have had problems in the manufacturing stage, in the distribution process, or in both.
To check which part of the process is responsible for the delay, more comparisons have to be made with standard ATP split in production and distribution. In particular the production lead time will be compared to the range OCF – ASS, and the distribution lead time with the range ASS – POD.
For this reason, Delivery FCA has been split in three additional categories (Figure 4.13):
• Production: if the interval OCF – ASS > Production Lead Time;
• Distribution: if the interval ASS – POD > Primary Transportation + Secondary Transportation;
• Production & Distribution: if both previous conditions are true.
Figure 4.13 Delivery FCA: split categories’ sizes (Source: FCA)
The influence of the production is relevant, since it occurred to three quarter (32% + 44%) of the vehicles included in Delivery FCA category. This can be due to the standard times used, that do not include additional time for vehicles with optional configuration.
Production scheduling for basic vehicles with no optional configuration is easier. Indeed, a customer that has specific requests for his car will have to wait more for it to be produced, but in this analysis the data used were an approximation of the lead time needed to manufacture a vehicle with standard configuration. These production delays might be the causes of the high result of 44% of vehicles with distribution issues too, because delivery might have been rescheduled causing troubles in respecting standard times.
The analysis of the distribution of the critical cases belonging to Delivery FCA (Figure 4.14) per days of delay shows that 80% of the vehicles are delivered within a month after the considered standard times (ATP = Production Lead Time + Primary Transportation +
12 12
Promise Delivery FCA Delivery Dealer
Global Overview
65%
17% 18%
61% 30%
9%
47% 28% 25% 77%
23% Promise Delivery FCA Delivery Dealer
Promise Delivery FCA Delivery Dealer
On Route Overview
Order Overview
Dealer Overview
Promise Delivery Dealer
32% 24% 44%
Production Distribution Combined
buffer might be introduced to reduce strongly the number of critical cases. In particular, a reasonable buffer of 14 days is enough to reduce of almost 40% the cases.
For what concerns Delivery Dealer (Figure 4.15), the tail is longer in this case. So, the observed problems are more solid and they have to be further investigated.
Figure 4.14 Order Category: Delivery Dealer - Cumulative percentage of vehicles per days of delay (Source: FCA)
Figure 4.15 Order Category: Delivery Dealer - Cumulative percentage of vehicles per days of delay (Source: FCA) 0%
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1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67
Percentage of vehicles
Days of delay Order - Delivery FCA
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1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 101 106
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4.2.6 Conclusions on Promise/Delivery
As seen, Promise is the largest category. So, the problem is a failed creation of the proper customer expectation.
Investing on solutions that can reduce the Promise category is more profitable than a heavy investment on the other two categories, because unexpected events are inevitable and there will always be a percentage of complaints in these fields.
Therefore, the Promise is the category to attack more decisively, to have a bigger impact on performances that regard customer expectation (further discussion later). A hard work has to be made in cooperation with the dealers that are fundamental for setting customer expectation accurately.
The survey submitted to the customers also has to be improved, because as of right now it may include complaints about delivery delays, when, actually, the customer complains about a longer waiting time at the dealer showroom the day of the pick-up. By deleting this source of error future analysis can have a more reliable database to work on.
4.2.7 Promised Delivery Date – PDD
Leaving aside the Promise and Delivery analysis, it is now necessary to check if the dealer is communicating information to the customer and to FCA properly.
For every OCF loaded on LINK, the dealer must insert the Promised Delivery Date (PDD), that is the supposed date in which the vehicle will be delivered to the final customer.
For foreign markets this input is mandatory, while at the moment it is not for Italy. This information has to be in line with what is written on Patto Chiaro, which is the contract between dealer and customer, that has the goal to make the purchasing conditions transparent.
The critical cases belonging to the dealer category will not be considered, because, as said previously, the vehicle is already on dealer’s compound, and so FCA has no responsibility.
