Professional Documents
Culture Documents
Abhilash Mishra
Reg No. 07MBA004
VIT Business School
Vellore Institute Of Technology Univetrsity
Vellore-632014
Mobile- +91-9952113317
Email id- abhilash.sonu@gmail.com
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ABSTRACT
Here the study was conducted to study the steps that can be taken to develop Customer
ownership for Ashok Leyland Dealers with special reference to its spare parts business
which is performed under the brand name of spare parts.
The objective of the study was to increase the spare parts sales by identifying the problems
and then narrowing the problems that are faced from different parties of the supply chain
starting from the vendors who supply the spares to Leyparts and its ends with the end
customer. The study was carried out by identifying some key custotomers in form of fleet
owners who have more than 100 Ashok Leyland vehicles and have a own workshop of its
own.
After the problems were identified then the functions of Leyparts was compared with the
functioning of some other companies and all the positive steps were taken up and then the
comparison was made and the positive steps were taken up and suggested to Leyparts
management after doing a proper study on it which would help Leyparts to increase its
market share and then some steps were suggested to reduce the running cost of Leyparts
supply chain.
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OVER VIEW
Automobile companies are waking up to the fact that consumers do not only buy vehicle
but also a package of support services with it.
We see that these support services, such as spare parts supply and contract repair and
maintenance activities, contribute a significant proportion of business and thus they receive
greater attention than before.
Leyparts enjoys considerable brand equity in the market place as a genuine and Original
Equipment spare part. However, Leyparts has not leveraged the power of the brand
effectively so far. In many markets, there is a poor perception of parts availability and price
value relationship.
The project was to study and cover all aspects of Leyparts business which includes
packaging, promotion, advertisement and channel and come up with recommendations for
enhanced market acceptance and competitive position.
The methodology consisted of understanding all the aspects of improving the Leyparts
business and then measuring customer perception. This included initial study of existing
system and then more focus on surveying.
Survey area - Chennai, Vellore; Tasks - survey design, data collection and analysis.
Leyparts evokes perception of that of market leader. The biggest strength for Leyparts is its
very good quality and brand name. However, certain weaknesses such as lack of service
level agreement for Ashok Leyland vehicles for the after sale service, poor availability and
high prices, were also identified after analyzing. Based upon these inferences certain
recommendations have been made at the end of the project report.
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RESEARCH DESIGN
The research design for the project consists of following sections:
METHODOLOGY
As mentioned in the project objective, a very important portion of project consisted
understanding the needs of the customers well and surround them with solutions so that the
customers will be more interested for Leyparts and hence the sale of Leyparts will increase.
This also deals with the study of consumption pattern of Leyparts in case of fleet owners as
they form a major part in Leyparts business. To be done through identified key customers
whose parameters have been specified. The methodology adopted is illustrated in the
following lines:
• Research design
This is a exploratory study in which we had to meet people to get their feed back on
Leypatys usage and its services so that we can narrow down the problems and suggest
appropriate steps for providing them appropriate solutions and in turn to help Leyparts
to gain more market share through the improvement of customer service.
Responses to answer research problems have been quantified for respective research
problems in MSexcel. Since responses to various questions have been obtained to solve
a particular research problem, weights have been assigned as per degree of importance
attached to a question. Hence after analyzing the questions, respective research
problems have been solved. Customer responses have also been considered from the
survey for recommendations from the project.
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Based upon the analysis, various inferences were drawn which were used further for
recommendations and suggestions.
The other limitation was the time factor as the study was on in the month of February
and march which is a busy time for all the dealers and the fleet owners as they have to
meet their yearly target and then decide upon their next year targets so there was a
problem in getting appointments.
The limitation of getting the Leyparts usage vehicle wise data as there was no data
available with the fleet owners. And some fleet owners were not interested to give the
data without any sort of help from Ashok Leyland
Project: Developing Customer Ownership for Ashok Leyland Dealers in Parts Business
Objective:
To study Leypatys usage and its services so that we can narrow down the problems and
suggest appropriate steps for providing them appropriate solutions and in turn to help
Leyparts to gain more market share through the improvement of customer service.
