Small Parts, Big Impact

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Small Parts, Big Impact

“Managing parts business for an OEM is a tight rope walk. While the primary focus remains customer delight through timely availability at the right price and quality, the contribution of this vertical to the bottom line of the business cannot be ignored. However, the usage of the pricing lever to improve the bottom line in our regular parts range is restricted to the extent of customer’s value perception and hence we constantly explore projects of waste elimination, cost optimisation and profit improvement,” highlights K Venkateswarlu, Senior Vice President – Parts Business, TVS Motor Company Ltd, during an exclusive interaction.

How crucial is the role of supply chain in the effective functioning of any industry? With varied number of SKUs and the dealer diversity, how do you ensure that it is managed effectively?

As the adage goes ‘the proof of the pudding is in the eating’, evidence of an effective supply chain lies in the ability of an organization to serve its customers in a timely manner with the right quality and at the right price. Our suppliers are a critical cog in this wheel. Aided by the ability to forecast accurately, our suppliers ensure adequate capacities are in place to meet the demand of our customers at the SKU level. Toward this, we are leveraging technology and best industry practices such as Theory of Constraints to ensure we have the right quality of the right part.

Our network, which interacts with our customers, plays an important role by stocking the right mix of parts. In this journey, our Dealer Management System (DMS) plays a pivotal role of capturing data and plotting trends to serve as effective inputs to the supply chain. Basis the historical trend of consumption of parts over the previous 6 months, the stock norms at dealerships is updated every quarter which helps the dealer place the right order periodically and stock right parts at all times. Further, possibility of pile up of slow-moving stock is significantly reduced. This ensures that no customer needs to wait / return without the right part most of the time.

Automotive parts supply chain is fraught with varied inherent challenges. What are those and how have you tackled them?

Ensuring reach and range is the biggest challenge. For instance, the sale of Mopeds in certain locations such as North East is relatively low and the retailers mostly stock fast-moving SKUs as it is not viable to stock the slow moving SKUs. To serve such needs, we have implemented “Parts on Call” using which any customer can dial in directly using the Toll free number. To draw a parallel, at a traffic signal when the timer displays the wait time, we are relatively relaxed and take a break, similarly, when the customer is made aware of the specific delivery time for a part, it provides great relief to the customer and helps him focus on other important things in his routine. In the meanwhile, our representatives make arrangements to supply the part through the nearest dealer at the specified time.

Safeguarding our customers from counterfeit parts menace: Presence of counterfeit parts affects the performance of products and compromises safety. We have institutionalized a brand protection cell, which liaises with professional agencies to identify counterfeit component manufacturers, wholesalers and retailers involved in stocking and trading. To keep this menace under check with the help of police conducted raids pan- India and within the last 12 months have confiscated a sizeable value of counterfeits.

Servicing of parts beyond the specified norm: There are many passionate brand loyalists for TVS products and there is naturally a demand for parts where the regular production of that model may have stopped. To meet such requirements, our central warehouse ensures adequate stocking of stranger parts. Despite that if we are still unable to fulfill such orders, we aid the customer to locate the part using “Parts on Call.” In the rare event that the order is still not serviced, we exchange the vehicles with special offers to seek the customer delight.

Spare parts management has been one of the keys to survive and sustain in the auto business. How do you manage that?

Definitely. A customer who is considering purchase of a vehicle would give very high weightage to cost of service and the periodicity, either through his own experience or through word-of-mouth. We, at TVS Motor, consider pricing of spare parts to be a strategic tool to ensure that cost of service is value for money. Further in the 2W industry, other than our authorized network, most vehicles in the post-warranty period are serviced by Private Garage Mechanics (PGMs) who are scattered over every nook & corner and availability of the parts close to these PGMs play a vital role in ensuring that our customers are serviced in the shortest span of time without going too far from their neighborhoods. Toward this, the hub & spoke model of distribution ensures that we reach out to all retailers, big or small, through our APS who are able to service their order within 48 hours.

How do you strengthen your dealers and distributors’ network seamlessly pan-India?

Keeping the customer as the focus of our business, we align all operations at our dealerships and APS. One of the important tools that our dealerships use is the Net Promoter Score (NPS). NPS provides an insight into the customer perception towards the operations of our dealerships. We have instituted a programme called Quality Leadership through Quality Dealership (QLQD) through which we rate every dealership on critical performance parameters. The scores provide deep insights into the dealer operations which in turn help us co-create training modules and improvement plans. All the above processes have helped TVSM achieve Number 1 position in Dealer Satisfaction survey conducted by JD Power for consecutive four years.

What have been crucial learnings during your journey of over two decades in managing supply chain?

Managing parts business for an OEM is a tight rope walk. While the primary focus remains customer delight through timely availability at the right price and quality, the contribution of this vertical to the bottom line of the business cannot be ignored. However, the usage of the pricing lever to improve the bottom line in our regular parts range is restricted to the extent of customer’s value perception and hence we constantly explore projects of waste elimination, cost optimisation and profit improvement. To illustrate profit improvement, as an adjacency, TVSM indigenously developed a line of engine lubricants under the brand name TRU4. TVSM was the first ever OEM in the world to obtain the JASO MA2 certification with API-SL 20W40 grade back in 2006. What began as an in-house project has today grown into a standalone business which is serving the needs of our customers and also improving business profitability.

Keeping abreast with evolving technologies and reducing dependence on manual processes is critical for organizations to stay in the race. In the context of warehousing, today we have Automated Guided Vehicles (AGVs), automated sorting conveyors, automated sealing and packing machines aided by digital dashboards. Further, there has been a transformation in the order obtainment process as well. Today we have provided our customer the convenience of ordering with the visual aid of an E-Catalogue. Therefore, importance of embracing technology evolution in business cannot be over emphasized.

What has been the transformation over the years?

With the introduction of integrated DMS at our dealerships, we were able to gather crucial consumption patterns, which formed the base for future planning both for material procurement as well as formulation of business growth models. With respect to distribution strategy, we have evolved from dispatches from TVSM to over a 1000+ outlets including main dealers, sub-dealers and stockists to a more efficient hub & spoke model of distribution through just 100+ APS who play the role of mini warehouses in their respective territories. This has benefited us to cut lead times to delivery and benefit from economies of scale.

Supply chain has evolved a great deal as well. Today, the vendors are intelligently guided by E-Kanban and Theory of Constraints which have brought in great levels of transparency between the OEM and the supplier as well as eliminated a great deal of non-value added work content. Every component dispatched from our warehouse can be identified for genuineness. A QR code is printed on every component, scanning which the customer is directed to our main server, through which genuineness of the part is ascertained. Skilled manpower is the basis for seamless operations. Focus of training and development to resources has evolved from immediate rolereadiness to facilitating managers to solve problems and shaping leaders.

What are the warehousing best practices implemented by you?

Achieving Zero defect against customer order is the target. Every inward component is affixed with a barcode for traceability purpose. Scanning the barcode, MRP label is generated to ensure Zero error. Packaging plays a major role in today’s business. Our qualified expert ensures continuous upgradation of packaging to achieve optimum tolerance levels and costs. “Auto case feature” developed inhouse suggests the secondary packing material based on the dimensions of the components to achieve least cost of packaging. An intelligent simulation-based software helped us in optimizing the load for the trucks, thus reducing the outward freight cost.

What are the policy imperatives that you suggest the government to look into?

We have initiated actions in a big way toward Brand Protection. Clamping down on the perpetrators is the need of the hour keeping the safety of the customer in mind. This also leads to a significant revenue loss for both the government and the OEMs.

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