Automakers can solve problems more quickly and improve customer satisfaction by exchanging customer data with dealers.
Posted Dec 21, 2005
Automotive manufacturers must do a better job of improving their detection-to-correction (DTC) time, according to AMR Research. With cars becoming increasingly complex, the ability of manufactures to detect defects based on consumer feedback and then to partner with subcontractors, dealerships, and their supply base is important for helping to ensure quick turnaround times. Most vehicle manufacturers take up to 120 days, on average, and as many as 220 days to recognize and correct a problem, with each fix costing up to $1 million, including the cost of service, labor, parts, and brand impact, according to AMR.
"This is not just a company problem, this is an industry problem," says Kevin Mixer, vice president at AMR Research. "Both brand owners and their supply base need to be tightly aligned around the whole concept of early warning and DTC."
The complexity of newer cars isn't the only problem. The speed at which new models are introduced and built also has increased dramatically. Between 1987 and 2005, the average number of new models launched per year was 35. In 2007 AMR estimates there will be 70. This increase, coupled with the fact that manufacturers are continuing to compress how fast a car comes to market (by as much as 72 percent from 2000 to 2010), will require manufacturers to gain greater visibility into customer feedback, engineering, and manufacturing.
Most times, a defect is noticed and triggered by a warranty claim by a customer who owns a car, but internal processes and information exchange between the dealership, manufacturer, and the manufacturer's supply base, is slow. In order for manufacturers to become more competitive when it comes to early warning and better quality, partnering with both the retail channel and the supply base is critical. As an example, the largest single system impacted by 2005 recalls in the National Highway Traffic Safety Administration recall list was vehicle speed control (i.e., cruise control) at 4.7 million units, double the number of recalls by any other component category. Establishing business processes that support communication of customer problems involving speed control issues, communicating that from the dealership to the manufacturer, then throughout the supply chain, is the key to reducing DTC, according to Mixer. These processes can reduce the amount of time it takes to correct a defect by as much as 40 percent, saving automotive manufacturers valuable customers and millions in revenue.
As for the technology to support this, it can be as simple as an integrated Web portal system to allow both dealerships and manufacturers to access customer and inventory data or an entirely new inventory management system. "Historically, information exchanged around quality and defect issues that impact the consumer have been a bone of contention [for the auto industry]," Mixer says. "It's about changing the process as much as the organization to get results."
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