Copyright © 2014 Mahindra & Mahindra Ltd. All rights reserved.

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 Automotive Logistics India Conference
Spare Parts and After Market

Aftermarket growth opportunities, delivery capabilities and

strategies to capture market share

Girish Bhobe
Mahindra & Mahindra
11th Dec’14

Copyright © 2014 Mahindra & Mahindra Ltd. All rights reserved. 2

Agenda

 Transforming traditional models: changing customer perceptions and building

brand loyalty through the aftermarket.

 Aftermarket segmentation and strategies: Categorising customer segments to

forecasting parts availability and demand.

 Supply chain integration & distribution networks: Parts delivery models,

including frequency, and network distribution points

 Warehouse and inventory management: Optimising warehouse inventory

management and demand planning for distribution

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India is Changing Very Fast & Consumers too

 Younger

 More educated

 Has more choices

 Demanding on brands

 Not loyal

 Value for money

 Tech savvy 4
Consumers Aspirations Changing
Best
Product & Best Quality
Best Service
Product at
door step

Most
Competitive
Cost

Speed Of
Lowest
Thought
Cost of
Ownership

Today Customer has Multiple Options

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 Vehicle Life Cycle coming Down

 New Technology
 Safety Features

 Reliability
 Government Regulations

 Fuel Efficiency

 Alternate Fuel

 Latest Features
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Spare Parts Industry Players

 OE
 Component Manufacturer supplying to OE

 Organised sector (own brand)

 Un-Organised sector (Without brand)

 Spurious Parts Manufacturer

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 Spares Parts-Customer Centricity

 As customer expectations increase, the service parts is now at the forefront

of peoples thoughts
 Customer Satisfaction index driven by availability of genuine spares
 Cyclicity of Business
 Cost Of ownership
 Spare Parts pricing our models are most competitive in their respective
segments

Mahindra USP : Spare Parts availability at reasonable price in the nook

and corner of the country 8
 Genuine Parts Preference

 High Tech Parts

 Certified Mechanic

 Multi Brand Service Chain Network

 Availability

 High Penetration

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 Spare Parts Industry

Spare Parts Sale Breakup

Genuine
Second &
33%
Spurious
42%

Vendor
25%

Opportunity

• Best In Industry 20-25 %

• Industry Average: 7-10%

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 Spare Parts Industry

Spares Business in Revenue

• 10-15 % of Vehicle Sales

• In India 7-10 %

Industry is estimated to grow by 11% CAGR - ACMA

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 Changing Customer Need

Selection of Workshop
Roadside workshop Relationship
Building
OUR
Reliability Low

Convenience High STRATEGY

Technical
Cost Medium Up gradation

Selection of Parts
M&M Second
OES Spurious
Genuine
Parts
Brand
Spares Product
Parts Spares
Range
Mediu OUR
Reliability High High Low
m
STRATEGY
Product
Convenience Medium High High High
Value
Cost High Medium Low Low
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 Closer to Customer

Transformation to becoming a
Brand of Choice

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 Customer Service Points
Automotive
Customer Care Service points Automotive Car Parc : 2.4 + Million
Dealerships 350+
Authorised Service centre 70+

Farm Equipment
Customer Care Service points
Dealerships 650+ Tractor Parc : 1.7+ Million
Authorised Service centre 400+

Two Wheelers
Customer Care Service points
Dealerships 500+
Two Wheelers Parc : 0.7 + Million
Authorised Service centre 1000+

Trucks & Bus Division

Customer Care Service points
Distributors 60+
Retailers 120+
Bazaar Sales
Distributors 1000+
Retailers 14000 14
 First Fill Rate

FFR measures the dispatch of material to Customers

( Dealers + Distributors ) within Stipulated Time

• VOR ( Vehicle Off Road ) / BDT (Break Down Tractor) Order

Dispatch from DC in 24 Hrs

• Commercial Order
Dispatch from DC in 5 Days

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Spares Supply Chain-Complexity

12100 parts 18000 parts 2500 parts 1500 parts 1500 parts

3500 parts
4300 parts

100000
Parts
3000 parts
1500 parts

3200 parts 3000 parts

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 Planning

 Migration from 3D matrix to 2D Matrix

 Migration from Forecasting model to Replenishment model

 Reworking of Max stock levels and Reorder point

 Double exponential smoothing for new projects and order spikes

 Categorization of parts (Focused, B2B, B2B Urgent)

 Multiple MRP runs

 Projections for N+1 and N+2 17

Categorization using 2-D Matrix Approach

Order Lines Basis

Category

Focus Parts

Back to Back Parts

Monthly Order All Balance
Frequency Combinations
Category

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Challenges

Where to Stock the Parts

• Near the final Customer

• Near to the Manufacturing locations

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Challenges

• No Of Models

• No Of Variants

• Engineering Changes –ECN’s

• Carryover Parts

• Service Commitments

• Cost- Storage of Non current parts

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Challenges

• End to End Inventory 70-90 Days?

• Seasonality

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Our Crusade

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Customer Expectation-AV

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 Thank You !

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