Gettng on the Right Track at General Motors

SECTION A

READ THE FOLLOWING CASE STUDY CAREFULLY AND ANSWER ALL THE

QUESTIONS THAT FOLLOWS

GETTNG ON THE RIGHT TRACK AT GENERAL MOTORS

"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." Think about the

ramifications of that statement. If a vehicle owner has a poor experience with something as

simple as an oil change, that person is only half as likely to spend $30,000 or more on that

model of car again. That is quite the return on investment (ROI) for providing a good

experience for an oil change that costs about $50.

Bryan Burkhardt, global director of retail inventory management for General Motors (GM)

service and parts operations, made the above statement. Bryan very clearly understands

the relationship between after-sales and service and retaining the loyalty of a customer.

Unfortunately, left to their own devices, most parts managers at any of GM's 7,000 North

American dealerships overstock too many of the more commonly sold parts and seldom

have those on hand that are infrequently purchased. As Bryan explains, there is "not

enough breadth of parts, but way too much depth on the ones they do have."

That "not enough breadth of parts" means that GM repair shops have been providing

customers with a satisfactory repair experience only 67 percent of the time. Bryan and his

team set out to change that and implemented a new inventory management system,

upping the satisfactory repair experience to 96 percent of the time. The new inventory

management system is a centralized, Web-based system that tracks inventory levels in

real time. If the quantity-on-hand for any part ever falls below 5, the system notifies the

parts manager and automatically routes an order for parts replenishment to one of 16

national parts distribution centres. The system can even accommodate regional

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differences and keep more of certain parts on hand for dealerships in a given region of the

United States, such as more windshield wipers for dealerships in the northwest during the

spring. All told, the system tracks over 500,000 GM parts from 4,000 different suppliers.

One of the biggest challenges facing Bryan and his team is that each of the dealerships is

allowed to choose its own dealership management system, resulting in the use of 28

different systems. So far, the new centralized inventory management system has been

certified to work with only 6 of those systems. Because of the increase in productivity and

inventory efficiencies, GM is working with the new inventory management system to

provide certification for more of the dealership-