Business Management Supply Chain

Business Management Supply Chain - Product Kits, an ERP Solution to the Automotive Grey Market

Introduction

An increasing threat to the automotive industry over the past decade has been the growth in the use of non-genuine parts, known as the grey market. The grey market is the third party market in non-genuine parts, clones of the original manufactured components. Distributors deal with the grey market problem and its growth by trying to find ways of providing incentives to use genuine parts.

Many have started to use kits which link together key components to provide a complete solution. These kits offer considerable financial, logistical and quality incentives, as well as improved warranties, to dealers and their customers and so remove the need to look to the grey market for replacement parts. This market is growing rapidly, especially within Asia, and includes counterfeit parts, as well as parts that are not intended to be counterfeit but are simply cheaper replacement parts. ERP software solutions, particularly the supply chain software, inventory correctly managed and configured must be capable of

For the customer, the use of non-genuine parts carries considerable financial risk. Grey market parts are almost universally inferior in quality to genuine parts and although cheaper initially, have to be replaced at more frequent intervals. They usually offer very limited warranty and, as these are individual components, each must carry its own warranty whereas a kit of genuine parts provides a more comprehensive warranty from the manufacturer. Another consideration is that the use of non-genuine parts potentially places all warranty at risk. Many distributors issue warranties under the condition that only genuine or approved parts are used.

In addition, the use of non-genuine parts can potentially affect the life span, or quality of a genuine part, particularly in the case where a non-genuine part is a component of multiple parts. If that non-genuine part endures greater and more rapid wear and tear, the rest of the components will suffer similarly. It requires more service, so in the short term, the cost is lower but in the long term, it actually may be a lot higher. A good example of that are components that endure a lot of wear and tear such as brake pads. Brake pads are a common item and non-genuine pads are known to wear at a greater rate, and therefore need to be replaced much more frequently.

The negative effects of the grey market on the manufacturer and distributor are many and varied. For example, a grey market brake pad may last one quarter as long as a genuine pad, and if the owner is unaware that the replacement is not a genuine part, blame may well be attributed to the manufacturer. For the distributor, the grey market cuts into market share. A major point of contention is when qualified service points use non-genuine parts. A vehicle owner may naturally expect that a qualified service point will provide genuine parts replacement. In fact, many distributors believe that their competition is not so much fellow distributors, but the market in grey spares.

Re-conditioned parts are another problem. It may not be well known amongst vehicle owners, but parts are sometimes removed from damaged or written-off vehicles. Instead of using new genuine parts, re-conditioned parts can be used. The longevity of that part is, therefore, not known, however a vehicle owner will expect that a genuine service will provide genuine parts. Although this is not yet prevalent in Australia due to the cost of importing grey parts, it can be the case in Asia as parts fail earlier than expected, leading to customer dissatisfaction and low regard for customer service. And as the cost of these items decreases and the quality improves, the distributor will find it even more difficult to compete. Kitting therefore becomes an integral and critical competitive strategy to counter the grey market.

Kits

There are two types of kits: Build Kits and Bill of Material (BOM) Kits. A Build Kit is one in which individual parts are pre-assembled before they are ordered and made available as a packaged unit. This type of kit is traditionally developed around a selection of dependent parts that are constantly used. An example in the automotive industry would be a 20,000km service kit, consisting of the relevant parts which are packaged ready for the service centre to use. It eliminates the requirement to determine and then search for individual components to complete the service. A single part number represents multiple parts.

A Build Kit provides an easy ordering process and eliminates the potential errors which are sometimes introduced when ordering individual parts. Furthermore, service centres may not have all of the required parts to perform a service or to replace faulty components. A Build Kit solves this problem.

A BOM Kit is used in situations where a single part number represents many smaller components. In simple terms, this kit expands into all the individual components and is picked and packaged at the time of order. For example, rather than ordering components individually, a single part number would enable all component parts to be ordered at once, eliminating errors and ensuring an easier, more comprehensive, higher quality ordering process.

Benefits of Kitting and Incentives

To solve the problem of non-genuine parts in the heavy vehicle industry many distributors have service kits for every level of service up to 100,000km. It is simple to find the kit for the model, for the service and order accordingly. Rather than have multiple line items in a purchase order, a single line item is sent to the warehouse that is then packaged and sent. A kit gives the dealer confidence that all components required for a particular job are present. In addition to Service Kits, the truck industry has developed the concept of Smash Kits - front-end, rear-end and specific panels Smash Kits. For example, a front-end kit would normally require two headlights, a grille, radiator, hoses and associated parts. This could be an excellent opportunity for BOM Kits. A dealer can simply type the kit required for the particular model, and then pick which components are required

The trucking companies are often the litmus test. Trends are identified, and because the trucking industry is very competitive, opportunities to provide a customer service or cost advantage are extremely important. However, the automotive passenger vehicle industry is now starting to follow the truck industry in using kits.

