Page 1
COPYRIGHT © SYNCRON
Dealer Inventory Management:
What, Why and How
Erik Lindholm – Presales director
Page 2
COPYRIGHT © SYNCRON
Syncron is the global leader in aftermarket service
optimization
• Dealer Aftermarket Specialist
– Inventory management
– Price Management
– Analytics
• Customers are multinational
companies
– Active users in more than 100
countries
– R&D intensive, investing >20% of
revenue
Meet the Presenter:
• 15 years experience of
inventory management
• Product manager for
inventory management
application
• Program manager for
several dealer inventory
management projects
Erik LindholmPresales Director
Page 3
COPYRIGHT © SYNCRON
Introduction to dealer inventory management
What is Dealer Inventory
Management?
How to implement?
Why should you implement?
Implemented correctly, dealer inventory management can
help you:
• Increase end customer service levels
• Grow sales
• Reduce capital tied up in stock
Page 4
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Common approach: Dealers Retain Control Of
Inventory
• Dealer owns and has full control of
inventory and ordering
• OEMs suggest replenishment
recommendations to dealers
• Incentives for dealers to join program
– Buy back guarantee
– No emergency charges
• Compliance requirements on dealers
– Dealer places X% of orders
suggested by the system
• OEM requires audit and follow up on
dealer performance
What?
OEM Distribution Center
Dealer 1 Dealer 2 Dealer 3
Figure 2: Dealer drives forecasts and recommends new order levels
Forecasts & Order Recommendations
Page 5
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Availability of parts at the dealer drives future
purchase of OEM equipment
Central Warehouse250,000 part numbers
98% Availability
Regional Warehouse30,000 to 100,000
part numbers95% Availability
Dealer Location3,000 to 5,000 part
numbers55% Availability
60%+ Rush orders
Why?
Page 6
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Dealers and local subsidiaries indicate that there is
tremendous opportunity for improvement
Off the Shelf Availability
Stock Turns Stock Obsolescence
Stock / Emergency Order Ratio
Worst Depots 40% < 1 40–50% 10/90
Smaller Dealers 50–60% 1–2 30-40% 30/70
Best Dealers/Subsidiaries
85% 2–6 25% 70/30
Why?
Page 7
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
OEM has a lot of vital information directly relevant to Inventory Management
close to the Customer:
• Recommended stock lists
• Initial/critical stock lists
• Master data (supersessions etc)
• Experience from other markets
• Stock visibility
Dealer will benefit from OEM information
OEMSubsidiary
Dealer
There is often no or a very fragmented approach to ensuring that these dimensions are considered in the inventory management process close to the end customer
Why?
Page 8
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Dealer/Distributor has a lot of vital information directly relevant to Inventory
Management at DC/RDC level:
• Visibility of true customer demand.
• Local sales and marketing campaigns
• Visibility of local stocks.
• Local competitive landscape.
OEM will benefit from dealer information
OEMSubsidiary
Dealer
Often such intelligence is not used in the inventory management processes at the DC/RDS’s.
Why?
Page 9
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Key benefits are reduced stock, increased sales,
higher margins and lower lossesWhy?
Release cash by reduced stock levels• Dealers can provide similar or better levels of off-the-shelf availability with
large reductions in stock• Varies by Dealers, but reductions of 25% or more
Increase sales through better availability• Industry analysis suggests that a 2% increase in off the shelf availability
can lead to a 1% growth in sales
Improve profits by reducing freight costs• Landed cost factors for airfreight can be up to 40%, while sea freight can
be as low as 10-15% • Allow the dealers to increase their competitiveness or to increase margins
Reduce losses from dead stock write-off• OEM takes back parts ordered by the Dealers when not sold in 12 months• Returned with no penalty or handling charge • Stock replenishment rules are agreed between the Dealers and OEM
Page 10
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Accessible Adaptable Reliable
Most OEMs will need a solution that met the requirements of an extensive
globally dispersed independent dealer network. The solution needs to be:
1. Secure and easy to access.
2. Have a low cost of ownership.
3. Support multiple languages.
How?Select a solution that is Accessible, Adaptable and
Reliable
Page 11
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
SaaS services allows OEMs to implement quickly
and access from anywhere at a low cost
• Easy to adopt: simple web interface
• Faster ROI: Rapid deployment and configuration
• Eliminates maintenance: Syncron maintains the software and servers on your behalf
• Reduces upgrade costs: Functionality is identified and implemented for all of Syncron’s customer by product experts
– Single point of responsibility for delivery of servicemeans economies of scale
• Lower total cost of ownership: Avoids internal IT costs including system training and support; hardware expense of infrastructure and backups
– Subscription license model. Only pay for what you use!