It is developing a feeling in the minds of the customer that you are really caring for him and
trying to help him in whatever ways.
It is all understanding what the customer expects from you and trying to give him the best
possible service.
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It is to develop a felling in peoples mind that Ashok Leyland really cares for his customers
and is able to give a solution to any of their problems whenever it is needed.
With schemes like AMC, VISHWAS, MITR Ashok Leyland is trying to move near to its
customers so that the needs and the expectations of customers so that more customer
satisfaction is resulted by helping them to get solutions to their problems and as a result
gaining more response from the customers and helping to improve his business.
Estimate:
Scope or potential for parts sourced for AL vehicles: estimated to be Rs.31000/year for
beyond warranty vehicles. (This is the amount that Leyparts estimates as the yearly parts
consumption for an Ashok Leyland vehicle after it has passed its warranty period on an
average of mindboggling models for an average running cycle.)
It is seen that SM stocks Leyparts, as well as some other agency lines, of which Demm,
Autolec, SKF, Sundaram Clayton, Sundaram Fasteners are major ones.. This is a point
where Leyparts sales for these items suffer. SM basically is reluctant to stock Leyparts for
those items which are also supplied by its sister concerns. So, when a customer orders for
Leyparts, and finds that this part is not in stock, he will obviously switch over to a similar
part supplied by SM. This, ultimately will lead to non-availability and lost sales for
Leyparts.
This is a very critical issue, as with the dealerships, AL’s brand is in direct
competition with the dealer’s own brand. Unless we address this issue, AL is going to
suffer, at least with the sale of these items.
These issues of parts unavailability leads to retailers’ dissatisfaction. They cannot afford
loss in sales due to unavailability. So, they will attempt to push similar parts from other
brands to customers, in case Leyparts brand is unavailable. Retailers I interviewed were
only concerned about parts unavailability, and basically wanted to be a part of a system
where their orders get serviced directly by AL, without the intervention of a dealer like SM.
Summing up all such issues that are there with the dealers in the current system, we see
that:
• Leyparts sales constitute just a fraction of total business for a dealer like SM.
• Apart from Leyparts, there are more than 30 other product lines that the dealer
handles.
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• Where will the focus for sale of Leyparts come from?
• No dedicated Leyparts sales force at the dealers end, who thus act order pickers
rather than order generators.
• Leave apart sale of competitors brands, today some of dealers own brand are in
direct competition with Leyparts, as seen above.
• In the current system, we have given the dealers a bit too many options, and too
much flexibility.
• He can use the parts for his workshop requirements, and enjoy full margin
• He can sell it at MRP over the counter, and again enjoy the entire of 23% margin
• He can supply to retailers.
• On ordering side, he can place COS order, and get higher margin, he can place a
general order to have higher margin and delayed supply, and VOR’s with
lesser margins but immediate supply, which is why we saw the issue in the case
study stated about.
• All this creates confusion for a not so smart dealer, and creates opportunities
to take advantage of loop holes in the system for a smart and intelligent dealer.
• Moreover, with such variety of options available, and such variety of businesses that
a dealer like SM is into, the focus towards Leyparts sales will definitely drop.
Apart from all this, it leads to lack of efforts from Dealer’s end, as, AL anyway is there to
worry about supporting vehicles or increasing sales and other issues. Whatever be the case,
the dealer will get his share.
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How to go on to this projects:
Warehouse visits
With nearly 20000 different part types, making required spares available at the right
place at the right time is a big challenge
Good spare parts support in the market is necessary to have a good after sales service
which is a key to sale of commercial vehicles
At present, the satisfaction level in the market with respect to availability of Leyparts is
poor.
Majority of the current Leyparts business happen through the Vehicle Dealers.