First of all, data displays that, despite being mandatory, not all OCFs from foreign
Thereafter, not all the remaining PDDs are reliable. The PDDs that were set before the date of OCF pairing were rejected. Furthermore, PDDs were rejected also if they were too close in time to the OCF pairing date, in particular for the two remaining categories:
• Order: if the range OCF – PDD < 30 days;
• On Route: if the range OCF – PDD < 15 days.
After having rejected this PDDs, only 52% of the total considered OCF, which FCA could have responsibility on (Order and On Route), are reasonable. This result highlights the inefficiency in the communication that dealers have with FCA. The dealer must be encouraged to use the PDD tool properly, in order to make FCA able to be informed of what the customer has been told and to have reliable data in case a new analysis has to be made. The solutions that have to be found for this topic are in line with those for the Promise category, since the problem is almost the same: a wrong (or missing) communication cannot create the proper expectation in the customers.
4.2.8 Dealer Interview
To investigate the practices and to understand the critical issues, an interview to a small sample of dealers for each of the five examined markets was necessary. Since the Promise category is by far the largest one, the submitted questions were focused on this issue and how they build customer expectation. So, they were asked on what basis they define the PDD and if they use the tools made available by FCA (ATP), if the PDD given to the customer is the same declared to FCA, how they check the vehicle logistic status and what are the main information related to tracking they would need, how much time they need to deliver the car once it is on their compound and various others related to this topic.
The answers given by the dealers were the starting point to develop solutions to solve the communication problems.
It has been highlighted that:
• Italian dealers do not use ATP because the Sales Director gives the PDD based on his experience, and in his calculation he counts 10 days for the order to be
issued and 10 days for the delivery finalization to the customer. Foreign dealers believe ATP is useful but needs an adjustment.
• All dealers declared that there is no tracking of the vehicle, they would like to know which gate has reached on the distribution process, and they would like ETA to be updated after every logistic event (as of right now ETA is only updated if it worsens).
• All dealers stated that being proactively warned in case of delay of the vehicle would be useful, and that (for this small sample) only Light Commercial Vehicles (LCVs) delays are critical.
• The Promised Delivery Date communicated to FCA is the same written on Patto Chiaro.
Having these interviews with the dealers was fundamental also to have a perspective of the competitors’ practice, because in some cases it was highlighted that Audi and Opel offer their customer the possibility to download an app, from which they can track the status of their vehicle. And furthermore, they can purchase additional services while the car is still in the production process or in the distribution phase.
4.3 Solution Proposal
Certainly, the actual communication condition between FCA and the dealers has to be rearranged.
The As-Is situation shows multiple streams of data transferred from FCA operations to the dealers (and through them eventually to the customers), like Available To Promise, confirmation date of production, Estimated Time of Arrival, status, production date, blocks, etc., while there should be only one stream traveling in the opposite way with the Promised Delivery Date, but often this information is not reliable or missing. The overall approach is regenerative, for example every week ATP is published but with no alert, so the dealer might not pay attention to the update (in case he actually uses it for his forecasts). Dealer can only find out of the delay if he frequently checks his database, otherwise FCA will not directly alert it to him.
The As-Is situation can be summarized in:
• poor data visibility for central cross functional governance and information disconnection toward dealer (and consequently final customers);
• a complex overall operational process, that is properly managed but with poor communication;
• when the delay has occurred, there is a reactive approach with “firefighting”
activities, and not a proactive approach that should try to avoid it in the first place;
• intensive use of basic communication tools to share data (emails, phone calls, excel files, etc.).
Instead, the intention for the To-Be situation is to have a leaner communication but more robust, in both directions (Figure 4.16).
Figure 4.16 Comparison between overall AS-IS and TO-BE situations (Source: FCA)
A new process and ICT solution is currently under evaluation, and it will address mainly the observed Promise problems, paying also attention to aspects of Delivery FCA and Delivery Dealer. The main elements for new solutions to keep in mind are:
• Implementation of a proactive approach, in order to identify in advance criticalities;
• Immediate communication in case of delay to the dealer;
Estimated Time of Arrival Confirmation date of production
Blocks
Promised Delivery Date (missing or unreliable) Dealer Customer
Weak communication