The automotive spare parts industry in is fiercely competitive. Manufacturers, vendors, and suppliers face constant challenges such as unclear demand signals, fluctuating demand- supply, and friction within the supply chain. Misinterpreting these demand signals can lead to lost sales and increased costs.
In this environment, a next-generation inventory management system with real-time visibility offers significant benefits, particularly in achieving accurate demand signals. OKgo collaborates with automotive supply chain stakeholders to deliver these advantages. In this case study, we explore how a leading aftermarket automotive battery distributor has transformed its operations through real-time inventory visibility and precise demand signals.
About the Battery Distributor
This distributor is a major player in the North American aftermarket automotive battery sector, holding over 20% market share and generating annual revenue exceeding $2.0 billion. With a product portfolio of more than 16,000 battery types available through over 250,000 dealers and serviced by 250 distributors, it faces significant supply chain challenges.
Challenges Faced
Inaccurate Demand Signals: Traditional inventory management systems rely heavily on manual processes and basic data analytics, resulting in fragmented and outdated data. This distributor experienced operational inefficiencies and lost sales due to inaccurate demand signals. Delayed information on battery shortages at dealer locations led to lost business and customers turning to competitors.
High Operational Costs: To ensure sufficient stock at every outlet, the distributor used an outdated milk run delivery model, resulting in excess stock and unpredictable replenishment needs. This approach incurred unnecessary expenses, which could be avoided with real-time visibility and accurate demand signals.
Lack of Control: Operating with a high-touch business model, the distributor had limited control over product delivery once it left their hands. This reliance on multiple parties and fragmented systems led to unaccounted problems and high service costs per battery.
Limitations with RFID: RFID technology was initially considered but found impractical due to its infrastructure requirements, high costs, and inefficiency with lead-acid batteries. An in-house solution based on Bluetooth Low Energy (BLE) technology also proved too costly and time-consuming to develop.
The Solution
A self-provisioning inventory management system, with on-demand, pay-as-you-go, infrastructure-light deployment, proved to be the ideal solution.
Self-Provisioning Inventory Management: The system allows the battery distributor to control inventory autonomously, without extensive involvement or training for distributors or store owners. A user-friendly dashboard provides item-level visibility, showing the state and exact location of products, and whether they have been sold.
Item-Level Visibility Across Retail Outlets: Indoor location monitoring sensors and advanced AI algorithms provide visibility within the distributor’s supply chain and dealer network. This system tracks sales velocity, expiry, and replenishment needs, providing a clear and consistent demand signal.
Next-Generation Demand Signals: The solution offers unprecedented item-level granularity, enabling dynamic route planning based on demand signals. This shift from the traditional milk run approach enhances operational efficiency, reducing the number of truck runs and minimizing stock while ensuring accurate replenishment.
Results
The solution has given the battery distributor a significant competitive edge, ensuring sufficient stock at each of its 250,000+ dealers while reducing operational costs. Immediate improvements in delivery optimisation and cost efficiency have been achieved, showcasing the transformative power of real-time visibility and accurate demand signals.