Some incentives are being offered, for example, a kit provides a financial incentive as opposed to purchasing individual parts. These incentives vary but, for example, a particular service kit may cost $1,000 if each component is purchased individually, but $750 if purchased in kit form. Additionally, if a single component price is reduced in the marketplace, the overall kit price may still be able to balance the overall cost of the kit, thereby maintaining good profit margins.

There is also a positive effect on quality, and on supply and service times. The service dealer can be assured that all the correct parts are available for the service and that he will not have to search for or re-order forgotten components. Instead of keying the 20 or so components for a particular service, a single key is used that incorporates all of the required components. The kit is then handed to the mechanic who has all that is required to provide that service. Quality is maintained because the parts are genuine and carry appropriate warranties. These benefits provide the dealer's customer with a guaranteed level of service, ongoing support, and an increased level of satisfaction. Ultimately this may well lead to repeat and referral business for the dealer. The true incentive for the distributor is in limiting the need to go beyond the available stock and access the grey market.

Forecasting and logistics

Kitting also assists in many aspects of the supply chain, particularly inventory management systems and warehouse management. Once a kit has been assembled and the trend for that type of kit has been analysed correctly, it becomes much easier to determine inventory turnover during a defined period. Business management supply chain software can have an automatic replenishment process once a kit level has fallen below a predetermined stock arrangement.

Kits do, however, require some initial adjustment to forecasting practice. For example, if 50 kits are built, quite often it is incorrectly recorded that 50 items have been moved. However, often there is only a requirement to record demand, particularly the demand on individual components that make up a kit. In the early stages of building kits, demand for each component is critical until the appropriate forecast can be determined. Once the correct balance of the number of kits required has been established the stock arrangements can be easily dealt with. One of the dangers of kits, of course, is that there is no point in building 100 kits if only ten are being turned over monthly. With correct forecasting, it is easier to build kits a month in advance, instead of perhaps 12 months and having considerable stock sitting on shelves with a perception of low turnover.

There is no doubt that kits also provide a better level of business intelligence. Many distributors have noticed some dealers increasing their purchasing based on kits and so they can also then forecast more accurately. Without kits, the ability to maintain stock levels can be difficult as there may not be true visibility as to the use of the individual components. Trends are easier to analyse for each dealer, based on a prediction of when the next service will be due. For example, it becomes possible to predict that vehicles that have just had a 20,000km service will probably require a 30,000km service and the appropriate number of kits at a defined future time. Stock levels can then be maintained and more accurate forecasting is possible. For the distributor benefit is gained through forecasting kits, as well as the individual components that make up those kits.

Many distributors use outside logistics companies, and kits provide a much simpler process for logistics because of the way they account for handling and inventory. A common accounting process is to pay per line item. As a kit will represent a single line item, but include considerably more components, the cost of logistics can be reduced. For example, if a kit consists of three line items, payment will be made on a single line as opposed to three lines, resulting in considerable logistics savings.

Summary

With the growth and availability of third party spares components, suppliers and distributors are looking to creative ways to maintain market share as well as ensure that the quality of spare parts in the automotive market place is not diluted. Spares kits are a practical solution to this threat. Dealers can easily order kits relative to the work to be performed and be assured that all components are in place at a price that is attractive and significantly reduced from individual parts ordering. Suppliers can be assured that genuine parts are being used, so too customers whose satisfaction is guaranteed. Kits enable business intelligence to be increased with a more predictable and consistent spare parts forecasting process and inventory requirements can be minimised and based on real knowledge of customer behaviour. Kits together with your ERP software solution can enable the supply chain itself to be streamlined to meet dealer delivery expectations.

A Wide Variety Of Automotive Paints Keep Your Ride Looking Good

A Wide Variety Of Automotive Paints Keep Your Ride Looking Good || Tell me something? When you were out looking for your first car, what was the one factor that totally dominated your purchase decision? Of course the make of the car did matter. Not to mention price. But it would probably be true if I said that the one decision that gained the maximum importance in swinging your decision was probably the color of the automotive paints the car boasted.

Not many of us realize it, but automotive paints have an undeniable role to play in helping people choose their wheels of choice. How many times have we heard people speak in awe about that red Ferrari or the black Cadillac? A Mercedes Benz is always silver or gold and a number of other automobiles have their own pick of automotive paints. Admittedly, we are all suckers for quality automotive paints. And it is a small wonder that these automotive paints influence the kind of car we buy.

In the days gone by, automotive paints had a very limited scope. Due to the cost of production of automobiles, most models that rolled out of the assembly lines used either black or white automotive paints. But once automobiles had entrenched themselves in the psyche of the modern man, manufacturers began being pestered by users for a wider range of automotive paints. In America, Ford could safely be said to be the first manufacturer who offered a range of automotive paints. Pretty soon, automobiles began rolling out of assembly lines in all sorts of colors. Automotive paints were here to stay.

