Supply Chain Issues; Vehicle Selection and Planning

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FridayFleet sat down this week with Rick Shick, Donlen’s VP of Acquisition and Strategic Sourcing, to talk about supply chain disruptions.

FridayFleet: Rick, can you tell us about the current supply chain situation?

Rick Shick: There are quite a few things happening right now that are causing disruptions, none bigger than the OEM recalls that are impacting production and delivery. We continue to see logistical delays due to rail car shortages. Earlier this year a hailstorm delayed a significant number of vehicles and customers are still feeling the impact. Upfitters are experiencing production and equipment challenges. And there are quality holds that may not necessarily be due to part shortages, but when they do occur, they impact production times. All these are affecting vehicle delivery timing and causing challenges for customers.

FF: Any insight into what’s causing the current disruptions?

RS: I think it’s a combination of things. Demand for new vehicles is growing as the economy improves and companies need to cycle units they held off replacing. Unfortunately, events of the last 12-18 months have affected the ability for OEMs and their suppliers to sufficiently ramp up again. The number of suppliers was reduced during the economic downturn and others were greatly affected by the Tsunami – there are still delays with some paint colors and electrical components. All this is making it challenging to get vehicles to customers when they need them.

FF: What’s our course of action for dealing with disruptions?

RS: The first priority is to keep the customer informed at each step – no matter what type of disruption is occurring. For new orders, we’ll work with the customer to prioritize: if the driver currently has a vehicle, it’s generally a less pressing issue. If there is not an existing vehicle – as in the case of new hires needing work trucks involving upfitting – it’s more critical to get vehicles to them. We’re constantly coordinating with multiple vendors and numerous “moving parts” behind the scenes to make that happen.

In the case of large recalls, each customer may be affected differently due to whether they are currently using the vehicle or have vehicles on order, so we have several different processes that we follow. In either situation, we communicate directly with affected customers so they have the most current information that we’re receiving from the OEM. For instance, in the case of the recent Ford Escape recall, it was a “stop delivery/stop drive” so we needed to communicate immediately with any customers who utilize Escapes. Then, because production on new Escapes will be pushed back a few weeks, we are contacting customers who have placed new orders so that we can work together on a plan of action. When recalled vehicles are returned to dealers, drivers are provided a rental; if dealers are having difficulty in that area, we can help with that as well. The ultimate goal is to keep drivers on the road.

FF: Is there anything that customers can do to mitigate the risks of a supply chain disruption?

RS: Once a recall or other disruption happens, the best thing to do is work with our team to see what alternatives are available. Many times, finding alternative vehicles that fit the requirement means coordinating with several different vendors, which can take time. We’ll help you weigh every option. While it may seem like the quickest thing to do, sometimes pulling a vehicle right from a dealer lot because it’s available right now is not always the best course of action, particularly in the case of trucks. Is the truck going to meet your requirements? Is the required equipment to be installed readily available? Sometimes waiting for the equipment can actually take longer than waiting for a factory order. We can help you look at all the possibilities.

Even before anything happens, forecasting for the next year is critical. Work with us on your process: What are your needs for the next year? When do you want to take delivery? Let us look at your delivery window and develop a plan working backwards from that. We’ll help you meet that objective and build a bit of a cushion for those situations that arise that are beyond our control.

FF: Any final thoughts?

RS: There are pros and cons to every choice you have during a supply chain disruption. Your Donlen team will work with you and do everything we possibly can to get vehicles to you. We work closely with the OEMs and other vendors to find alternatives where feasible, and we make it a priority to communicate with you throughout the process. We keep our website updated immediately with any new information, so that’s always a great resource. And of course, at any time if you have questions about the acquisition process, I can be reached at rshick@donlen.com.

FF: Thanks Rick.

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This entry was posted in Auto Industry, Dealer Inventory, Environmental Impact, Japan Earthquake, Lifecycle Management, Short Supply, Supply Chain, Trucks, Vehicle Colors. Bookmark the permalink.

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