IMI Magazine

IMI Magazine

Aftermarket Logistics - The fast show

Tracking distribution channels for aftermarket parts is a bit like trying to extract a single strand from a tangle of string.

Take exhaust systems, for example, where specialist distributors are a feature of the market due to the size of the product and requirements of customers. Together with batteries and tyres, exhausts tend to be distress items which typically are replaced when they fail, often at inconvenient times, and therefore the timing of delivery to the point of installation is crucial. Also, the presence of major fast-fit chains means that there is often a direct relationship between producer and installer without any distribution layer in between.

In contrast, there are parts with an entirely different distribution profile because they are easier to store with lower unit costs and are less time sensitive. Filters and spark plugs, for instance, are usually replaced during routine servicing and may have several layers of distribution between producer and end user.

On top of this there’s the sheer size of part numbers (or references) as vehicle producers continue to increase the permutations in the model mix.

Because a high proportion of aftermarket parts are sourced from abroad, some carmakers have attempted to streamline their parts operations by supplying the entire European market from a limited number of centralised warehouses. This requires dealers to order in advance, with suppliers providing emergency back up for VOR (vehicle-off-road) parts demands through airfreight. Typically, parts producers run their own UK-based warehouses or appoint agents to handle their products.

Though fewer parts warehouses mean cost savings for the supplier, consolidation has to be weighed against customers who expect quick responses to their orders. With everyone anxious to hold minimum stock, deliveries at every level of the supply chain are becoming more frequent.  It’s against this background that vehicle manufacturers and the independent trade (mainly comprising warehouse distributors and motor factors) are battling for supremacy in aftermarket parts sales.

Faced with the well documented decline in new car sales margins, carmakers are looking to expand their presence in the more profitable aftermarket sector and part of this strategy is to boost parts sales to independent repairers through programmes such as Vauxhall’s Trade Club and Ford’s Parts Plus. Audi, Volkswagen and Renault are among others to bring in similar schemes, recognising the role of independent repairers in the servicing of older vehicles.

But crucially these initiatives rely on franchised dealers for distribution and reports indicate that delivery times compare unfavourably with the service provided by independent factors.

The latest issue of the CAT Parts Distribution Trend Index says that faster delivery by factors is mainly possible because they hold a broader range of stock. CAT points out that the typical parts department of a franchised dealer is geared towards supplying to the dealer’s own servicing operation and hence ordering parts for next day delivery is common practice. According to CAT’s research, this results in an average delivery time of 15 hours, which is not acceptable to many installers.

This contrasts with an average factor delivery of just over an hour, which explains why vans from major motor factors like Andrew Page and Camberley Motor Factors always seem to be dashing here and there on aftermarket mercy missions. Brian Taylor, the CAT report’s author, notes that “a substantial proportion (17%) of franchised dealers offers no delivery service at all”.

The big unknown is how long it will take for vehicle manufacturers finally to lose patience with their franchised dealers to the point where they set up their own arrangements for delivering to independent repairers – or, perhaps more likely, establish closer alliances with the independent trade itself.

Less contentious is the relationship between vehicle manufacturers and component suppliers and their logistics providers. Principal companies in this sector include CAT Logistics, Exel, Lex Logistics, Christian Salvesen, TNT Logistics and Unipart Logistics.

Illustrating the value-added benefits offered by logistics operators is Lex’s new long-term deal with Hyundai. As well as the usual functions of warehousing and transport, the contract includes inventory management, demand forecasting, product management, reverse logistics and dealer training.

Earlier this year, TNT Logistics started a five-year contract to manage aftermarket distribution for DaimlerChrysler UK, covering all of the group’s automotive parts including Mercedes-Benz cars and commercial vehicles, as well as Chrysler, Jeep, Mitsubishi, Smart and Unimog. The contract involves the distribution of spare parts to around 300 dealers throughout the UK from a hub in Milton Keynes, with VOR delivery by 8am every working day. TNT also has a UK outsourcing contract with Volkswagen for inventory management, warehousing, national distribution and technical support.

Beyond Britain, Exel’s 25-year partnership with BMW has paid extra dividends with the German company’s luxury carmaking division, Rolls-Royce, selecting Exel for the management of parts distribution worldwide.

Then, of course, there’s the case of CAT Logistics which swapped roles from servant to master with the collapse of MG Rover. As the owner of XPart, the MG Rover parts business, CAT Logistics assures customers that through its AutoService, members of the former MG Rover franchise have an entry into all-makes servicing and repair.

Meanwhile, as recycling and environmental considerations continue to move centre stage, it is probable that reverse logistics will assume a more critical role. This involves the transporting, handling and returning of used products from end users to a remanufacturing or recycling facility. 

This contrasts with an average factor delivery of just over an hour, which explains why vans from major motor factors like Andrew Page and Camberley Motor Factors always seem to be dashing here and there on aftermarket mercy missions. Brian Taylor, the CAT report’s author, notes that “a substantial proportion (17%) of franchised dealers offers no delivery service at all”. 

The big unknown is how long it will take for vehicle manufacturers finally to lose patience with their franchised dealers to the point where they set up their own arrangements for delivering to independent repairers – or, perhaps more likely, establish closer alliances with the independent trade itself. 

Less contentious is the relationship between vehicle manufacturers and component suppliers and their logistics providers. Principal companies in this sector include CAT Logistics, Exel, Lex Logistics, Christian Salvesen, TNT Logistics and Unipart Logistics. 

Illustrating the value-added benefits offered by logistics operators is Lex’s new long-term deal with Hyundai. As well as the usual functions of warehousing and transport, the contract includes inventory management, demand forecasting, product management, reverse logistics and dealer training. According to Graham Lightfoot, Hyundai’s aftermarket director, “we see Lex Logistics as adding value to our commercial thinking, rather than just operating within logistics. While their primary responsibility is to report on the supply chain, they will also have an understanding and view on commercial matters which we seek and encourage them to give”. 

Earlier this year, TNT Logistics started a five-year contract to manage aftermarket distribution for DaimlerChrysler UK, covering all of the group’s automotive parts including Mercedes-Benz cars and commercial vehicles, as well as Chrysler, Jeep, Mitsubishi, Smart and Unimog. The contract involves the distribution of spare parts to around 300 dealers throughout the UK from a hub in Milton Keynes, with VOR delivery by 8am every working day. TNT also has a UK outsourcing contract with Volkswagen for inventory management, warehousing, national distribution and technical support.

Beyond Britain, Exel’s 25-year partnership with BMW has paid extra dividends with the German company’s luxury carmaking division, Rolls-Royce, selecting Exel for the management of parts distribution worldwide.

Then, of course, there’s the case of CAT Logistics which swapped roles from servant to master with the collapse of MG Rover. As the owner of XPart, the MG Rover parts business, CAT Logistics assures customers that through its AutoService, members of the former MG Rover franchised have an entry into all-makes servicing and repair.

Meanwhile, as recycling and environmental considerations continue to move centre stage, it is probable that reverse logistics will assume a more critical role. This involves the transporting, handling and returning of used products from end users to a remanufacturing or recycling facility.