– Service and infrastructure are scalable
How?
Page 12
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Syncron provides seamless support for multiple
languages
• Syncron has team members that speak all major languages to provide support for implementation and training.
• Currently support is available for the following languages:
– English
– French
– Spanish
– Portuguese
– German
– Japanese
– Russian
• Additional languages can be added as required.
How?
Page 13
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Select a solution that is Accessible, Adaptable and
Reliable
Accessible Adaptable Reliable
An OEM supply chain and a global dealer network is often complex. The
solution will need to accommodate unique inventory practices, implement
with limited IT resources, on disparate systems and with personnel of
varying ability. OEM’s need a solution that:
1. Supports multiple inventory models concurrently.
2. Is proven in a dealer environment.
3. Is easy to implement, integrate and use.
How?
Page 14
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Product modules supporting requirements
• Mange different strategies and targets for
different segments/parts
• Initial / Critical Stocking
• Advanced What If simulations
• Buy back / Refill History follow up
Inventory optimization Global planningAccurate forecasts
• Automatic forecast algorithm application
based on demand type
• Seasonality Management
• Supersession Management
• Alert Management
• Coordinated Multi Echelon
• Virtual Warehousing
• Redistribution / Balancing
• Supply chain visibility
• Designed to support centralized planning
Performance Monitoring
• KPI
• Reports
• Analytics
How?
Page 15
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Specific dealer inventory management functionality
• Allows for different level of dealer influence
regarding depth and breadth decisions.
• Configurable buy back functionality
• Refill order tracking allowing
– Follow up of acceptance KPIs
– Connected buy back
• Part compliance management and tracking
• Designed to be easy to operate with minimum
training requirements
• Designed to automate daily tasks
• Possible to manage non OEM items
How?
Page 16
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Modern architecture supports your business
requirements
• Standard solution supports
repeatable set-up process and
best practises
• Highly configurable, quick
implementations
• Concurrent parallel
processing
• Business Process Platform
connects
to any business system
Figure 6: Syncron’s software is built on a robust business process platform and delivers extensive analytics
How?
Page 17COPYRIGHT © SYNCRON 2015
Designed to operate in an dealer environment
• Ability to process
millions of SKUs on a
daily basis
• Configurable as for the
data requirements on
the DMS
• Inbuilt monitoring and
alerts of scheduled
files
• Data content
validation
How?
Page 18
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Accessible Adaptable Reliable
OEM’s need a partnership with a provider that has the infrastructure,
personnel and right attitude to support their operations around the world.
OEM’s need:
1. A partner that can provide extensive support, not just
a software solution.
2. Full solution auditability and traceability.
3. High solution availability.
How?Select a solution at is Accessible, Adaptable and
Reliable
Page 19
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Syncron offers comprehensive project
and post-project services
• Consultancy services: Support
with the project, the impact and
the business change
• Customer Support Team:
operating in all time zones
• Analyst Services: Actively
coaching the users to maximize
benefits
• Training Support: Giving your
team the information they need
to leverage the solution and
promoting best practice
How?
Page 20
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Full support for system auditing
• Standard KPIs allow for global comparison
of dealers independent of DMS System
– Service level
– Stock turn
– Stock value
– Sales value
• A number of standard reports for follow-up
• Integrated BI tool allows for creation and
configuration of specific reports using
Syncron calculated data in combination
with OEM-data.
How?
Page 21
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Syncron Data Center: High availability, redundancy,
scalability, security
• High security classed data center facilities that
fulfills SAS 70 type II requirements
• Redundant infrastructure, automatic fail-over
database platform and application platform & Network
• Scalable environments
• High security protection and data isolation
• 24/7/365 Managed hosting – ISO 20000(ITIL v3)
Certified provider.
• Backups stored at an additional high security location
How?
Page 22
COPYRIGHT © SYNCRON INTERNATIONAL AB 2014
Coordinated supply chain, improves service level because
planning is improved across the extended supply chain
Stocking Policy & Target Service Level
EN
D C
US
TO
MER
S
Stocking Policy & Target Service Level
Stocking Policy & Target Service Level
Central Warehouse 1
Central Warehouse 2
Regional Warehouse 2
Regional Warehouse 3
Regional Warehouse 1
Dealers
Dealers
Dealers
How?