Loyalty in Parts

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Apr 17, 2006
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By John Hennessy, Vice President, Concept Shopping, Inc.

(www.conceptshopping.com)


“At heart, it’s about enhancing the ownership experience, and keeping those customers in the GM camp.” That’s how Bryan Burkhardt, global director of retail inventory management for GM service and parts operations, summarized a new General Motors (GM) parts management system.


“Our data tells us that the vehicle owners that don’t have a satisfactory dealership repair experience are only half as likely to buy that model car again,” Mr. Burkhardt told Information Week.


Prior to the new system, parts managers found themselves out of less frequently used parts. The result was GM’s parts department being able to satisfy the parts needs of its repair shops only 67 percent of the time.


In pilot implementations of the new system, parts requirements are satisfied 96 percentage of the time. This was due to: tracking parts used each day, comparisons to national and local parts use averages, adjustments for regional requirements and automated re-ordering. 


Moderator’s Comment: How is (should) customer satisfaction be considered when companies are contemplating an operational improvement? How can businesses,
specifically retailers, communicate those improvements and their benefits to consumers?


While classified as an inventory management system, this is really a customer listening post. The system listens for the parts GM customers need; then works
to make sure those parts are available.


Considering customer benefit in planning and evaluation, operational improvements can increase the impact of those improvements.


When this program rolls out, GM should support it with a major marketing initiative around the reduced turnaround time for repairs at GM dealerships, as
compared to other dealership organizations and repair shop alternatives. In this time-starved economy, there’s something there.

John Hennessy – Moderator

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6 Comments on "Loyalty in Parts"


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Karin Miller
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Karin Miller
14 years 10 months ago

My expectation would be that if a dealership did not have any part associated with any new car they sold within the last 7 years available on their shelf, that they would be able to procure it from a local distributor within 24 hours, with few exceptions. It is sad that bringing service up to what will probably amount to less than this level is considered noteworthy by GM’s PR department.

jack flanagan
Guest
14 years 10 months ago

GM is seriously late to the party and, having arrived late, is still underperforming Toyota’s parts network.

Toyota doesn’t trumpet its legendary rapid replenishment to its dealer network…Toyota owners (when they need a part replaced, which is seldom) simply benefit from it.

Ed Dennis
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Ed Dennis
14 years 10 months ago

GM’s parts program is a day late and a dollar short. Look in the phone book – you’ll find at lease 5 national auto part companies as well as a number of franchise parts dealers. These guys exist and do well due to GM’s parts practices. GM parts are primarily used for under-warranty replacement. GM’s confidence in their parts is so low that their new car warranty is the worst in the automobile industry. Keeping parts in stock is a good idea as I recently had a vehicle with less than 10,000 miles on it stay out of service for 6 days waiting on a GM part. This experience convinced me that I had made a major mistake buying GM and my future decisions will not include GM products. This is a company that has managed itself for every reason EXCEPT customer satisfaction. In my opinion they don’t deserve to survive and won’t in a real competitive environment.

Race Cowgill
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Race Cowgill
14 years 10 months ago
I think I understand your dismay, Ian. It is certainly disappointing to me to see such a large and prominent organization seem to be so weak operationally. Note, however, that Zenith’s research data says that 92% of retail organizations have a customer service rating of 70% or worse and have products or services that fit their market at a rating of 70% or worse. We are confronting, again, the fact that American retail businesses operate at a very low level and do not know it. This is a huge challenge for us as advisors, and we have not, in my view, really addressed this. Why are we — consultants and advisors — not making more of a difference? What could we do to make more of a difference? (What about a discussion topic somewhere just on this point?) There are dozens of approaches that a business could take in making improvement: improve the organizational efficiency, improve the market share, improve the margins, improve staff retention. An organization can improve staff retention but weaken margins, or… Read more »
Ian Percy
Guest
14 years 10 months ago

Let me understand this…GM was able to supply parts only 67% of the time so their breakthrough thinking that produced a “new” approach is to improve that. According to a June/05 report by Gallup only 20% of customers are “fully engaged” with their vendors which means that loyalty is virtually non-existent at the best of times. A company that finally gets the idea that you have to be better than 67% has a very long and steep mountain to climb.

Mark Lilien
Guest
14 years 10 months ago

If GM starts an ad campaign bragging that their dealers have parts, they’re wasting their money. It would be embarrassing to advertise what people already expect. And why remind people that GM vehicles are less reliable than some other brands?

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