Friday, September 6, 2013

RIM – The Evolving System

When OEMs began discussing Retail Inventory Management (RIM) at our Focus Days, starting in 2010, they struggled to understand how different RIM systems worked. OEMs used tools that varied enormously from one to another, and the metrics were limited; there was no data available to clearly show which RIM system was best and why. Four Focus Days later, the group has begun to define what works, what these systems are capable of, and how to improve them.

During this year’s 1.5-day RIM Focus Day – expanded from one day at the participants’ request – we concentrated on stocking logic, key performance indicators (KPIs), RIM terms and conditions, and implementation methods. It’s an understatement to say that these forums are changing the industry.

The group has been collaborating with RIM dealers by recommending changes in the programs. In response, a number of those companies have modified their RIM programs. OEMs have also modified terms and conditions for RIM dealers, in order to encourage those dealers to comply with the group’s recommendations. Over time, we have evaluated the impact and relative cost of the terms and identified which ones are most effective.

Stocking logic is another success story. It has always been difficult to compare the performance and effectiveness of RIM systems, due to a lack of consistent metrics in the areas of fill, dealer inventory, and compliance. This year, the group dissected each metric and discussed the challenges in data gathering and calculation. By the end of this Focus Day, OEMs reached a consensus on how each metric should be strictly defined.

Why devote so much time to metrics? Improved data allows us to see RIM effectiveness, and the defined set of core metrics can be reported by all RIM systems. That means future cross-brand comparisons will truly reflect differences in system usage and performance. And with an improved dataset the group can really begin to compare and contrast various approaches to stocking logic.

Three OEMS also demonstrated their RIM systems to help group members better understand the functionality and dealer interface associated with each. Two of the systems were custom-built, while the third was an off-the-shelf product; they ranged from a fairly simple order recommendation system to a highly complex and integrated system.

That served as a jumping off point to analyze how RIM systems integrate with Dealer Management Systems (DMS): the structure of various interfaces and the DMS systems with which OEMs have integrated. We discussed the future evolution toward more transactional Point of Service (POS) data collection, and the possibility of working jointly to develop interfaces.

Most OEMs want an integrated DMS system that includes complex solutions, such as policy recommendations and automatic order generation and promotions, to name a few. OEMs are also taking the reins, limiting dealer controls, in order to drive improved consistency and performance across the supply chain.

Bottom Line: Defining the metrics and collecting a common set of data will help the group effectively benchmark RIM performance, and show who is truly best-in-class. Understanding who the industry leaders are, and why, will enable RIM to become more efficient and help OEMs satisfy dealers and end-customers. These Focus Days have shifted the industry and started new trends in RIM systems. Once again, industry benchmarking is helping to raise the performance bar.

To find out more about all upcoming benchmarking and research activities visit our Carlisle Calendar.

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