When an automobile parts dealer or a business in the automotive aftermarket industry makes a request to its suppliers to fulfill an order, there is an expectation that the right component shows up at the right place, in the right time frame, at the right cost. After all, at the end of the line in this complex automotive aftermarket supply chain fulfillment cycle is a customer with a vehicle waiting for a repair part. That customer has the choice of going to a dealer’s service department, or an independent shop in the service parts retail network. The complexities of the automotive aftermarket supply chain and the physical movement of millions of individual parts made by manufacturers around the world demands flawless execution at every link to satisfy that customer.
Accurate and timely visibility, process expertise and understanding the intricacies involved in managing the physical movement of goods and inventory in the automotive aftermarket supply chain are some of the acute challenges within the aftermarket auto industry. And as you have seen in many of our blog posts, with so many moving parts in effective transportation management, In order to win the business of a car owner, both dealers and the automotive aftermarket supply chain network must overcome these challenges and position themselves as the most attractive option and remain competitive.
Today, in preparation for our upcoming exhibition at the Automotive Aftermarket Product Expo (AAPEX) this coming November 4th thru the 6th, we continue our series on best practices and tips for those in the automotive aftermarket supply chain. Our first post was around the supply chain trends affecting those in the automotive aftermarket. Today we will talk about how a focus on effective transportation management gives shippers a competitive advantage.
Top 6 Competitive Advantages for Automotive Aftermarket Supply Chain Companies who Master Effective Transportation Management
Some of the top competitive benefits realized by those automotive aftermarket supply chain folks who master logistics, and especially transportation management are:
- Reducing Overall Costs: Aggregating shipments, more effectively planning for production and labor, and reducing transportation costs, all play a part in reducing the total landed cost of your products. Lower costs will allow you be more competitive with your customers and potential customers.
- Increasing Efficiency: Technology is a key element in developing an effective automotive aftermarket supply chain strategy. Spend less time performing tactical, repetitive supply chain activities so you can spend more time focusing on your core business. A Transportation Management System gives you the ability to automate supply chain processes that makes decision-making easier, and thus spending less time and resources towards executing shipments. Again, this allows the shipper to then quickly scale and not lose money as they are able to gain more customers.
- Improving Service: With more effectiveness in transportatoin management, and in working smarter and collaboratively with carriers, automotive aftermarket supply chain practitioners can potentially broaden their carrier base to give their business many more options. Choose carriers based on cost, transit time and service levels. Handpick the carriers you believe will serve your customers best. When you have the ability to use a TMS with reporting and analytics you are able to see the affect of your choices within that TMS. For example, let’s say you were shipping LTL, and at time of processing the shipment, you have a carrier you can choose based on time of transit, cost of shipping, and insurance limits. Let’s say you choose one carrier 10 times because it’s the lowest cost, which you naturally want to choose. 5 other times you pick another carrier, because they happened to be the least cost carrier, but not always are they the cheapest. After a month goes by, and you use the reporting capability of the TMS, you see that although you chose the carrier 10 times, they only got the product to the customer on time 60% of the time, and you are always having to run customer service interference, wasting valuable time and money. With the other carrier, they are on time 100% of the time! This is valuable information, allowing you to increase your customer happiness by making sure the customer has no issue with receiving their product. Now that is increased customer service!
- Warehouse Efficiency: The MORE you use your transportation management system the more you decrease time on freight management and more time working on other projects such as warehouse duties. Furthermore if your TMS is integrated into systems, such as your ERP, you decrease days entry error providing less time spent on data entry or correcting mistakes caused by entry error. In combination with a Warehouse Management System, you get the overall combined automotive aftermarket supply chain visibility you need to make business decisions that drive further cost savings and decrease inefficiencies.
- Inventory Reductions: When effective LTL Freight management gives you confidence that your customers are receiving their shipments on time, it allows you plan better for your inventory you have on hand. Having an accurate forecast of your inventory is increasingly important as eCommerce freight shipping continues to increase for the foreseeable future.
- Cash Flow Improvements: Pre-paid and add? Free shipping? Only Pre-paid? Collect? How do you know how you should charge a customer? When you have the ability to better understand how transportation accounting happens in LTL Freight management, you can focus on finding the right balance between good customer service and overall profitability/cash flows with your transportation department.
The Core Competitive Advantage….Working with an Automotive Aftermarket Supply Chain Transportation Management Expert 3PL
With parts crisscrossing the globe, one of the benefits of working with a 3PL focused on transportation management, is gaining the ability to offer assurance of a part’s status at any point in the automotive aftermarket supply chain. This is where visibility is critical. 3PLs provide an accurate view of the flow of inbound and outbound goods. Driven by continual technology investment, the accessibility of as-it-happens information is increasing by the day. By extension, the availability of supply chain information has altered the aftermarket aftermarket landscape. The ripple effect of on-demand information continues as customer expectations surrounding status updates have also increased. The bar is constantly being raised regarding the importance of the reliability and efficacy of that information.
Dealers and other providers in the automobile aftermarket supply chain network that elect to navigate the supply chain without the assistance of a 3PL run the risk of losing inventory control, negatively affecting customer service and increasing costs. A 3PL delivers the tools, information, and importantly, the people and process rigor to ensure accurate, timely execution. Most parts suppliers and their dealer or retail networks do not have the expertise to manage their own supply chains. By leveraging the experience and knowledge of a strong 3PL, stakeholders can focus on customer relationships, more efficient and accurate inventory management and increasing sales.
The movement of parts along each stage of the automotive aftermarket supply chain can also be a challenge. When a parts dealer or retailer needs 500 SKUs of windshield wipers and 50 pallets of mufflers, those parts do not arrive on separate trucks originating from each factory that produces them or distribution center that ships them. A 3PL can bring a robust transportation management solution integrated with technology to coordinate the collection of those parts from their points of origin and provide consolidation services to facilitate the receiving, sorting, repackaging and delivery of those auto parts to a dealer or retailer.
Monitoring each stage along the way with timely data will quickly illuminate inefficiencies, identify possible corrective actions and allow for uninterrupted service.
Issues surrounding effective inventory management are also commonly identified as roadblocks to efficiency. By taking advantage of the insight and expertise of a 3PL, dealers and the automotive aftermarket supply chain network benefit from increased transparency, visibility, clear communication and a fuller understanding of what happens at each stage of the supply chain. This information will position automotive aftermarket players to effectively manage the balance between over-ordering and warehousing unsold stock, and delayed fulfillment due to under-stocked items — both classic outcomes of a lack of timely visibility and rigorous process controls that lead to poor situational awareness and mismanaged inventories.
Optimizing your transportation management gets your products to market faster, lowers landed costs to your customers and increases your capacity to fill orders. These are all competitive advantages to be had by those in the automotive aftermarket supply chain.
A third-party logistics provider (3PL) can address these issues and help implement solutions that allow a dealer or retailer to win in this continual competition for customers.
The automotive aftermarket industry presents one of the most difficult and complex supply chains to manage. Whether a dealer or retailer needs one pallet consisting of 10 different products, or 100 pallets loaded with 1,000 parts, a 3PL provides the same seamless service. The right 3PL can implement systems that provide critical data integration and in-depth visibility to achieve results with greater efficiency and lower cost than a dealer or automobile service parts retailer can achieve otherwise.