Guest Commentary: Moving Parts: Effectively Managing the Aftermarket Auto Parts Supply Chain

When an automobile parts dealer or a business in the auto service parts retail network makes a request to its suppliers to fulfill an order, there is an expectation that the right component shows up at the right place, in the right time frame, at the right cost. After all, at the end of the line in this complex supply chain fulfillment cycle is a customer with a vehicle waiting for a repair part. That customer has the choice of going to a dealer’s service department, or an independent shop in the service parts retail network. The complexities of the aftermarket auto parts supply chain and the physical movement of millions of individual parts made by manufacturers around the world demands flawless execution at every link to satisfy that customer.

Accurate and timely visibility, process expertise and understanding the intricacies involved in managing the physical movement of goods and inventory are some of the acute challenges within the aftermarket auto parts industry. In order to win the business of a car owner, both dealers and the automotive service parts retail network must overcome these challenges and position themselves as the most attractive option. A third-party logistics provider (3PL) can address these issues and help implement solutions that allow a dealer or retailer to win in this continual competition for customers.

With parts crisscrossing the globe, one of the benefits of working with a 3PL is gaining the ability to offer assurance of a part’s status at any point in the supply chain. This is where visibility is critical. 3PLs provide an accurate view of the flow of inbound and outbound goods. Driven by continual technology investment, the accessibility of as-it-happens information is increasing by the day. By extension, the availability of supply chain information has altered the aftermarket auto parts landscape. The ripple effect of on-demand information continues as customer expectations surrounding status updates have also increased. The bar is constantly being raised regarding the importance of the reliability and efficacy of that information.

Dealers and other providers in the automobile service parts retail network that elect to navigate the aftermarket auto parts supply chain without the assistance of a 3PL run the risk of losing inventory control, negatively affecting customer service and increasing costs. A 3PL delivers the tools, information, and importantly, the people and process rigor to ensure accurate, timely execution. Most parts suppliers and their dealer or retail networks do not have the expertise to manage their own supply chains. By leveraging the experience and knowledge of a strong 3PL, stakeholders can focus on customer relationships, more efficient and accurate inventory management and increasing sales.

The movement of parts along each stage of the supply chain can also be a challenge. When a parts dealer or retailer needs 500 SKUs of windshield wipers and 50 pallets of mufflers, those parts do not arrive on separate trucks originating from each factory that produces them or distribution center that ships them. A 3PL can bring a robust transportation management solution integrated with technology to coordinate the collection of those parts from their points of origin and provide consolidation services to facilitate the receiving, sorting, repackaging and delivery of those auto parts to a dealer or retailer. Monitoring each stage along the way with timely data will quickly illuminate inefficiencies, identify possible corrective actions and allow for uninterrupted service.

Issues surrounding effective inventory management are also commonly identified as roadblocks to efficiency. By taking advantage of the insight and expertise of a 3PL, dealers and the auto parts retail network benefit from increased transparency, visibility, clear communication and a fuller understanding of what happens at each stage of the supply chain. This information will position dealers and retailers to effectively manage the balance between over-ordering and warehousing unsold stock, and delayed fulfillment due to under-stocked items — both classic outcomes of a lack of timely visibility and rigorous process controls that lead to poor situational awareness and mismanaged inventories.

The aftermarket auto parts industry presents one of the most difficult and complex supply chains to manage. Whether a dealer or retailer needs one pallet consisting of 10 different products, or 100 pallets loaded with 1,000 parts, a 3PL provides the same seamless service. The right 3PL can implement systems that provide critical data integration and in-depth visibility to achieve results with greater efficiency and lower cost than a dealer or automobile service parts retailer can achieve otherwise.

Paul McDonald is Director of Business Development at Menlo Worldwide Logistics, a $1.6 billion global provider of logistics, transportation management and supply chain services. Named to his current position in 2008, McDonald is responsible for sales and marketing activities in Menlo’s Automotive and Heavy Industrial Group. He joined Menlo as a senior manager of operations in 1997.