Tag: popular choice combinations
Connect With Us
Q&A with John Sloan, former director, Jeep Brand Global Product Marketing
In today’s post, John Sloan talks about challenges dealers face in ordering inventory that best matches customer demand.
Emcien: Describe the Chrysler-Emcien initiative that examined dealers’ struggles with complexity in the ordering process.
JS: In a soft “push” market where volume is driven by heavy incentives versus the merits of the brand / model, managing cost is paramount. A key piece to focus on is product inventory. Dealers get roughly 60 days of no-interest floor plan. In a soft market, vehicles can easily sit for longer than two months before being sold, so it’s critical that vehicles be easy to order, stock and sell. Simple is better.
Emcien worked on a model to simplify the Chrysler PT Cruiser product mix. There were thousands of possible build configurations for the PT Cruiser, creating significant complexity for engineering and the assembly plant, as well as the supplier extended enterprise. Emcien’s ability to accurately forecast demand is invaluable for a complicated product line because it can assist with reducing the build configurations to those that best match demand. The PT Cruiser initiative validated the power of the Emcien inventory model.
The typical tail graph
In a previous post, I discussed two types of sales history: raw and collapsed. The collapsed sales history can be displayed in a table or spreadsheet, with a special column for volume. If this table is sorted on decreasing volume, then the most popular configurations (popcons) will be at the top. The graph with the volumes displayed in decreasing order (popcons on the left) is called the tail graph
We have drawn tail graphs for cars, computers, washing machines, lighting fixtures, trucks and tractors, and they all look basically the same. The first tail graph shown below is small but typical. It represents 2,884 tractors, with 1,997 unique configurations, or build combinations. On average, there are 1.44 units per unique configuration. The most popular configuration was ordered 23 times. The graph quickly drops to two of a kind and finally one of a kind (our technical terms are “twosies” and “onesies”). Combined, the onesies and twosies account for 2,000 tractors, or 69% of total volume. Rather high, though this number is usually at least 40%.
Comments Off