Today, things have gotten a tad more complicated. Due to the wide variety of automotive paints available in the market, people have begun experimenting with the regular colors of their automobiles. There are a number of two tone automotive paints available in the market and some of the flashier consumers have almost normalized multiple colors. But automotive paints themselves have not remained staid. Today's automotive paints come in more than just colors. They come with a wide variety of features that earlier generations could only dream of. There are scratch proof automotive paints, rust-free ones and even all weather automotive paints. But one thing is for certain. No matter how high tech these paints get, they still hold a place very close to our hears. And by doing so, they have become the determinants of how and why we loosen our purse strings to buy that blue beemer or green bug!

Cable Assemblies Play a Major Part in Ensuring Vehicle Safety

Cable Assemblies Play a Major Part in Ensuring Vehicle Safety || Whether traveling by car, truck, train, plane, boat or another mechanical device, people today are always on the go. Our society is built upon multiple means of getting from place to place. We take advantage of the fact that there is always an option when it comes to traveling. But, do we ever sit back and consider all that goes into making sure we are safe while traveling? We put ourselves in the hands of a machine every time we get into a car, a train, or another transportation vehicle. It is important to know that we are protected.

Our government helps regulate the safety of transportation vehicles by setting requirements and policies for the industry. The vehicle manufacturers must ensure that the variables used to create their products are also safe. They not only rely on the engineers involved in designing the vehicle and the machines used to physically make the vehicle, but they also rely on each and every piece of material used to produce the vehicle.

There are so many different types of transportation vehicles and each is made up of a number of special materials to perform a unique function. It is difficult to come up with an inclusive list so take, for example, the functions of a car. You have parts that open and close, move up and down, go side to side, heat up or cool down, and turn around and around. Making sure all of these parts work properly are vital to the safety of the car. Tying these parts together to function as a unit is a difficult task.

One of the common components to tie the working parts together are cables. There are automotive control cables to control anything from the HVAC system, to the shifting of the car, to the brake release. There are restraint cables to help with tailgating heavy loads or safety cables to hold a seat to its frame. Just about any task the vehicle performs includes some type of cable assembly. It is important to make sure that the cable assemblies used to build the vehicle functions are safe and secure.

Starting from the top and working your way down you can see how vital it is to ensure quality products are used from the beginning to construct a quality vehicle. If unsafe cables are used, it does not matter how good the machines are that make the vehicles or how smart the engineers are that design the vehicles. The manufacturers would not be able to build a safe vehicle and the government would not be able to approve the vehicle through their requirements and policies if the cables were unsafe. And, this one small factor could affect the confidence we have in the safety of our transportation. In turn, our "always on the go" society would come to a screeching stop. Safety is key and ensuring quality products are used can help us remain unharmed.

Automotive Rapid Prototyping Fail First Paradox

Automotive Rapid Prototyping Fail First Paradox || New product development and innovation is much more difficult and time consuming than most other business activities. Automotive rapid prototyping greatly enhances learning speed and reduces the risk of new automotive parts development.

Historically, the automotive industry has been using rapid prototyping as an important tool in the automotive parts design process. The extremely fast-paced automotive design cycles require an extremely fast prototyping system which can produce car parts fast and inexpensively.

The main objective of automotive prototyping is to learn quickly: how a new automotive product behaves in its natural working environment, before transferring the prototype to the production line. Many times, mistakes are learned only after a new automotive part is launched. This is the main explanation for poor automotive parts design, from product mismatch, poor engineering and function or finish, and overpriced production. In order to accelerate the learning curve, before these costly automotive prototyping mistakes are made, one must accelerate and facilitate feedback loops from tests in the lab and market trials.

Automotive Manufacturing Technologies

Working with an assortment of rapid prototyping equipment, automotive prototyping engineers utilize the most advanced 3D printers, in their quest for perfect form, function and utility. Working in advanced manufacturing centers, the automotive engineers use the technology to verify what they are doing, and, equally important, to save tremendous amounts of time, and money.

Automotive Rapid Prototyping Compresses Development Time

The advantages of 3D rapid prototyping model creation versus viewing a cad/cam model on a computer screen is palpable. Automotive parts engineers get together discuss the pros and cons of a rapidly produced automotive parts model and discuss the pros and cons of the design, as they pass it around, twisting and viewing the prototype, and decide if that is what they had in mind. This way, problems get solved up front, before going to the assembly line! Once determined that the automotive prototype design is a go, the model can then be sent to a die maker.

