Friday, July 24, 2015

Lets Talk Facing Fill – Carlisle Scrapbook
by David P. Carlisle

Parts people can be very focused on “parts availability” as a key metric. The big issue is: what does availability mean to a smart dealer parts manager?

Every year, we survey thousands of dealer parts managers, and occasionally we’ll follow up the survey with individual interviews. Recently, we conducted a few such interviews with parts managers from leading OEMs to ask them this question on availability, and what they told us matches insights from our previous data analyses and what we have heard from some OEMs. What follows is based on one interview that is representative of the parts manager interview group.

OK, this seems simple enough. But really, it’s not. Here’s what we found:
  • When we asked what does “availability” mean? The response was: “What I can get from my warehouse in a timely manner. Or, whether I can get the part at all.”
  • The parts manager reported that their facing fill was at 94-94.5%, and said he’s very happy with this; said they haven’t been in this good of a position in years. He says network fill is something like 98%.
  • He is very satisfied with his facing fill rate and thinks there are more important issues that the OEM could focus on to improve his business.
  • Unless a customer specifically asks for something else, he will always order a genuine part. Essentially, only if the customer says they cannot afford the genuine part will he go aftermarket – he will try to convince the customer that genuine is better than aftermarket (better quality, fit, performance, and warranty).
  • How loyal was this parts manager? He indicated that substantially more than 90% of his parts come from the OEM.
Like a Talmudic Scholar, I’ve put a lot of thought into the 164 words in these notes. What do they really mean? You can see how I marked it up, parsed the words, linked the clues, and squeezed out the essence of what the parts manager said.

At its essence, “availability” is about the level of backorders: “whether I can get the part at all.”

Toyota got it right decades ago when they adopted a goal of 95% facing fill. Back then, I asked Toyota Motor Sales all-stars Bill Bucher and Ace Yeam where the 95% came from. They had been Korean War supply sergeants in the Marines and said that’s what they aimed for in the military. But, a lot has changed since the 1980’s. Facing fill was simple back then – it was the percent of “perfect” lines filled on all dealer orders. By “perfect,” I mean completely filled order lines – if a dealer ordered 100 washers and the parts warehouse could only fill 99, this order line was deemed “unfilled.”

Now, facing fill is not so simple. The order might be sourced from multiple warehouses and supply points – bulky fenders might come from a high-cube center, while expensive, small-tech parts might come from a central, low-cube facility; slow moving parts might come from a slow moving warehouse or Vintage, and other parts might come from ship-direct suppliers.

So, what is facing fill? It is the percent of order lines that arrive at the dealer inside the expected order delivery time. It should be about 95%.

Because of the incredible evolution in the parts supply chain, “facing fill” might not be all that important any more, other than as statistical evidence of appropriate parts availability. It’s like runs, balls, and strikes in baseball. There are a lot of different ways to make a run, to hit a ball, and to throw a strike. But, who really cares? When you turn over the picture of a baseball card, it’s all about simple numbers: runs, balls, and strikes. There is also a lot of ways to achieve what a dealer interprets as 95% facing fill, and all that really matters is that 95% of the parts are there when they expect them to be there.

Bottom Line: So, what really is availability? To a dealer, it’s not so much about what’s available as it is about what isn’t available. The best representation of this, it seems, is backorders.

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