Ford parts system changes

[mbowers]

Last Friday Ford held a nationwide conference call for dealership parts managers.

The call was to formally announce changes to U.S. distribution network (non-Ford parts managers should check the September 2001 issue of The Parts Manager newsletter for some details.)

Among the changes, which won't be fully evident for another 18 months, was a switch to daily stock orders accompanied by a reduction in the discounts available to dealers and a reduction in the return reserve.

Are the changes good or bad for Ford dealers? Won't daily orders allow dealers to carry less inventory investment? Won't Ford now have to warehouse its own parts instead of using big wholesale dealers for free storage space? Won't daily orders improve dealership fill rates and customer satisfaction?

Or am I missing something?

What do you Ford parts managers think?

[mbowers]

Rather than reply to myself, here are some observations on the subject from Mike Nicholes:

Daily orders are a big improvement and an advantage if properly used by the parts manager.

Your observation that the daily delivery offsets the changes in discount and PIPP returns is correct. The catch is to use the inventory control system in place (there are a couple of glitches here) in making sure the system responds as accurately as possible to the increase efficiency of the distribution process.

The major three systems are still set to read weekly demand (not a problem if certain rules are followed STRICTLY), but if the parts department thinks that this lets them off the hook for better internal controls and efficiency in increasing the coverage and scope of the parts stocked then they are badly mistaken and will not benefit from much of anything.

Whether or not there are distribution problems from the factory to the dealer, it is the dealer that still must bear the brunt of proper response (fill rate to the technicians and customers) in the dealership. There is still poor coordination between the actual sales demand at the dealership and the purchase demand that the PDC receives from the dealership. Sometimes the two are so disparate to defy belief.

The problem can be over come through following proven and basic (not some of this esoteric crap that is showing up from time to time) principles of inventory control and management.

Nuff said

Mike Nicholes

[This message has been edited by mbowers (edited 10-09-2001).]

[eric the red]

Now that some of the shock has worn off, I think that we will need to reassess the way we have been doing business and be very careful not to over-react.
The change in discount could be a push or even slightly to the benefit of the dealers. The big variable here is whether or not the PDCs have stock to fill orders. I can still clearly recall when Ford was increasing the number of FADs, how difficult it was to buy Motorcraft parts. The shortage was due to filling all these warehouses, causing spot shortages in the different geographical areas. Also, Ford has proven time and again that JIT (just in time) inventory often fails because there is no supply to fill demand.
I think the biggest fear is the cut in inventory protection and the force-feeding of the Parts Upgrade program ($30,000). If it's true that we won't need as much PIPP (which may be possible), why not leave it alone for one year past the final wave of openings and demonstrate the unused dollars before making the cut?
Ford has a terrible record for launching anything, so who knows what the program will morph into over the coming months.
I also think that it would be nice if Darryl Hazel would take a basic charm school course so that I could quit feeling like the enemy or some kind of stepchild.

[mbowers]

A reader asked us to post this message on his behalf:

My question is one no one seems to want to talk about at Ford Motor Co. Fords newest parts program," Daily Parts Advantage ", seems like a fair and surprisingly well thought out program. I have always made it a game of sorts to try to figure out Fords eventual reasoning for such ideas, but this one has me puzzled. Would love to hear your comments on these plans.

I am the parts manager for a middle size dealership. Sales average 450k per month with a good steady wholesale business. Service drive rate sitting at about 86% with 4.2% no sale over 12 months inventory. Ford inventory stays around 480k. If I have been told correctly by a representative from Darell Hazels office, I still sit at getting an additional 3.5% on top of the 1% SOD given on the new plan. I have not seen the Ratio Sheet, as the rep called it, myself. This would still put me below the SOD I am getting now. So even though I have a clean inventory, service drive fill rate near normal and a purchase loyalty to Ford at around 55%, I feel like I have been stuck again. Do you see any downfalls in the program other than this?

Also the "Motorcraft Strategy" program seems like a good way to do away with the FAD's they have in place. 17% WINS on wholesaled parts is a no brainer! Why would I buy from the FAD we have been dealing with for the past 25 years? I have one FAD that will be powertrain parts only and another that will cover the motorcraft and chemicals. This leaves a gray area for certain parts that Ford will not tell me who will supply. as an example, RABS valves, basic #2B373, have been supplied by the Fad that will now be powertrain only and is not supplied by the PDC's or motorcraft.

I know I have vented to you just a tip of the problems with Fords parts division, but not getting anywhere with reps.

[This message has been edited by mbowers (edited 11-14-2001).]