome as the parts are available and the customer can have his car back on schedule,” said Köpke.
“The pilot project in Cape Town showed that DNI can be implemented without disrupting parts supply," Köpke said, "and we are now ready so start rolling out DNI on a regional basis throughout the rest of South Africa."
The system will be implemented in the Eastern Cape in September, followed by KwaZulu-Natal. Free State, Mpumalanga and Gauteng will follow, and the project will be completed with the Northern Cape roll-out, targeted for December 2005.