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Before automaker parts e-commerce portals (late 1990’s), automakers were limited in their efforts to facilitate parts ordering by repairers and consumers. A few fleet and national parts buyer programs (centered on discount pricing) had parts ordering forms and/or applications. With the advent of automaker portals for parts, the situation is shifting to substantial automaker leadership in tools to promote and automate replacement parts and accessory sales to both consumers and repair shops. Parts portals promote automakers’ perspectives on parts quality, safety and durability while enabling highly targeted pricing/discounts (see below) to be rolled out, changed or terminated with little lead time.
Automakers have always had to set MSRP (list) prices and dealer cost
for parts. What’s new in MSRP processes is the increasing level of
sophistication in life-cycle pricing being implemented by automakers to
optimize the balance between maximizing sales (via low prices) and
maximizing profit margin (via high prices).
Automakers using e-commerce are now better able to provide better
targeted pricing or promotional discounts/rebates to buyers for select
parts based on competitive pressures.
Until recently, many of the automakers’ service parts sales and logistics leaders were captive to their internal accounting systems – viewing shipments to their dealership as market ‘demand’ while blind to actual consumption of parts. Treating dealer orders as demand led to suboptimal PDC stocking targets, programs to ‘push’ parts into dealer inventories and other sub-optimal behaviors. Now, automakers increasingly have access to dealership parts inventories and sales, to dealership repair orders (including parts) and to business intelligence (BI) tools to make better decisions (as well as to make more accurate forecasts and thus better last-buys and other purchase decisions).
Improved Analytics & Reporting (immediately above) – enabled by improved data exchanges between automakers and their dealerships – make more accurate forecasts and budgeting more likely.
Automakers create parts catalog content for new vehicle models and update their parts catalogs for parts changes. Content includes exploded-view illustrations with call-outs and the associated parts text with application information for each part. Catalog content is combined with vehicle-build data to publish EPCs for use by dealerships and others.
Automakers must also generate and maintain the content for fitment guides as well publish the fitment guides. Typically, fitment guides are used with accessories, tire and batteries. Fitment guides differ from parts catalogs in that address a single class of items (for example, tires) rather than a range of vehicles, they tend include attractive photos of items (to aid selling) and identify whether there is a configuration of an item that fits a vehicle and if so, which ones. A part catalog nearly always leads to a single part number; a fitment guide can identify zero or multiple items that fit.
Automakers utilize systems that combine demand forecasts, target fill rates and other criteria (for example, order lead time mean and variability) to compute target stocking levels (as well as safety stock and minimum stocking levels) and then construct orders based on inventory levels, part production and transportation costs, target stocking until parts become obsolete (and are phased out of PDC stocking).
For many years automakers have provided their dealerships with guidance on the parts to stock in the dealership’s inventory. In recent years automakers have taken the position that only a minority of their dealerships’ parts managers are excellent at inventory management. As a consequence, many automakers have implemented RIM or RMI programs to improve dealer inventories (which typically translates to a broader range of SKUs – unique part numbers – in stock, but a smaller quantity of parts stocked for each SKU.
Automakers establish and revise policies that impact dealer parts purchases and stocking practices. These include return policies, return allowances and incentive payment.
Automakers have parts ordering systems – increasingly part of a dealer portal – that dealer can use to place stock and emergency orders, change or cancel orders and check order status.
When a dealer places an order, if the part is not at the facing PDC, the part is ‘referred’ to another PDC. If the ordered part is not only absent from the facing PDC but also unavailable from all other PDCs, the order is said to be on “national backorder”. Automaker systems send messages to dealers when parts are on backorder – and look for the dealer to indicate if the part is needed urgently (for example, for a VOR – Vehicle Off Road). Emergency National backorders are prioritized by automakers who use manual processes and/or automated systems to expedite the sourcing and fulfillment of those backorders.
Automakers may have programs that allow central billing and/or special pricing for participating wholesale buyers. In these cases, a manual process or automated system is required to settle the transactions. (For example, the parts – and even service – for a fleet may be provided by a dealership that – rather than charging the fleet – files a claim for the parts with the automaker.
Delivering service parts to dealerships quickly and cost-effectively is a major transportation challenge for automakers. Some automakers outsource a portion of their parts deliveries.
Automakers may own their PDCs or outsource warehousing. Ship Direct can be viewed as a form of outsourcing of warehousing (at least in part).
Automakers also have systems to support parts returns as well as the "return" of cores for remanufacturing.