This paper focuses on the distribution practices used by the company responsible for Volvo Cars’ spare parts and after-sale services, Volvo Car Customer Service (VCCS). VCCS has more than 1500 sales units in Europe, 400 in North America and 500 in rest of the world, with about 23000 employees at its dealers and workshops. The two main goals of VCCS are to increase customer satisfaction and to increase the volume of part sales. The empirical part in this paper is used for illustration of current distribution practices with special focus on spare parts in the automotive industry.
Table of Contents
1 INTRODUCTION
1.1 PURPOSE
2 THE DISTRIBUTION NETWORK OF VCCS
2.1 LOGISTIC GOAL AND STRATEGY
2.2 ACTORS
2.3 RESOURCES
2.3.1 Warehouses
2.3.2 Transportation resources
2.3.3 Goods
2.3.4 Information Technology
2.4 ACTIVITIES
2.4.1 The LDC Process
2.4.2 Ongoing transformations
3 ANALYSIS
3.1 THE LOGISTICS STRATEGY AND TRANSFORMATION
3.2 ACTORS
3.2.1 Control
3.2.2 TPL providers
3.3 RESOURCES
3.3.1 Warehouses
3.3.2 Information technology
3.4 ACTIVITIES
4 CONCLUSIONS
Objectives and Core Themes
This paper examines the distribution practices within Volvo Car Customer Service (VCCS) to understand how the company manages spare parts logistics. The research focuses on the intersection of customer satisfaction goals and supply chain efficiency, analyzing how VCCS coordinates its complex network of suppliers, third-party logistics providers, and dealers.
- Analysis of logistic strategies and their transformation within the automotive industry.
- Evaluation of the role of actors, including VCCS, suppliers, and TPL providers.
- Examination of resource management, specifically warehousing and information technology.
- Investigation of distribution activities, with a particular focus on the Local Distribution Center (LDC) process.
Excerpt from the Book
2.4.1 The LDC Process
With LDCs implemented, the way of work for dealers change. With the LDC process, a technician talks to the customer when booking the appointment to determine what parts need to be ordered and can give a cost estimation of the work to be done. The technician then sends a pre-planned order to the LDC and schedules the amount of labor needed. The day before the scheduled repair, the planned parts are picked from the LDC and are delivered the night before the repair. When the customer arrives in the morning, a technician confirms the contract and tries to up-sell additional work. If the customer agrees, the additional parts are delivered the same day from a LDC. In the afternoon, the customer picks up the car.
This process provides better service for the customer, because he no longer has to wait a day or two for parts to arrive. It also gives the dealer an opportunity to make additional sales with the increased availability of parts. Another advantage for the dealer of being connected to an LDC process is that he no longer needs to keep a large inventory of parts. Instead, additional space and personnel freed up can be used for value-adding activities. According to VCCS, a typical dealer stock can be reduced by approximately 75%. Yet, over 25000 parts are available for same day delivery.
Due to the increased number of warehouses and deliveries, the costs for VCCS will increase. This cost will have to be carried by the dealers, who will have to pay a higher price for the delivered spare parts. However, the lowered stock levels and handling costs for the dealer is supposed to compensate for the increased purchase price. There will also be an increase in customer service, since the availability of parts will be significantly higher. The ultimate goal for VCCS is to increase sales volumes for the spare parts.
Summary of Chapters
1 INTRODUCTION: This chapter outlines the current challenges in distribution reality, such as geographical dispersion and conflicting needs for efficiency and service, while defining the paper's focus on VCCS.
2 THE DISTRIBUTION NETWORK OF VCCS: This section provides an empirical description of the VCCS network, covering its logistics strategy, key actors, resource infrastructure, and the specific distribution activities like the LDC process.
3 ANALYSIS: The analysis applies distribution theory to VCCS, evaluating their top-down strategy, actor coordination, and the role of IT in enabling efficient material flow.
4 CONCLUSIONS: This chapter synthesizes the findings, noting that while VCCS excels in controlling its network, there is room for improvement in collaborative relationships with other actors to better navigate market dynamics.
Keywords
Distribution Network, VCCS, Logistics Strategy, Customer Satisfaction, Spare Parts, Warehouses, TPL Providers, Information Technology, Puls, Volvo Inventory Management, LDC Process, Supply Chain, Automotive Industry, Coordination, Material Flow
Frequently Asked Questions
What is the primary focus of this paper?
The paper focuses on the distribution practices used by Volvo Car Customer Service (VCCS) for managing spare parts and after-sales services within the global automotive industry.
What are the main goals of VCCS?
The two primary goals of VCCS are to increase customer satisfaction and to increase the total volume of part sales.
Which scientific method is used?
The study utilizes an empirical case study approach, conducting interviews within the distribution and central warehouse facilities to collect primary data for analysis.
What is the role of the Central Distribution Center (CDC)?
The CDC in Gothenburg serves as the heart of the network, where nearly all goods are routed to ensure efficient resource utilization and economies of scale.
How does VCCS manage its TPL providers?
VCCS manages Third-Party Logistics (TPL) providers through strict monitoring using Key Performance Indicators (KPIs) and by integrating its IT systems directly into the provider's warehouse operations.
What does the "LDC Process" entail?
The Local Distribution Center (LDC) process allows for pre-planned orders where parts are delivered to dealers the night before a repair, enabling same-day availability and reducing dealer inventory levels.
Why does VCCS favor an "arms-length" relationship with its TPL providers?
VCCS maintains these relationships to ensure control and standard procedures across all global regions, avoiding dependency on any single provider.
What is the significance of the "Puls" IT system?
Puls is the global IT backbone that supports all logistics and sales activities, enabling centralized inventory control and replenishment based on actual consumption forecasts.
How does VCCS address the competition from non-original spare parts?
VCCS utilizes the complexity of its global supply network as a competitive advantage, making it more feasible for dealers to partner with VCCS than to manage over a thousand individual suppliers.
What suggestion does the author make for future improvements?
The author suggests that VCCS could benefit from moving towards a more collaborative basis with its network actors rather than relying solely on strict control and power-based influence.
- Citar trabajo
- Mohsen Shirani (Autor), 2010, The Distribution Network of Volvo Cars Customer Service (VCCS), Múnich, GRIN Verlag, https://www.grin.com/document/191668
