Parts availability: The key to success
- Large scale investment in state of the art Parts Distribution Centre pays dividends
(Johannesburg), 6 November 2014. From importing and retailing two model ranges through 12 dealerships in 1998, to eight complete model ranges sold through 70 dealerships, KIA Motors has seen dramatic growth and expansion in its sixteen years of doing business in South Africa.
With stellar sales across all the KIA model ranges, the KIA brand makes up a notable portion of the South African car parc. Yet it’s not only our cars that deliver on our brand promise, “The Power to Surprise”. With a state of the art Parts Distribution Centre, the company’s parts availability and exceptional service levels make up a critical part of KIA’s success in the local market.
Keeping a competitive advantage: a story of growth
Formed in 1998, KIA Motors South Africa (KMSA) initially operated out of a 40m2 warehouse in Kempton Park, from where the parts warehouse moved to a much larger, 500m2 facility in Springs in 1999. The next year, the parts warehouse moved a second time, and again to a larger, 800m2 facility in Germiston.
In 2002, KMSA built a brand new Head Office in Meadowdale, which included an adjacent PDC (Parts Distribution Centre) covering a massive 2620m2. Moving the company’s existing stockholding into the new facility initially took up but a quarter of the available space, and despite a steady improvement in sales and the resultant increase in the vehicle parc, KMSA was able to prolong the life of the facility. This was done through innovative packing, the formation of regional hubs and effective stock management.
However, due to the considerable growth of KIA Motors in South Africa and an immense increase in vehicle sales over the past few years, even this facility proved insufficient.
By 2011 it was running far over its official capacity, signalling the need for a much larger, state of the art facility to address stock holding and overall parts availability in order to offer the brand’s loyal customers world-class service and quick turnaround times.
Investing in future growth
Representing a R65 million investment, KIA Motors South Africa’s new Parts Distribution Centre (PDC), located in Germiston, was operational by mid-January 2012, and officially opened as part of KMSA’s Annual Dealer Conference on 2 March 2012. It’s a state of the art facility that offers 5303m2 and a generous maximum storage height of 5m.
“We were very excited about the opening of the new Parts Distribution Centre in 2012, as it has had a notably positive impact on the business as a whole”, comments Hans Stenger, KIA Motors South Africa’s Parts Director.
“Because of increased storage capacity, we are able to offer a higher level of safety stock, which has resulted in better parts availability to all dealerships. It will continue to ensure high levels of parts availability and efficient distribution for years to come and has potential for further expansion when required,” he concludes.
Availability: the key to success
The facility currently holds stock in excess of R40 million, with 16 000 lines comprising all parts that move twice in a six month cycle. With such abundance of stock at hand, and especially on those line items that have high turnover, KMSA has been able to ensure that its dealer network can offer customers top-notch service levels with quick turnarounds.
“Parts availability is definitely not a problem for KIA Motors South Africa,” continues Hans Stenger. “Parts are ordered by the dealerships in real time and couriered from the PDC twice a day for delivery on the next business day. Our Gauteng-based dealerships can also collect directly from the PDC if a part is needed urgently,” he adds.
There are however certain parts, like trim items and wiring harnesses, that is not held in stock at KMSA’s Parts Distribution Centre and which must be ordered from KIA Motors Corporation (KMC) in South Korea.
“Often, these parts are slow moving or once-off items that are only produced in Korea upon request,” explains Mr Stenger, “making it unfeasible to keep it in stock. However, all parts ordered from Korea are shipped with air-freight to South Africa in order to be delivered in 10 working days,” Mr Stenger continues.
“Apart from the fact that these parts are produced on order only, the main reason why it takes longer to arrive in South Africa is because there are no direct flights from Korea to South Africa, and all shipments have to travel via Hong Kong or Singapore.”
Occasionally, KMC are out of stock on certain items, which add three to four weeks to the process. “In such instances, and if the service or repairs fall within the customer’s warranty period, we supply the customer with a rental car,” Mr Stenger concludes.
KIA Motors South Africa’s pro-active position on parts availability has had a notably positive influence on the service levels maintained by the company’s dealer network and approved body repairers.
The South African motor industry offers a number of solutions for measuring business components such as parts supply, including the annual National Automobile Dealer Association (NADA) Dealer Satisfaction Index (DSI) Survey, which is divided into 13 focus areas of interest to the NADA membership at large, including aspects like Dealer Satisfaction, Communication and Relationships, Dealer Support and Parts, as well as Goodwill, Policy Claims and Warranty, to name but a few. In the most recent survey, KIA Motors South Africa again ranked highly for parts.
“The R40m worth of parts stock in our Parts Distribution Centre in Johannesburg represents three months of stock supply at distributor level,” says Cher Maharaj, Service Director at KMSA. “We also have a month’s parts supply on the water, on route from Korea monthly, and our dealer network carries a further month of stock.
“Furthermore, we have a supply rate of 96% to our dealer network on first pick, which is why we have a “no excuses” policy in place for our entire dealer network, including a prominently displayed toll free number – 0800 600 931 – that customers can use if they aren’t satisfied with the level of service received or want to query a delay in parts availability. All of this has contributed to the high levels of service and customer satisfaction our dealer network displays,” he concludes.
More proof that KIA has “The Power to Surprise”.