Sunday 25th Mar 2018 - Logistics Manager

Future horizons

By employing creative design teams, leveraging modular manufacturing and maintaining an extremely responsive global supply chain, you can afford to manufacture cars based on actual customer orders, ridding yourself of excess capacity and capturing that ever-elusive market segment of one. Of course, the transition from make-and-sell to build-to-order has not been easy; this fundamental change reshaped every area of your business from manufacturing to measurements. At the same time, the market has richly rewarded your efforts.

For example, when customers are ready to place an order, the CarWorld system launches the interactive ordering application on your website. Customers are presented with many choices that allow them to configure their own customised vehicles. Choices may include special incentives like €1000 in RoadHugger bucks (redeemable for postsale service or add-on merchandise) for selecting a 4-cylinder versus a 6-cylinder engine. Offering such incentives during a unique ordering situations helps fine-tune component inventory levels, gives personal savings opportunities to individual customers and uses ‘rebate dollars’ to strengthen post-sale customer relationships.

The ordering application also verifies parts availability, production scheduling, and realtime aggregated demand data to provide a specific delivery date and time to your customer. As soon as the order is confirmed the information is passed on to your order-fulfillment system, which in turn alerts your suppliers’ production planning systems to schedule the production of customer Sally’s vehicle. Her order pulls the components and materials through the supply chain.

Important milestones
Your global order-fulfillment system is updated in real-time by all of your manufacturing sites around the world – including the manufacturer – of Sally’s car. Using this information, Sally’s order-fulfillment agent updates her at important milestones, keeping her engaged in the unseen manufacturing process. Because your build-to-order process is designed with the flexibility to add options at the last moment, your orderfulfillment agents can leverage this capability to drive incremental sales of these high-margin items on in-process orders.

The net result? Building based on actual demand yields substantial reductions in cost. Plus you have the ability to offer your customers a personalised product that is customisable until the moment it rolls off the manufacturer’s lot – an advantage that drives increased revenue and strengthens customer loyalty considerably.

You are a global company. Gone are the days when you relied on a centralised, inhouse product development team. Production has been shifted to areas in the world where economic advantages exist. To control capital expenditures, you’ve formed close alliances with your key suppliers – so close, in fact, you cohabit many of the same plants and share manufacturing equipment. Technology has allowed you to span both country borders and enterprise boundaries.

Extensive customer group profiling has led to better design choices. You understand customer preferences and can more accurately forecast demand within specific geographic or demographic targets. Retail pricing requires less guesswork now that your analysis tools identify the price sensitivity points of a particular target audience.

Relationships with your key suppliers – those few technologically superior partners you’ve chosen – are cemented with electronic ties. There are no paper invoices to slow down the process. In an industry that every day moves millions of parts worth several billion dollars, the true linchpin is the internet.

With the industry-wide automotive exchange, you can afford numerous transactions with a variety of suppliers, regardless of their size, because transaction costs are minimal. Suppliers that were previously excluded because of the prohibitive investments required for traditional electronic data interchange (EDI) have now emerged, expanding your supply chain and opening up new possibilities.

Since you and your selected suppliers are working together in a collaborative electronic environment, individual team members have immediate access to their collective body of knowledge. Ideas and changes are exchanged seamlessly, with minimal human intervention. Team members can study information as soon as it’s available, suggesting improvements or correcting problems early in the cycle, before formal product design reviews.

Simulation has proven to be a very effective tool for production planning. With your virtual assembly line, your planners experiment with new approaches, anticipate actual results and spot potential problems, all before committing precious capital and resources.

The entire product development workflow has been automated; every available parallel path exercised; every possible gap closed; every step focused on speed to market.

The net result? You can deliver profitable, high-quality products at unprecedented rates, and respond quickly to dynamic market opportunities.

Customer George quickly scans the new arrivals in his electronic in-basket. He notices an e-mail from his SeniorSedan car club. The e-mail advises George that, based on the average miles driven by careful drivers like him, his car is probably due for an oil change. Attached to the e-mail is a coupon that George can use at his local dealership to receive a free oil change and lube.

Having recently moved, George thinks he’s out of luck on the free oil change until he notices a ‘Moved recently?’ link at the bottom of the e-mail. The link takes George to his profile on the SeniorSedan website where he updates his address information. While he’s there, he browses his personal car maintenance log, a free online service for SeniorSedan club members. Yes, there’s the tune-up performed by the dealership six months ago. George really likes having all of his family’s car maintenance information in one place, neatly organised.

Get acquainted
The next day, George receives an e-mail introducing him to the SeniorSedan dealer in his new home town. It contains several ‘get acquainted’ coupons, including one for a free oil change. According to his actual mileage, an oil change next week will work perfectly, right on time, just how George likes to be. He prints the coupon and tucks it into his wallet.

After years of car ownership, George knows that regular maintenance means less overall expense and a longer life for his car. Considering the quality of the product and the service he receives, George will be a SeniorSedan customer for life.

Strong participation in the ‘car clubs’ you’ve established is a hallmark of your successful brand management. It’s clear you understand your different customer sets and continue to meet their unique needs, transforming them from one-time buyers into long-term customers. As members of these clubs, customers routinely exchange personal data in return for useful information, education, online services and free offers from you. They trust you to use their information prudently, for product innovation and development of value-added services.