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Parts Distributors contributed only 11 percent of the total Leyparts business in replacement
segment.
Leyparts sales constitute just a fraction of total business for a dealer like SM.
Apart from Leyparts, there are more than 30 other product lines that the dealer handles.
No dedicated Leyparts sales force at dealers end who act as order pickers rather than order
generators.
Leave apart sale of competitive brands some dealers direct direct brands are in direct
competition with Leyparts.
In the current system, we have given the dealers a bit too many options, and too much
flexibility.
• He can use the parts for his workshop requirements, and enjoy full margin
• He can sell it at MRP over the counter, and again enjoy the entire of 23% margin
• He can supply to retailers
• On ordering side, he can place COS order, and get higher margin, he can place
• a general order to have higher margin and delayed supply, and VOR’s with lesser
margins but immediate supply.
• All this creates confusion for a not so smart dealer, and creates opportunities to take
advantage of loopholes in the system for a smart and intelligent dealer.
• Moreover, with such variety of options available and such variety of businesses that
a dealer like SM is into, the focus towards Leyparts sales will definitely drop.
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Study Of parts consumption by Key customers:
To study does ashok Leyland serve his vehicles owners well to create a satisfied
customer who will purchase or recommend Ashok Leyland.
To see to it if current Leyparts service level have significant impact on the decision
of recommending Leyparts.
To study the per vechile consumption of spare parts for Ashok Leyland vechiles and
ley parts share in it.
Terms of Reference:
Total parts sourced for AL vehicles: collect actual exp. Of last 12 month period and
match with estimate by no. of beyond warranty vehicles* Rs 31000
Itemised break-up of parts: collect actual exp. Of last 12 month period - Part no,
Desc, Qty, Avg. price
Leyparts sourced (with break-up of how much from local dealer and how much
from market)
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Choose customer groups who can be taken up for immediate intervention to
improve Leyparts shares and target those customers.
Unlike AL, in case of Tata’s distribution setup, distributors have got a greater role to play.
Out of a total spares business of around 650 crores, the business happening through
distributors is around 300 crores, and this figure through distributors, is growing at the rate
of 50 percent every year. Efforts are being made from Tata’s side to encourage product
supply in the market through distributors, and to have dealers primarily as
consumption points rather than distribution centers. The reason behind Tata’s stress on
the distributors as better channel members than the dealers are many:
A dealer has got a number of other concerns apart from focusing on sale of
Leyparts. This is one reason why a company’s control on the dealer is not very
high. Moreover, the kind of monopoly the dealers are enjoying in case of AL, they lack the
right kind of motivation towards Leyparts sales.
If we look at a distributor, things are very different in his case. His only business is to deal
with the distribution on spare parts, and this is the only way he earns his livelihood. So, he
remains focused, and does his best to increase his sales, thereby increasing company’s
business as well.
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Comparision With Pharma Industry Set up:
But there is one major difference between the auto-spares business and the pharma
business. In case of auto spares, if a particular spare of a particular brand is not available at
the retailers end, without any thought he will suggest alternatives to the customers.
This is not the case in case of pharma companies. Once the customer comes with a
prescription, the retailer must service that particular medicine only.
The distribution practices adopted by most Pharma companies are almost the same.
There are different channel members and the roles and responsibilities of each of these are
very well defined. The typical flow of materials in case of Pharma companies is as follows.
Proper and latest IT tools is again one of the key areas in distribution and SCM. Wal-Mart
have shown this and many have gained competitive advantage just by implementing newer
and better IT tools.
With the system of bar coding on every item, and with the common and integrated IT
platform at each level, the moment an item is consumed by any outlet, the
information goes to each member of the supply chain. When the stock at any area falls
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below a certain level, AL automatically get signal and accordingly ship their
materials on time to the hub, from where they go to the respective outlets……
With such high quality IT tools in place, Inventory replenishment is to happens twice per
week (industry average is once in 2 weeks). Directly materials are to be dispatched
to Dealer warehouses and immediately then to the respective stores, just because,
beforehands the partners at each level like have access to data all the time, according to
which they are capable of planning in advance, thereby enabling Just in time supply, lowest
inventory holding costs and lowest stock-out chances.
