Minimizing guesswork in vehicle orders

Automotive Design & Production, Jan, 2003 by Gary S. Vasilash

For the most part, vehicle configurations are based on best guesses. Guesses about what the consumers are likely to want to buy at some point in the future. if it is a guess (generally called "planning') for a completely new model, then it is a huge gamble (money, resources, time, market--you name it). if it is an existing model, then it is still subject to expensive estimates: It may be thought that brown cars with sunroofs and leather seats will be big sellers when, in fact, people are actually looking for red paint, solid roofs, and cloth. Which leads to the proverbial "putting money on the hood." Which isn't what companies really want to be doing.

Trilogy (Austin, TX), a provider of e-business software, is perhaps best known in the auto industry for its providing the software infrastructure used for websites such as www.forddirect.com and www.nissandriven.com. While consumer websites like these may be thought to be of interest primarily to those within automotive organizations who are interested in sales and marketing, Stephen F. Bell, Trilogy's director of Product Strategy, says that while that may be partially the case, there is a whole lot of information that can be obtained from the interactions that consumers have with a website that is directly applicable to the whole planning activity. (The importance of websites to what gets moved off of dealers' lots is non-trivial: according to a recent report by Forrester Research, 58% of people who are doing on-line research for a new car purchase start with an OEM's site, and if their experience is a frustrating one, 18% are less likely to go test drive a vehicle while 30% of those who are favorably dispos ed toward their web experience will go take a ride. Two of the sites that scored well in Forrester's research are, perhaps not surprisingly, those previously mentioned.)

Bell talks about the "demand chain." As former president of SupplySolution, he knows more than a little about the supply chain. But what he thinks that OEMs can really use to advantage is the type of information that can be gleaned from web interactions--advantage in the sense of saving $1,000 to $1,500 per vehicle. As Baba Shetty, principal analyst at Forrester who worked on the "Building a Better Automotive Web Site" study puts it, "Ultimately, what you want to do is build the highest profit margin configurations that you can. You don't want to build a bunch of brown ones with sunroofs and cloth seats.

Trilogy has created some patented "data representations" and analytics that, Bell maintains, permit them to predict with 96 percent accuracy what the demand will be for specific vehicles as far as three months out. Right now, he says, there are automakers that have this software in beta testing. While he thinks that having a Trilogy-powered website is best for use with this "automotive demand intelligence" capability, he says that it can be used with any front end. With that kind of accuracy and that size of savings, even if they can provide something close to that is undoubtedly of tremendous value. For additional information visit www.trilogy.com.