Will the OEMs eventually outsource their Parts Depot operations?

[XDCX]

I read recently that Bombardier Recreational Products, the maker of SeaDoo, SkiDoo, CanAm and Evinrude, is going to spin off their U.S. parts depots and have a "logistics provider" take over the operations.

Here's an excerpt from their Press Release:

By using a specialized firm to handle North American distribution, BRP said it will gain greater flexibility to meet the projected growth of its parts, accessories and clothing business and will reduce capital investment while improving customer service.

My bet, for what it's worth, is this will be a trend with the automotive OEMs in the next five to ten years. While improvements to customer satisfaction sound great in a Press Release, it's the reduced employee count and the lower capital investment that will appeal to the OEMs.

Think of all the capital an OEM has to have tied up to run a nationwide depot operation - the real estate, parts inventory, computer and logistics systems, employees, etc. While I acknowledge that parts sales are a huge profit source for OEMs, I don't think the OEMs necessarily have the best solution for distributing parts. The OEMs can still make money selling parts, they'll just hire a company like UPS or FedEx to handle the distribution and take all of the risks associated with running a parts depot. (Obsolescence, damage, inventory taxes, shrinkage, parts returns, etc.)

Companies like FedEx and UPS want to expand their operations and already offer "logistics providers" services to other companies.

From a dealership perspective the change (if it ever happens) would probably be mostly transparent and I think anything that allows the OEMs to increase their profits without picking the pockets of their dealers is a good thing.

[57years]

Does this sound like outsourcing to NON UNION vendor?

[XDCX]

Originally Posted by 57years

Does this sound like outsourcing to NON UNION vendor?

That's a great question. BRP didn't provide too much information in their Press Release but I'd be willing to bet 100 to 1 that the new vendor is non-union. I can't imagine the vendor could improve on BRP's performance if they were saddled by the same labor expenses.

BRP is definitely in a cost savings mode - in the same Press Release that I mentioned above BRP indicated they'll be sending 100% of their SeaDoo PWC manufacturing to Mexico. While I hate to see jobs go South of the boarder I can imagine that BRP is just fighting to survive - this economy has not been kind to the builders of recreational toys.

[tnpartsguy]

GM won't. GM has had several perfect opportunities to do just that, and refused. They had a buyer for ACD, but because ACD really isn't anything but a brand name, and maybe 100 people working directly for ACD, nobody could see any value in it. Everything ACD is reboxed or rebranded, they don't make anything.

GM's too busy trying to look profitable to realize the savings they could have, because a logistics company wouldn't have a RIM program, or an LPO program. They would work harder to get the off-the-shelf fill rate up, and try to save rental car days and overnight freight charges (the REAL ways to read how well it's working)

[XDCX]

Originally Posted by tnpartsguy

GM won't. GM has had several perfect opportunities to do just that, and refused. They had a buyer for ACD, but because ACD really isn't anything but a brand name, and maybe 100 people working directly for ACD, nobody could see any value in it. Everything ACD is reboxed or rebranded, they don't make anything.

Funny you should mention AC Delco, I saw a really cheap Auto Jack and Jack Stands package at a local O"Reilly's Auto Parts store and it was branded with the AC Delco logos but there was no GM branding. The package came from China, of course, and it reminded me of something you'd see at a Harbor Freight store. I just assumed GM sold off the brand.

In the old days I used to think of AC Delco as s premium brand - not any more.

Originally Posted by tnpartsguy

GM's too busy trying to look profitable to realize the savings they could have, because a logistics company wouldn't have a RIM program, or an LPO program. They would work harder to get the off-the-shelf fill rate up, and try to save rental car days and overnight freight charges (the REAL ways to read how well it's working)

I follow your sarcasm and just like BRP, my bet is if GM ever decides to move to a "Logistics Provider" it will have nothing to do with customer satisfaction or dealer satisfaction.

My bet is some day in the future one of GM's MBAs will realize they can reduce their UAW head count, reduce their real estate holdings and free-up Millions in capital if they just outsource their depos.

Concerning the UAW, it has been said in the past that the UAW really doesn't care about their members who are in non-assembly position. Time will tell....

[tnpartsguy]

Originally Posted by XDCX

Funny you should mention AC Delco, I saw a really cheap Auto Jack and Jack Stands package at a local O"Reilly's Auto Parts store and it was branded with the AC Delco logos but there was no GM branding. The package came from China, of course, and it reminded me of something you'd see at a Harbor Freight store. I just assumed GM sold off the brand.
In the old days I used to think of AC Delco as s premium brand - not any more.



I follow your sarcasm and just like BRP, my bet is if GM ever decides to move to a "Logistics Provider" it will have nothing to do with customer satisfaction or dealer satisfaction.

My bet is some day in the future one of GM's MBAs will realize they can reduce their UAW head count, reduce their real estate holdings and free-up Millions in capital if they just outsource their depos.

Concerning the UAW, it has been said in the past that the UAW really doesn't care about their members who are in non-assembly position. Time will tell....

They didn't sell it, but they had licensed it several years ago for a tool program; hand tools, jacks, ect. ACD parts quality? ehhh, not what it once was. They made a lot of bad decisions on contracts and still do. The good, better, best program had them buying some real junk to have stuff to sell as GOOD...