Automotive News Canada - December 2021 - F26

FIXED OPS JOURNAL
STEP BY STEP
A
utomotive service parts fulfi llment is
at a crisis level, says Paul Gurizzian,
CEO of aftersales data and strategy
fi rm Carlisle & Co. Th e volume and
duration of parts on back order is growing, he
says, and that leads to a number of issues.
Dealership service customers are unhappy because
of the inconvenience. Service departments
lose repair order revenue while waiting
for needed parts to arrive. And automakers,
unable to supply parts to customers, may lose
business to aftermarket parts providers. Gurizzian,
59, discussed the parts supply issue and
how it impacts the service lane with Editor
Dan Shine. Here are edited excerpts.
Q: These supply chain issues have been going
on for a while. Is there a light at the end
of the tunnel?
A: We will get through this, but the exact duration
is unknowable. Th ere is no single root
cause, therefore there is no silver bullet to
solve the challenge. But we at Carlisle have
some near-term, medium-term and longterm
recommendations
for the industry.
PAUL
GURIZZIAN
Let's start with the nearterm
recommendations.
Th e cost of lost fi ll is signifi
cant. Some of it is
measurable, but some isn't because tarnishing
one's brand happens slowly, and the impact
on lost market share and pricing power is
subtle. Th e point is that investing to address
this problem is merited just like you would invest
to improve quality or increase production
capacity. Purchasing departments need
to understand their suppliers and carriers are
competing for labor, and the prices you pay
them need to be high enough so they can hire
qualifi ed labor and drivers in the marketplace.
Now is not the time to try to save 2 percent
on a piece cost or [less than load] rates.
Be prudent but pay at or above market prices
so you can secure capacity over your competitors.
What
are Carlisle's medium-term recommendations?
Th
ink carefully about suppliers and supply
chains for critical parts that enable customer
uptime. Increasing redundancy and reducing
supply risks need to happen. Th is means a
PAGE 26 DECEMBER 2021
"
" Think carefully about
suppliers and supply
chains for critical parts
that enable customer
uptime. Increasing
redundancy and
reducing supply risks
need to happen. "
few things:
 Onshoring production rather than off shoring
it in the Far East. Shortening supply distances
and lead times simplifi es your supply
chain and reduces the risk of bottlenecks.
 Spending money for a second set of tools
so there are two suppliers for key components
rather than just one. For current production
parts, your manufacturing colleagues need to
take the lead. For past model parts, aftersales
supply executives need to take the lead. Focus
on the most constrained parts or suppliers
How to cope with the supply chain crisis? Carlisle CEO shares strategies
that support uptime, like powertrain.
 Reconsidering what can be remanufactured
and reconditioned to free up capacity,
particularly in electronics.
 Asking where you are on the additive manufacturing
journey. Increasingly more materials
can be 3D-printed. Th is is another source
of surge capacity.
Finally, what are the long-term actions?
I'm going to recommend some actions that
are bold, strategic and controversial. Th ey require
investment.
We as a service parts industry have been
QA&
measuring what we could measure, not what
the customer experiences. OEMs typically
measure order fi ll rates from their warehouses
to their dealers since that can be easily measured.
Yet end customers don't care about fi ll
rates to the dealers - they care about whether
the dealer has the right parts to fi x their vehicle
when the car is in the repair bay. Th is is
measured via dealer " off -the-shelf " fi ll and
" repair order " fi ll.
Th e end customer, when they are buying
parts or getting a repair, actually experiences
off -the-shelf fi ll and repair-order fi ll.
Over the past decade, Carlisle has worked
with OEMs to develop a standard way to measure
off -the-shelf fi ll and RO fi ll. While many
now measure off -the-shelf fi ll using the standard
defi nition, only a handful have been able
to crack the holy grail on RO fi ll. Deployment
of a capable retail inventory management system
and real-time extraction of inventory and
RO data from many disparate DMS platforms
is required. Also, getting high-quality data is a
challenge because dealer processes vary.
However, these challenges can be solved.
Th ey require investment and prioritization by
OEMs and their dealers and cooperation from
the DMS providers.
To optimize RO fi ll for the customer, your
supply chain requirements change. Dealers
need to stock more breadth, and they need to
stock asynchronously. Th at is, stocking requirements
vary by dealer and may be based
not just on their demand but the demand of
other " similar " dealers. And dealer compliance
with recommended stocking needs to be
very high. Beyond dealers, OEMs have a role
because same-day delivery is required. It can
be from [parts distribution centers], other
dealers or a distributor channel. Th e point of
"
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