Service parts Logistics in Japan

Finally, DHL operates local distribution centres, also known as dealer metro distribution centres, which are based on high inventory rotation and offer same-day delivery services within a geographical range of up to 200km. Here, about 5, 000 parts might be held for delivery on a same-day or next-day basis for car types specific to this area. DHL has 37 of these facilities dotted across Europe, mainly in Germany, the UK, and northern Europe for customers including Renault and Denso.

“We can perform weekly fixed quantity replenishment as well as daily same-day replenishment, ” says Tlatli. “Some sites perform up to five ‘same-day’ deliveries per day to dealers and one ‘in-night’ for planned repairs.”

TNT Express, with its focus on expedited logistics, operates a slightly different system to DHL’s. According to Nick Beard, global industry director for automotive, TNT manages up to 400 depots across Europe, connected by air and road. TNT supports two supply chains within automotive: the regular distribution of inbound materials and the delivery to dealers of urgent vehicle-off-road (VOR) material.

There are, however, alternatives to the warehousing model. Swiss Post does not currently operate any automotive spare parts warehouses. “In the past, we evaluated whether or not to operate local distribution centres for different car manufacturers, ” says Markus Roos, project manager for customer solutions at the company. “However, it was decided that direct importation, cross-docking and parts delivery would be a better solution. We operate small exchange hubs for some customers in our logistics centre to enable moving parts to be delivered quickly to recipients.”

Taking stock: inventory levels and overflow

As customers in some markets opt increasingly to repair older vehicles rather than purchase new ones, there is a growing pressure on stock replenishment. For example, the average age of cars on the road in the US stands at 11.4 years (up from 10 years in 2007), according to IHS Automotive.

To meet this demand, carmakers and logistics providers must manage increasingly imbalanced supply chains. “If it is a standard part, then the dealer will probably have that in stock on site, but if it is an expensive component, the likelihood is that it will have to be ordered from the OEM and this process can take days, ” says TNT’s Beard. “This leads to dealer and customer dissatisfaction and ultimately lost customers.”

Stock replenishment strategies differ by OEM or distributor. While carmakers have moved towards low inventory, high replenishment models, including nightly deliveries, independent distributors are often still faster. “I would say that the biggest competition sits more with the independent retailers, like Pit Stop, for example, ” says UTi’s Möller. “They drive speed of service, particular on more commodity parts.”

"We can perform weekly fixed quantity replenishment as well as daily same-day replenishment. Some sites perform up to five ‘same-day’ deliveries per day to dealers and one ‘in-night’ for planned repairs" - Fathi Tlati, DHL

For most of Ceva Logistics’ OEM customers, replenishment frequency is daily and target fill rates vary from warehouse to warehouse depending on service targets. Charles Roth and Chris Senior – respectively, logistics director of business development and global key account director for automotive at Ceva – say that 10-15 years ago, dealers started placing stock orders on a weekly basis and emergency orders every day, usually with a target of next-day delivery. However, over the last decade, there’s been a steady trend towards daily stock orders.

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