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.
Operations & Supply-chain (for Automobile Sector)
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. At times, despite the best efforts of the purchase managers, schedules may not stabilise for a day or a shift. This is because plants face a shortage of complete kits required for scheduled assembly for that day or the shift.
So, as the month progresses, the WIP of incomplete kits balloons; 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 automobile companies and automotive component 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 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 howRead More
Vehicle Distribution (for Automobile OEMs)
Improvement of availability
Reduction in overall inventory
Reduction in dealer inventory
Eliminate or reduce need for inventory liquidation sales
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 outRead More
Auto Components and Service
Enhance to near
Availability of automotive components
Reduced inventory in supply chain
Increase sales of automotive components
Increase on time performance
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 is 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 OESs distribute automotive components in the aftermarket through a network consisting of distributors and small retailers. Stock movement in the channel based on forecasts and targets creates its own challenges. Most 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 force 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.Read More
Research & Development
Reduced project lead time
Increased output without additional resource
Enhance visibility and control over progress of projects
Reduce rework & improve quality of output
Rapid production stabilization
Reduced stress on people and other resources
In most auto R&D departments, the addition of resources does not keep pace with the increase in load. The enormous workload, the high uncertainty of the environment, and the heavy dependence on external suppliers make new product development in auto companies immensely challenging. The process is riddled with rework, delays in production stabilization, and delays in the launch. Even after launch, quality issues are not uncommon. Elevated stress levels of engineers are a serious concern.Read More
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?'
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Case Studies from Automobile Industry
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
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.
- No. Of SKUs
- Increased from 300 to 650
- Overall Inventory
- Reduced by 67%
- 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
Transforming the auto component supply chain: Tata Motors Spares CVBU
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.
- 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%
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:
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.
A. We are a multi-brand car service company. We are sandwiched between brand companies offering high quality service at high prices and unorganized local garages offering ‘not-so-great’ quality at dirt-cheap prices. Our offer of high quality at reasonable prices is attractive to people looking to move away from unorganized garages. The challenge is beating single-brand service centers in service delivery. Parts management gets in the way – the number of components that a brand service center has to hold is much lower than what we (a multi-brand service company) have to stock. Expanding rapidly without solving the inventory conundrum can spell doom for a multi-brand service company.
A. Vector Consulting Group, our partner on this transformational journey, showed us the merits of exploiting sales opportunities using existing infrastructure. Vector educated us on the benefits of improving ROI before we push for accelerated growth. Guided by the TOC approach, we are focused on improving services and inventory management, cluster by cluster.
A. TOC implementation requires hub and spoke model. Therefore, as a first step, we grouped the company-owned workshops across India into clusters. Kicking off the implementation along with Vector Consulting Group in the Chennai cluster, we adopted processes of TOC replenishment for auto components while we created a hub and spoke model of inventory locations. This allowed for maximum aggregation benefits at the hub. We implemented TOC operations processes to cut down service lead-times. Our turn-around-times have dropped by more than 50 percent, our on-time performance has entered the 90s. We now guarantee that running repair jobs will be completed in four hours, we offer to pay a penalty if we fail to do so.
Component availability is in the high 90s. All in all, we have made the working environment stress-free for our operations team.
Sales (of restricted models) has gone up by more than 20 percent by value in the Chennai cluster where we are doing the first phase of implementation. Ticket size has gone up, thanks to the decoupling of inspection and actual repair work.
A. We will roll this out in all clusters and then expand through franchisees whom we are promising an ROI of minimum 30 percent.
"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."