Saab Automobile Shortens the Supply Chain for Dealer Parts Replenishment with Internet-Enabled Technology
Saab motor cars have earned a reputation for performance and driver satisfaction that is truly superb.
Saab Automobile, 50% owned by General Motors with whom it shares many business practices, is determined to ensure that all aspects of its service are equally superb, including the availability of spare parts at Saab dealers throughout the world. Raising customer service levels from every dealer in every part of the world up to the standards delivered by the top dealers in the distribution channel. Top management therefore backed a new company wide project called Primary Escalation Process (PEP) under the marketable banner of ASIST. This project aimed at nothing less than a global best-in-class process to help resolve customer concerns with maximum speed and minimum disruption.
Business Requirements
Detailed research on the supply chain for spare parts highlighted a problem. Instant parts availability from its central warehouse in Nykoping, Sweden was running at close to 100% reflecting Saab’s commitment to ensure first-class fulfilment rates for orders. Some of its dealers, however, were only reporting a figure of 65-75%, a result which, in Saab’s view, could be improved upon. An independent investigation, including logistics experts from Gsteborg University, confirmed Saab’s suspicions that the problems stemmed from three root causes at dealers:
- stocking decisions for parts were based on overly simple models
- only local trends were known
- lack of time and expertise to manage an effective parts stocking system.
Saab management decided to explore options to give their dealers greater centralized help in the complete supply chain process for parts. Saab initiated a project to look at a new Dealer Parts Replenishment (DPR) system. After rejecting package-based solutions as lacking the desired functionality, Capgemini was selected as a partner to develop a customized solution.
DPR had to cope reliably and rapidly with significant two-way information flows every minute of every day, on a global basis.
Saab dealers operate in markets of widely varying sophistication. The option of asking dealers to install complex software, running on expensive hardware supported by networking infrastructure, and to train staff in system use, was a complete non-starter.
The Capgemini Solution
Internet-enabled technology, with use of suitable encryption software to guarantee security of transactions, was recognized as the key. After consultation with Capgemini’s Internet experts, this was selected to form the basis of DPR.
The system would carry low investment costs, be easy to use and require minimal training. All that a dealer needed was a Web Browser, connection to an Internet Service Provider and simple instructions to run DPR via an existing PC. A 3-tier solution to run on a Unix platform was established, thus conforming to Saab’s (and GM’s) chosen platform.
The Capgemini project team applied iterative application development techniques, with input from people at different points in the Saab supply chain for parts.
The system consists of a Data Warehouse of all 40,000 parts in the Saab ‘parts master-file.’ It also has additional capacity for some 150,000 Opel parts and over 300,000 GM parts for US-manufactured vehicles to cover markets where Saab dealers also handle Opel and GM vehicles.
As an inbuilt fail-safe mechanism, the system includes a Parts Locator module. Should a dealer not have a particular part, he can interrogate the system to establish if a neighboring dealer can supply the missing item, a much more effective process than phoning around in hope.
The automatic replenishment of parts, without any need for human intervention, is another key feature. This enables Saab to have centralized information not only on parts supplied to a given dealer, but also on each dealer’s current stockholding of every part, with day-by-day sales volumes.
The international rollout, scheduled to start at some 300 dealers in Scandinavia and the UK initially, will be extended to other major markets such as Germany and Brazil. The ultimate aim is a truly global rollout. Saab is already laying plans for the system to cater for several other languages, including those that do not support the Western alphabet.
The Benefits
Saab Automobile’s Project Manager says: “Capgemini was chosen for the project because of its experience in car industry logistics, its technical expertise in Web technology and its ability to manage large projects to tight timescales.” DPR enables Saab management to have a full, detailed global picture of what is going on in its parts business, with emerging trends. The benefits expected can be summarized as: For Saab Automobile:
- an even better reputation for customer service
- a greater share of the important after-sales market
- improved management control and forecasting for parts manufacture and inventory.
For Saab dealers: significant reduction in out-of-stock situations lower overall stocks of parts and lower stockholding costs big reduction in administrative time, effort and costs.
For Saab customers: higher levels of same-hour or same-day service firmer assurance of genuine Saab parts reduced cost of Saab parts as a result of improved efficiency.
Saab’s Project Manager continues: “The whole point of an intelligent parts management system like DPR is that it actually reduces total stockholding while simultaneously increasing the certainty that a part required will actually be in stock.”
“That’s because DPR will allow parts sales to ‘pull’ replenishment to the dealer instead of various monthly sale quotas and incentives which have traditionally ‘pushed’ unwanted and often unneeded quantities of parts to dealers.”
“What’s happening, essentially, is that web technology is allowing us to change the existing paradigm of automotive parts supply from an inefficient “push” system to a much more efficient “pull” system. This dramatic improvement in the whole supply chain is made possible by the ability to manage huge quantities of information quickly and reliably.”
“Dealers will be able to carry lower stocks without risking out-of-stock situations, and the final customer -- the Saab motorist -- will get a service significantly closer to the 100% that we must aspire to provide.”
Written in cooperation with Saab Automobile AB
Contact: Capgemini Sverige, Division Syd