We can then take this to the next level, which is the Vendor managed inventory,
wherein there will be automatic stock replenishments at each level.
The DMS at all the dealers and ALASC’s, and then with forward integration, is a must, as
this will improve their ease of operation, and also with proper information available ,
service levels and unnecessary delays can be eliminated.
• Educating the customers on choosing an insurance policy that assures use of OEM
parts, (which General Motors did), to do something against the Fake auto spares
market.
• The next step is to talk to insurance agencies about the ill-effects of using fake auto
spares on Vehicle life and performance. We can try convincing them to include a
statement in their policy document for deduction in claims in case the cause of an
accident is found to be the failure of a fake spare part.
• In case the insurance agencies are not willing to do this, we can even get it done
legally by convincing Government on this, as revenue loss to Government on
account of these counterfeit spares at around Rs 3,600 crores annually .
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Leyparts offers a credit facility of 30 days to its dealers but Sundaram Motors do not extend
any credit facilities to its customers especially the fleet owners who have a good amount of
business with SM as a result of which the fleet owners are forced to buy the Leyparts from
the retailers with no discount only because the retailers offer them a credit facility or
sometimes get the parts from any local company which costs him less.
To make the credit facility scheme successful Leyparts can hold talks with its dealers and
make arrangement for any bank guarantee so that the fleet owners have some amount
deposited in the bank and it can take the Leyparts on credit basis up to a certain amount for
which the bank will hold the guarantee. Doing this the sale of Leyparts will increase surely.
As the retailers have to pay the bill at the end of 30 days which has been allotted as the
credit limit to the retailers and the customer sometimes delay the payment to the retailers so
the retailers in order to get the amount to be paid for Leyparts sometimes pushes other local
made parts instead of Leyparts as the profit gained by him on the local made parts is huge
and by doing that he can recover the money that he has been pending for him for the
Leyparts payment.
This practice should be stopped as this is a huge loss to Leyparts if due to this reason it
loses a major amount of market share.
Conclusion:
Its confirm that Leyparts enjoys considerable brand equity in the market place as a genuine
and Original Equipment spare part. However, Leyparts has not leveraged the power of the
brand effectively so far. In many markets, there is a poor perception of parts availability and
price value relationship.
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of competitions and opportunities, The in effective supply chain and sometimes monopoly
in case of the dealer.
But if we consider and compare the set up of TATA motors and WALMART then there are
many steps which can be incorporated by Leyparts so that they can improve its business.
The problem of the credit facilities are being shorted out with the help of talks with the
dealers and Ashok Leyland in which Ashok Leyland is trying its best to extend a credit
facility to the retailers and the fleet owners by which they can gain more market share.
It all depends on the service quality as customer ownership means to Customer Ownership
means surrounding the customer with solutions. It is developing a feeling in the minds of
the customer that you are really caring for him and trying to help him in whatever ways. It
is all understanding what the customer expects from you and trying to give him the best
possible service.
So doing this Leyparts will surely be on the top of the list with reference to vehicle parts
business.
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References:
Website www.ashokleyland.com
Website www.leyparts.com
Website www.google.com
Website www.tatamotors.com
Website www.walmart.com
Website www.wikipedia.com
Keller K.L. and Kotler P. (2006), Marketing Management, Pearson Education, Inc, Dorling
Kindesely (India) Pvt Ltd, New Delhi, India
Malhotra, K. Naresh (2006), Marketing Research, Pearson Education, Inc, Dorling Kindesely
(India) Pvt Ltd, New Delhi, India
Annual Report, Ashok Leyland, 2006-07, 2007-08
Share Holders Meeting, Meetings, 2006-2007,2007-08
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