Volkswagen to bank on spare parts
Published on 11 June 2019
Today’s spare parts market is burgeoning. Nestled in among the 8% growth from 2014 to 2016, spare auto parts were no exception. While this niche was previously reserved for specialized distributors, it has become a high potential market garnering increasing interest from manufacturers. Volkswagen Group Spain Distribution, for instance, just launched PRO Service, its very own spare part service for repair shops.
The project posed several challenges for the German manufacturer. For instance, the teams did a number implementing new logistics processes and software. What results did this provide after a WMS solution was implemented? In this article, we present the PRO Service Project and the methods used to optimize warehouse streams in collaboration with Generix Group.
Volkswagen Group Spain Distribution’s PRO Service Project
An unprecedented distribution project
Volkswagen Group Spain Distribution hit the ground running when it launched its PRO Service platform on the spare part distribution market, soaring past direct sale competitors that provide parts to professionals in the automobile repair sector.
Traceability and inspection on the distribution chain
The company considers service deployment to be a growth driver and a way to stand out from competition, with the main goal of ensuring the traceability of parts distributed on the automobile market. A tight grasp on spare part destination is essential in the event of product recall, and helps strengthen a brand’s professional image among clients, not to mention increasing perceived quality of service.
Generix Group, a partner that keeps its spare part logistics promises
Generix Group’s assistance with the PRO Service Project
Volkswagen Group Spain Distribution had no logistics department when the PRO Service project was launched in 2016, and the German manufacturer called on Generix Group to assist it in coming up with a new distribution strategy. Generix Group worked with Volkswagen Group Spain Distribution teams to custom tailor its warehouse management system (WMS), working with teams to redesign logistics flows and optimize them. This work included receiving and storing merchandise according to size and product turnover, preparing orders according to urgency and cross-docking, among other exchanges.
Keeping logistics promises
According to the PRO Service distribution model, it must be possible to ship every part in the catalogue—which includes 845,000 references—to repair shops within two hours, with a target of four daily deliveries. This sales strategy also includes a “zero error” objective likely to offer clients full satisfaction.
The optimization of logistics flows done by Generix Group and project teams according to Agile methods proved crucial when responding to this ambitious logistics promise. In order to reach its PRO Service deployment objectives, Volkswagen Group Spain Distribution plans to hire 400 professionals, including about 15 engineers who will act as repairmen.
PRO Service: A deployment similar to B2C
41 interconnected warehouses throughout Spain
PRO Service was launched in 2017 in four distribution centers located in Zaragoza, Lleida, Gerona and Tarragona. Today, it is operational in Barcelona, Madrid, and the north and east of Spain. All in all, 41 interconnected warehouses handle spare part orders for the brand, which are shipped out all over Spain. Today, Generix Group is working on continually improving project processes.
An e-commerce–like logistics project
The logistics chain deployed for the PRO Service Project is actually quite similar to an e-commerce model. In this case, it’s all about meeting very quick preparation deadlines, contrary to the more common B2B orders, which require a longer preparation time and include several palettes to send to the same client.
Similar to an e-commerce, PRO Service handles retail sale operations, prepared on one or two lines, in order to multiply the number of orders. When it enters into the operational circuit, a single preparer handles several lines at a time and uses picking to accelerate preparation flows. Distribution greatly resembles the provisioning methods used with last-mile delivery.
Results and advantages for Volkswagen Group Spain Distribution
A WMS with multiple features to optimize service
The logistics system developed using Generix Group’s WMS offers teams a plethora of features that are useful for the service and optimization of warehouse flows. These include:
- part identification to change parts using a vehicle’s chassis number and offer suggestions for identical replacement parts, or replacement using more technically advanced parts;
- dynamic management and automatic planning for order preparation depending on streams (tight deadlines, available stocks);
- calculation of part supply in order to ensure delivery of parts within two hours from when orders are placed;
- analysis of product turnover should it become necessary to reorganize warehouses according to specific needs.
The ERP-based WMS used by Volkswagen Group Spain Distribution lets teams handle all kinds of PRO Service orders quickly and effectively. Its connectivity also enables real-time sales order confirmation and helps directly adjust stocks shop-side.
Advantages of the solution deployed for Volkswagen Group Spain Distribution
A WMS system offers many benefits for automobile manufacturers. These include:
- inspection along the entire logistics chain regarding spare part distribution;
- excellent quality service for end clients;
- fewer stock shortages, and order preparation guaranteed at two hours;
- service and occupation time optimization for warehouse spaces;
- a simplification of the distribution network.