Is A Five-Day Car A Reality?

How are the automotive companies going to adapt to the rapidly growing world of e-commerce, where customers get what they want when they want it- now?

At last check, it took less than a day to build most of the vehicles on the market today. Yet, it takes months to schedule production and deliver those vehicles to their distribution sources, the dealerships, where customers go to buy or lease their cars and trucks.

At the dealerships, a great majority of customers make their purchases from the supply on hand -- or the supply dealers can quickly get their hands on by trading with other dealers. The problem is, they often just settle for a vehicle that meets most of their expectations in order to get it sooner.

A very small number of cars are ordered with exact specifications, probably because of the time it takes to get such a vehicle to the dealer. Waiting two months -- or more -- is not uncommon, and that's a wait most customers don't want to make.

Would more customers make special purchase orders if their vehicles were ready for delivery within five days? Of course they would. Consequently, the auto companies need to work on providing a mix and match of cars and trucks that meet their customers' specific needs. That's a fine goal, but delivering a factory-ordered vehicle within five days of order is not going to be easy.

Here are just a few reasons why.

First, automakers are going to have to limit the offerings and options available until they can show they are capable of producing such vehicles. What's more, many of the vehicle options customers select are built by automotive suppliers. That means sup. pliers also are going to have to show they can build specific products and then deliver them almost instantaneously to the automakers.

Manufacturing operations also must have designed-in flexibility to build different models and platforms according to customer specifications.

One area that's already getting a lot of discussion is the method of delivering vehicles to customers. If the experts are right, sales and distribution are responsible for up to one-third of a vehicle's cost. That needs to change.

The focus of this change seems to center around dealerships. Most recently, GM caused quite a stir by announcing plans -- and then reversing its decision -- to buy and operate hundreds of dealerships throughout North America.

Many people seem to be of the belief that dealerships simply add cost-- and time -- to the vehicle-buying process. But I believe there's much more cost involved in the distribution system between the plant and the dealer. A lot of money could be cut out of that operation by making it more efficient.

I also believe dealerships will always have a place with customers. For some, they may serve in much the same role they hold today, as a showcase where potential buyers can look at, test drive and order their new vehicles. But for e-buyers, dealerships may serve as nothing more than a distribution outlet for vehicles ordered on-line and later a service center.

The dealerships that adapt to these customer needs will be the ones that survive and thrive in the future. The ones that don't make changes to the old methods will indeed be "dinosaurs" that wind up on the automotive scrap heap.

But while so much of the focus seems centered around dealerships as cost drivers, the real troth is automotive companies need to make breakthrough improvements in their total distribution channels.

Even if a five-day delivery is not a possibility now, automakers need to focus on driving down the time it takes to get vehicles to customers -- and reducing delivery costs.

Ron Harbour is president of Harbour and Assoc., manufacturing consultants in Troy, Mich.

COPYRIGHT 1999 Cahners Publishing Company
COPYRIGHT 2000 Gale Group