Supply and stocking systems in the UK car market

Abstract

There can be no doubt that distribution, in the widest sense of the word, is operating in a rapidly changing environment in the UK new car market. In particular, the supply and stocking systems for new vehicles have been subject to greater change since 1992 than at any time in the past and, it must be emphasized, this change is still ongoing. There has been very little academic research on distribution generally and some of the points drawn from this work in the automotive industry may have viability in other contexts with suitable localization. Summarizes the research carried out in the UK by the International Car Distribution Programme. Shows that some franchises have instituted revolutionary changes while others are more evolutionary. Some would seem to have carefully considered philosophies and strategies while others appear to have more of a “me‐too” approach. Many franchises have introduced central‐stocking systems as the first step in trying to make their supply systems leaner and they have achieved both an increase in customer matching (customers actually getting the exact specification of car that they wanted) and a decrease in stock and costs. Those already operating such systems are making them more sophisticated as time goes on. During the fieldwork for the research some systems had received major updates and others were due to occur in early 1995. There are many different approaches and in the research they have been classified into broadly similar types. The systems operated by some franchises are already pan‐European while others are confined to the UK with continental markets operating traditionally. In addition, wholly new approaches and systems are in the process of being introduced ‐ such as one specialist manufacturer who has introduced a “supply to order” policy. The improvements in distribution efficiency have the potential to provide savings typically of about £150 (but up to £360) per new car sold to the franchise as a whole. In addition there are unquantified benefits from the considerable improvements in customer satisfaction. Part of such savings can be realized by the dealer and part by the manufacturer. Some franchises had already realized large proportions of these savings and benefits before this research took place while others still have opportunities ahead of them and could yet achieve the sort of amounts suggested above.

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