New Model Launch


CHALLENGE

The client realized that to meet the high expectations for the new vehicle, excellent aftermarket support was critical. They set a target of 96% first-pick availability (FPA) for the launch’s first day onward, involving:

  • 3,600 new part introductions (NPI)
  • 1,100 common parts
  • 500,000+ configurable vehicle variations
  • 18,000 customer pre-orders
  • 3.5 million pieces ordered
  • 300 vendors
  • 15 regional distribution centers
  • 177 global markets

Not having parts in the right place at the right time was a risk that could damage customer relationships. Neovia had advanced technology in place to manage the company’s mature parts inventory, but it was just one element for achieving overall optimization. For the new model’s new parts, there was no demand history to help determine which parts to stock and how much inventory to hold, if any. The company knew that it could achieve optimization only when technology was combined with best-practice processes and executed by experts.

 

SOLUTION

As long-term partners with this manufacturer, Neovia’s inventory management team and optimization specialists applied best-practice processes that they had refined during many years of aftermarket inventory planning. They compiled detailed information on forecasted vehicle part, bill of materials, markets, market applicability, feature take rate and historical demand from previous vehicle launches.

Eight months before the launch, the team intensively analyzed each of the 3,600 new parts. They developed a 12-month forecast of independent demand at a regional level using stock keeping units (SKUs). Adding to the complexity was the high number of items that were unique to the new model, such as panoramic roofs and numerous accessory options. Yet, from the extensive forecasts, Neovia staff established stock policies and Initial Stock Orders in line with the company’s targets. Neovia also managed the forecast and supply of existing parts that were common to other vehicles within the portfolio to ensure that established customers would not be caught short with the expected increase
in demand for those parts.

The manufacturer and Neovia then closely collaborated to move parts into its master facility in the United Kingdom. Working closely with the client’s staff, the Neovia team addressed:

  • Supplier readiness – Prepared 300+ suppliers
  • Capacity planning – Determined supply-base constraints and adjusted parts
    scheduling accordingly
  • Future due scheduling – Planned parts orders outside of lead time
  • Schedule management – Established strict governance and communication for schedule adherence
  • Parts readiness – Organized packaging, documentation and local market requirements for all parts
  • Receipts – Established operational plan for bulk put-away and cross-dock receipts

 

RESULTS

In a global, multi-echelon distribution network, inventory management does not stop with replenishment schedules. No matter how tightly inbound parts supply is planned, delays are likely. Neovia worked with the client to ensure careful material deployment to manage global availability. Together they reviewed receipts and regional stock levels daily and communicated those numbers to operations and transport, which enabled the combined team to manage manpower and costs more effectively.

 

The manufacturer sold 108,598 of the new model vehicles globally in its first full year of sales – more than any other previous model during the same period. Along with these exciting sales figures came more exciting results: In what this 4X4 manufacturer’s parts director would call “the best-ever new vehicle launch,” Neovia had helped the client surpass its launch goal of 96% overall FPA for aftermarket support, reaching:

  • 97% overall FPA for new and common parts
  • 93.1% new parts FPA
  • 97.5% accessory parts FPA
  • 1.5 days – average back-order clearance time
  • 3.14 – inventory turn of new model parts 24 months after launch

 

KEY TAKE AWAY

The manufacturer achieved 97% availability of both new and common parts.

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