Dealerships and alliance partners are valuable sources of customer information. With electronic links between their systems and yours, you can maintain a fairly comprehensive picture of a customer’s automotive history. This information allows you to extend highly personalised offers to your customers, such as giving a free oil change to George when, according to your educated estimations, he’s most likely to need it.

Convenient and valuable
Subsets of this information, like George’s car maintenance log, are valuable to your customers, too. Because consolidated information is convenient and valuable, some customers even choose to contribute additional information that is not available from your ‘extended enterprise’.

With the personal information George has supplied about his family, you can also anticipate future automotive needs. For example, when you sent George one of your periodic ‘thanks for your business’ e-mails last year, you included happy birthday wishes to his son, who just turned eighteen, and offered your assistance in helping find a new car for college transportation.

With varying levels of resources available to local dealerships, the Internet has played a strong role in establishing a consistent presence for your brand and maintaining good relationships with your customers. By uniting the information you maintain on your dealers with the information you collect from your customers, you can start a dialogue between George and the local dealer. Fuelled by this kind of three-way integration, progressive dealers can be proactive, providing exceptional sales and service support, plus the ‘human’ complement to electronic customer relationships. Not even a move across the country can break the ties you’ve established with your customer.

The net result? Enduring customer loyalty, and your share of their lifetime purchases continue to rise, elevating your brand equity to new heights.

Cusomter Helen backs out of the drive, headed towards the office. As she drives, she calls her clients to leave reminders about appointments scheduled for that day. While waiting in her first traffic jam of the day, she pushes a button to access her email in-basket. She adjusts the volume as a digitised voice, programmed to sound like a well-known newscaster, begins to read Helen’s e-mail aloud. ‘File under follow-up,’ she replies casually as traffic starts to move again. She has really become attached to her leased EdgeCoupe. With its hands-free phone and voice-activated e-mail option, she can stay on top of things, without risking her good driving record. After a few appointments, she stops at a fast food place for lunch, checking her e-mail as she inches forward in the drive-through line. Since she obviously has a few minutes, she asks to open the e-mail from CoolCars, the company who makes EdgeCoupe and also her leaseholder. According to what Helen hears, her actual mileage is about to reach the limit of her lease, 36,000 miles. A quick look at her odometer confirms the warning 35,640. Although it’s only year two of her three-year lease, she’s about to enter the ‘pay through the nose’ zone. Fifteen pence for every extra mile is really going to add up, considering her current mileage record. But wait; the second part of the e-mail offers a special lease amendment for high-milers like her. The savings are pretty clear so she dictates her e-mail reply, accepting the amendment. Done.

The technology wave
The Internet has not only changed how you do business; it’s changed the business itself. You’ve successfully ridden the technology wave, harnessing the capabilities presented by pervasive computing, wireless technology and the web to revolutionise how cars are used. You know that cars aren’t simply about transportation anymore.

When driving one of your cars, your customers have the option of communicating with the outside world in a variety of ways. Because safety on the road is so important, your design teams have developed these communication features with interfaces that don’t require the driver’s hands to leave the wheel. Take, for example, the voice interface to the customer’s electronic in-basket, complete with audio replies from a digitised voice impersonation of a well-known media personality, whichever one happens to fit the customer’s voice preference.

Your networked cars provide customers with safe, efficient methods to stay connected and be productive while getting from place to place. But the realtime information made available to you, the car’s manufacturer, is valuable, too. Yes, you must allay the privacy fears of your customers and give them an incentive to participate in your data collection programs, but the insight provided is definitely worth the effort.

For a free car-wash each month, customers allow you to track their mileage, average speed – even their vehicle’s engine performance correlated to outside temperature. The list of possibilities goes on. You’ve got an entire fleet of ‘smart’ cars, all reporting in on key measurements, providing you with a live performance test each day. Your engineering innovations demonstrate the value of this data year after year.

The personalised service
Your customers also benefit from personalised service and offers made possible by sharing their information. You can recommend repairs when a potential problem is first spotted, before things break, keeping your customers from being stranded along the roadside. For serious problems that require immediate action, onboard computers can even suggest the repair facility closest to the car’s current location. Knowing that you are monitoring their car helps your customers feel safer. By partnering with other firms, you can also offer customers tire specials when tires are wearing thin, filter changes when their mileage dictates, or even film developing when they return from that long driving vacation. Repeat leases are certainly more frequent now that you help customers like Helen save money on excess mileage fees.

The results? Fuel for continuous innovation that yields distinct competitive advantage.

Siva Darivemula is a marketing manager within the IBM e-business technology team.


Time for a tune-up?

As you reflect on the pace of change in your industry and what it means to your business, ask yourself the following questions:

  • Can you adapt to changing market conditions and emerging opportunities faster than your competition? (Because someone will)
  • Are you recognised as a leader in product innovation? (You could be)
  • Are you eliminating supply chain inefficiencies? (Your competition is)
  • Which are the right alliances, physical and electronic, to establish? (Teams are forming fast)
  • How do you respond when a customer asks, ‘Can you make “my” car?’ (Because that’s what your customers might want)
  • Do you treat every client as if he or she was a lifetime customer? (If you play your cards right, they just might be)

These are critical considerations for any business and should be integral factors in mapping out your strategy. There is no single answer, no ready road map, but it is clear that the choices you make about e-business will be pivotal to your success.