Automotive Prototyping and the Die Maker Process

The die maker cannot use model to make the die, but because they have it in their hand and can look at it and feel it, they can determine where the parting lines will be and exactly how much steel they will need to produce it. The timing of the die process is greatly compressed.

Examples of Automotive Rapid Prototyping Parts

·  Engine castings and parts

·  Car Engine parts

·  Auto Mechanical parts

·  Car Dashboards

·  Car Handles and Knobs

·  Auto Body Components

·  Car Trim parts

Fail first Paradox in Automotive Rapid Prototyping

The automotive rapid prototyping paradox is to fail earlier rather than later. By failing earlier, the design engineers surprisingly succeed in accelerating the project; this greatly reduces development cost risk. By considering all automotive prototype failures as learning experiments, the engineer has much less stress, knowing that they are practicing the old adage, that success comes from ninety-nine percent failure and introspection.

Companies Bring Big Supplies of Automotive Connectors

New Companies Bring Big Supplies of Automotive Connectors || Newly appeared companies bring into the market new automotive connectors and components like: tires, brake systems, stability control systems, cables, wires etc..

New suppliers of automotive connectors and components have conquered the market by their extensive activities particularly in the production of tires, brake systems, control of the vehicle dynamics and electronic sensors. With a turnover of 20 billion Euros in 2009, these new companies have about 138,500 employees in 46 countries.

These connectors providers have been real work suppliers as well, making that over 100,000 people over the world were provided with jobs.

These automotive connectors are available for most car models, such as BMW, Fiat, Opel, GM, Ford, Chrysler, RV, Farm Chevrolet, Audi, Porsche, Seat etc.

Automotive connectors are one of the most common causes of overlooking reasons for engine problems and starting problems on a boat, truck, car or anything that starts with a battery. Repairing can be made by simply replacing the old corroded and broken connector in the electrical system.

These new connectors companies have a submersible and nature sealed interconnection systems that have designed auto connectors to withstand harsh conditions. These connectors include opaque and inter facial seals and this new design assembled firstly is very easy to use.

It also reduces applied costs because it does not require assembly of components and eliminates the need to purchase or handle wire seals.

The Automotive Connectors provide unique combination of superior electrical performances and low insertion forces.

These are designed to meet the new requirements and face the tests which are aligned to 150,000 miles or 15-years of service life. The connectors' performance standards for sealed connectors. By being compliant with these standards, the Automotive Connectors are ideal for automotive, off-road construction, marine and agricultural equipment, as well as bus, truck and RV applications.

These connectors are available in a wide variety of shapes and circuit sizes and wire ranges. These new automotive connectors versions accommodates wide ranges of styles from SAE wires to UL type wires, in comparison to old connectors, that were usually designed for thin, weak wires.

"Prior to the old connectors, sealed connectors used in these types of applications require additional assembly by the customer and, in some cases, there were permanent connections that needed complete replacement if a connection failed, all of which cost time and money, With these new and improved connectors not only meet the market needs for sealed, they also offers pre-assembled designs that are also field repairable solutions that eliminate assemblies and down time, as well as hard repair costs."

These being said, hopefully you've understood the importance of automotive connectors and plan to get the best there is available. Among the numerous companies that provide automotive connectors, a good car can only hope its owner will choose the best product that suits your car's every personality and style. Give a few bucks more but at least you'll not regret the good quality you have found.

Can an Engineering Process Like Automotive Roll Forming Really Be an Art Form?

Can an Engineering Process Like Automotive Roll Forming Really Be an Art Form? || If you have ever been in a manufacturing plant you will see all kinds of machinery. If you think about it, everything you see has been made. Very seldom do you have anything in the raw form. Even most organic food has been handled and packaged to get to you. There are television shows based entirely on how things are made and it is fascinating.

They show how cars are made including the automotive roll forming process prior to the typical automotive assembly line we're accustomed to seeing. They show how raw materials are made into the products that can then be made into more refined products.

When looking at some of these processes the question always comes to mind, how much of it is art and how much science and engineering. Maybe it can even go into the realm of a mix. It can be art and science. After all, isn't a growing flower both? The uncoiling of a Jasmine plant is fascinating as is watching an uncoiler spinning off strands of coiled copper wire in a manufacturing plant. They both require perfect timing and incredible engineering. 

Most people watching a time lapse video of a plant growing don't think about how the stresses and strains of gravity and other forces of Mother Nature impact the ability to produce such beauty and intricacy. However, if you are an engineer in the manufacturing world, you may very well ask those questions when looking at a growing plant.

If you are a creator of bending machines then you may be paying attention to how the earth bends and molds itself into mountains and how old pine trees stay bent over for decades to be some of the oldest trees on earth yet remain so in often harsh conditions. To see the beauty of art and form in manufacturing equipment may be a stretch but then enjoying your surroundings is much less stressful than looking at everything as just another piece of metal.