CDMM AD Crusade - Automotive Logistics

Copyright © 2014 Mahindra & Mahindra Ltd. All rights reserved.
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Automotive Logistics India Conference
Spare Parts and After Market
Aftermarket growth opportunities, delivery capabilities and
strategies to capture market share
Girish Bhobe
Mahindra & Mahindra
11th Dec’14
Copyright © 2014 Mahindra & Mahindra Ltd. All rights reserved.
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Agenda
 Transforming traditional models: changing customer perceptions and building
brand loyalty through the aftermarket.
 Aftermarket segmentation and strategies: Categorising customer segments to
forecasting parts availability and demand.
 Supply chain integration & distribution networks: Parts delivery models,
including frequency, and network distribution points
 Warehouse and inventory management: Optimising warehouse inventory
management and demand planning for distribution
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India is Changing Very Fast & Consumers too
 Younger
 More educated
 Has more choices
 Demanding on brands
 Not loyal
 Value for money
 Tech savvy
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Consumers Aspirations Changing
Product at
door step
Best
Product &
Best Service
Best Quality
Most
Competitive
Cost
Speed Of
Thought
Lowest
Cost of
Ownership
Today Customer has Multiple Options
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Vehicle Life Cycle coming Down
 New Technology
 Safety Features
 Reliability
 Government Regulations
 Fuel Efficiency
 Alternate Fuel
 Latest Features
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Spare Parts Industry Players
 OE
 Component Manufacturer supplying to OE
 Organised sector (own brand)
 Un-Organised sector (Without brand)
 Spurious Parts Manufacturer
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Spares Parts-Customer Centricity
 As customer expectations increase, the service parts is now at the forefront
of peoples thoughts
 Customer Satisfaction index driven by availability of genuine spares
 Cyclicity of Business
 Cost Of ownership
 Spare Parts pricing our models are most competitive in their respective
segments
Mahindra USP : Spare Parts availability at reasonable price in the nook
and corner of the country
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Genuine Parts Preference
 High Tech Parts
 Certified Mechanic
 Multi Brand Service Chain Network
 Availability
 High Penetration
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Spare Parts Industry
Spare Parts Sale Breakup
Second &
Spurious
42%
Genuine
33%
Vendor
25%
Opportunity
• Best In Industry 20-25 %
• Industry Average: 7-10%
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Spare Parts Industry
Spares Business in Revenue
• 10-15 % of Vehicle Sales
• In India 7-10 %
Industry is estimated to grow by 11% CAGR - ACMA
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Changing Customer Need
Selection of Workshop
Roadside workshop
Reliability
Low
Convenience
High
Cost
Medium
Relationship
Building
OUR
STRATEGY
Technical
Up gradation
Selection of Parts
Reliability
M&M
Genuine
Parts
OES
Parts
Second
Brand
Spares
Spurious
Spares
High
High
Mediu
m
Low
Convenience
Medium
High
High
High
Cost
High
Medium
Low
Low
Product
Range
OUR
STRATEGY
Product
Value
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Closer to Customer
Transformation to becoming a
Brand of Choice
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Customer Service Points
Automotive
Customer Care Service points
Dealerships
350+
Authorised Service centre
70+
Farm Equipment
Customer Care Service points
Dealerships
650+
Authorised Service centre
400+
Automotive Car Parc : 2.4 + Million
Tractor Parc : 1.7+ Million
Two Wheelers
Customer Care Service points
Dealerships
500+
Authorised Service centre
1000+
Two Wheelers Parc : 0.7 + Million
Trucks & Bus Division
Customer Care Service points
Distributors
60+
Retailers
120+
Bazaar Sales
Distributors
1000+
Retailers
14000
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First Fill Rate
FFR measures the dispatch of material to Customers
( Dealers + Distributors ) within Stipulated Time
• VOR ( Vehicle Off Road ) / BDT (Break Down Tractor) Order
Dispatch from DC in 24 Hrs
• Commercial Order
Dispatch from DC in 5 Days
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Spares Supply Chain-Complexity
12100 parts
18000 parts
2500 parts
1500 parts
1500 parts
3500 parts
4300 parts
100000
Parts
3000 parts
1500 parts
3200 parts
3000 parts
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Planning
 Migration from 3D matrix to 2D Matrix
 Migration from Forecasting model to Replenishment model
 Reworking of Max stock levels and Reorder point
 Double exponential smoothing for new projects and order spikes
 Categorization of parts (Focused, B2B, B2B Urgent)
 Multiple MRP runs
 Projections for N+1 and N+2
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Categorization using 2-D Matrix Approach
Order Lines Basis
Category
Focus Parts
Back to Back Parts
Monthly Order
Frequency
Category
All Balance
Combinations
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Challenges
Where to Stock the Parts
• Near the final Customer
• Near to the Manufacturing locations
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Challenges
• No Of Models
• No Of Variants
• Engineering Changes –ECN’s
• Carryover Parts
• Service Commitments
• Cost- Storage of Non current parts
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Challenges
• End to End Inventory 70-90 Days?
• Seasonality
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Our Crusade
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Customer Expectation-AV
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Thank You !
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Copyright © 2014 Mahindra & Mahindra Ltd. All rights reserved.
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