Renault Speeds Up Delivery with a New DSS
In the face of a very competitive Western European market, French automaker Renault decided in 1999 to launch the "New Delivery Project" aimed at offering its customers all the diversity of the product range while shortening delivery times. Lead times between the customer order and the arrival in dealerships were to be reduced from six weeks on average to three weeks in Western Europe. The three weeks include the production and transportation of the customer vehicle.
[ILLUSTRATION OMITTED]
The assumption was that if a client can get exactly the right model with the right color and all the options he or she wishes in a "reasonably short" delay (i.e. three weeks), Renault will gain benefits simultaneously on three levels:
* Reduction of car inventory level. (Thanks to short delivery times, customers can wait for their cars, so that dealerships can lower their stock levels.)
* Reduction of the price discounts designed to sell cars that do not match exactly clients' desires.
* Since all the options are available to customers with short delivery times, expectation of selling a more profitable product mix.
In other words, Renault decided to switch its supply chain from a built-to-inventory to a built-to-order perspective, while offering a more diverse product range with shorter delivery times!
Such an ambitious strategy required a tremendous speed-up of the entire planning process, ranging from the national sales companies (NSC) to the assembly plants via the headquarters. Let us examine this planning process. At the start of each month, NSCs all over Europe define monthly sales forecasts for every model for years Y and Y+1. Then the headquartered sales department reviews the figures with industrial planners so as to ensure that resulting productions comply with plants' capacities, those of Renault and of its suppliers. The discussion between sales and industrial departments may lead to the upgrading of industrial capabilities or to the lowering of sales
[ILLUSTRATION OMITTED]
The assumption was that if a client can get exactly the right model with the right color and all the options he or she wishes in a "reasonably short" delay (i.e. three weeks), Renault will gain benefits simultaneously on three levels:
* Reduction of car inventory level. (Thanks to short delivery times, customers can wait for their cars, so that dealerships can lower their stock levels.)
* Reduction of the price discounts designed to sell cars that do not match exactly clients' desires.
* Since all the options are available to customers with short delivery times, expectation of selling a more profitable product mix.
In other words, Renault decided to switch its supply chain from a built-to-inventory to a built-to-order perspective, while offering a more diverse product range with shorter delivery times!
Such an ambitious strategy required a tremendous speed-up of the entire planning process, ranging from the national sales companies (NSC) to the assembly plants via the headquarters. Let us examine this planning process. At the start of each month, NSCs all over Europe define monthly sales forecasts for every model for years Y and Y+1. Then the headquartered sales department reviews the figures with industrial planners so as to ensure that resulting productions comply with plants' capacities, those of Renault and of its suppliers. The discussion between sales and industrial departments may lead to the upgrading of industrial capabilities or to the lowering of sales