Auto OEMs & Auto Components Consulting Services

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

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.

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.