Auto OEMs & Auto Components Consulting Services
We offer consulting services to organizations engaged in manufacturing and distribution of automobiles or auto components. Our consulting methodology focuses on identifying the leverage point of an organization for intervention.
Automobile companies can have a constraint in one of the following areas:
Plans of manufacturing plants in the automobile sector are sensitive to the slightest changes in the market and in the supply chain. Market upswing/downswing or disturbances in the supply chain cause the plants’ schedules to become unstable quickly. This is true for both automobile companies as well as Tier I auto component manufacturers. The schedules may not stabilise for a day or even for a shift, despite best efforts of the purchase managers. This is because the plants face shortage of complete kits of parts required for assembly that is scheduled for the day or the shift. So, as the month progresses, WIP of incomplete kits balloon; and at the month end when more kits are completed, it drops with a huge spike of dispatches in the last week. This relentless struggle to complete kits during the month, and the huge skew at the month end, together lead to significant capacity wastage. This prevents the automobile companies and the automotive components manufacturers from exploiting the full potential of their plants.
In this situation, to keep their own inventory levels low, the stronger players in the supply chain (usually Automobile OEMs) tend to push the weaker players (usually automotive component manufacturers or dealers) to keep high inventory in the latter’s books and warehouses. On the surface, this might seem like a good bargain for the OEMs, but it is not. Burdened by excess inventory, the component manufacturers will struggle to organise the relevant raw material or parts for the OEMs. This lack/mismatch of automotive components at the vendors’ or component manufacturer’s facility, in turn, leads to further rescheduling at the OEMs’ plants.
We, at Vector Consulting Group, offer our consulting and implementation expertise to both automobile OEMs and automotive component manufacturers. We enable manufacturing units to stabilize operations, increase plant output, and improve reliability. Find out howKnow More
- Near 100% availability of automotive components and finished goods, on a daily basis
- Reduction in overall lead-time (and work in progress) by around 30% to 50%
- Increase in on-time delivery performance to more than 95% as per the originally committed dates
- Increase in output of plants by around 25% to 40%
- Reduction in overall inventory by 10-20%
- Improved cash-to-cash cycle
Vehicle Distribution (for Automobile OEMs)
Unlike in the days of Henry Ford (a time when variety was limited), today’s automobile manufacturing companies offer a huge choice of variants to customers. Competition activity and norm changes also necessitate new product introductions at a faster rate than ever. Since dealers stock as per forecasts and OEM prescribed sales targets for this large range of SKUs, each dealer would have very high finished goods stock tying up space and cash in his warehouse. However, in spite of the high inventory, some popular models quickly become stocked out (loss of sale) while many slow models (e.g. demand may have shifted to new variants) have to be discounted (loss of margin). Curiously, what is stocked out at one dealer may be in excess at another!
Vector Consulting helps clients address the problem of vehicle availability without the necessity of maintaining large inventories. Our custom solutions create a win-win reality for both automobile OEMs and dealers.
How can automobile companies ensure near-100% availability at less than half the inventory? Find out
- Improvement of availability to near ~100%
- Reduction in overall inventory days/reduction of overall inventories in the supply chain by about 50%
- Reduction in dealer inventory by about 50%
- Eliminate or reduce need for inventory liquidation sales
- Increase dealer ROI to 60 to 80
Auto components and service
An automobile Original Equipment Manufacturers (OEM) spare parts business has to ensure delivery of components to customers exactly when they need them. However, ensuring component availability is a major challenge due to the enormous variety of automotive components involved across the portfolio of the Auto OEM’s vehicles. To complicate things further, some of these parts are needed very infrequently. Consequently, whenever OEMs try to improve component availability, the cash tied up in slow moving inventory balloons! So, most automobile OEMs in India struggle with trying to ensure component availability while ensuring financial viability.
Many OEMs and OES’s distribute automotive components in the aftermarket through a network consisting of distributers and small retailers. Stock movement in the channel based on forecasts and targets creates its own challenges. Most of distributors in the market are small businessmen who find it difficult to invest large sums as capital. When many automotive components are inherently slow moving, the speed at which stock rotates deteriorates because the channel partner is exposed to a smaller demand and highly variable demand in a restricted geography. This impacts their ROI, and their ability to restock when items are sold out. So, the daily working capital woes of a distributor forces him to restrict his business; many tend to service only a limited number of retailers (mostly large ones) whom he perceives as low credit risk. These conditions adversely impact the last mile availability of components.
At Vector Consulting, we have evolved innovative solutions, robust techniques and proven practices for addressing the long tail problem created by infrequently demanded automotive components.Know More
- Enhance availability of automotive components at the point of service/retail to near ~100% on a daily basis
- Reduce inventory in the overall supply chain by around 25%
- Increase sales of automotive components by more than 20%
- Reduce as much as 50% in turn-around-time (TAT) at OEM service centers
- Increase on time performance of auto OEM service to more than 90%
Research & Development
In most auto R&D departments, addition of resources does not keep pace with increase in load. Enormous workload, the high uncertainty of the environment, and the heavy dependence on external suppliers makes new product development in auto companies immensely challenging. The process is riddled with rework, delays in production stabilization, and delays in launch. Even after launch, quality issues are not uncommon. Elevated stress levels of engineers is a serious concern.Know More
- Reduce project lead-time by 33-50%
- Increase output by 30-50% (without additional resources)
- Enhance visibility and control over progress of projects
- Reduce rework & Improve quality of output
- Rapid production stabilization
- Reduced stress on people and other resources
Is your inventory profile skewed on the wrong side – too much at a point where there is minimal aggregation and too less at the point of highest aggregation?'
To do a detailed diagnostic on your company, take this test
Using the principle of pull-replenishment of Theory of Constraints, Vector Consulting Group has helped organizations like Tata Motors CVBU, Fleetguard Filters to build agile operations and achieve seamless distribution.
A ten-year journey of excellence: Fleetguard Filters Ltd
Indicators Remark No. Of SKUs Increased from 300 to 650 Overall Inventory Reduced by 67% Receivables Reduced by 75% Daily availability at distributors Now 99% Stock levels at Distributors Reduced from 45 to < 15 days ROI of distributors Over 80% (Same Margin) No of retailers covered Increased 7 times
Fleetguard Filters implemented Theory of Constraints company-wide, with the help of Vector Consulting Group, to achieve phenomenal improvements in financial and operational performance. The company’s efforts won them several national and international recognitions. This video showcases their journey to excellence.
Transforming the auto component supply chain: Tata Motors Spares CVBU
Indicators Remark Daily Availability (Central Warehouse) Increased to 94% Inventory Days Reduced by 15% Daily Availability (Dealers Warehouses) Improved to 93% Service Dealer sales growth Improved to 11% (stagnant earlier) Service Distributor sales growth Improved to 23%
With the help of Vector Consulting Group, the company harnessed the power of Theory of Constraints to strengthen their supply chain. They transformed the large and complex supply network by steering it away from the forecast-based system toward a pull-based or replenishment-based system. The company discusses this journey and their remarkable accomplishments in this video.
Vector Consulting Group has partnered with major names in the auto and auto components industry to create and implement radical solutions which have helped redefine industry benchmarks. These names include:
YVS Vijay KumarCEO, Mahindra First Choice Services
“We are able to guarantee completion of running repair jobs in four hours from the time a car enters the service centre. Ultimately we want to be known as the dominos of car servicing market.”Know More