Honda revamps ordering system to give dealers cars they want

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LOS ANGELES -- Ever order a Big Mac at McDonald's and get a fish sandwich instead?

If so, you understand the limitations of the typical car dealer's inventory-ordering system. What the dealer wants and what the factory is able to build often are miles apart, leading to frustration when the wrong car shows up on the lot.

Honda aims to better bridge that gap this week, when it launches the APEX inventory system.

APEX -- for Allocation Preferencing and Exchange -- is the result of five years of software coding and deliberations among dealers, the factory and Honda's field staff. The system will give dealers more flexibility in ordering vehicles, changing vehicle specifications before the units are built and swapping vehicles with other retailers before the units are in transit.

"When dealers request changes to an order, we put constraints on what they are able to change," said Mike Ike, Honda sales and production planner. "When they go into APEX, they are seeing all the capacity the factory has. If we can't give them their No. 1 choice, they can at least pick the second or third option. It allows much better inventory planning."

APEX "will get us more of the cars we really want," said Brad Mugg, general manager of Honda's top-selling dealership, Norm Reeves Honda, in Cerritos, Calif.

Most importantly, APEX gets Honda closer to the goal of having its retail system driven by dealers' orders rather than what the factory churns out, said Dennis Manns, Honda's vice president of sales and logistics planning.

For nearly 20 years, Honda and Acura dealers have processed vehicle orders and shipments from the factory with a computerized system called MOVE, for Market Oriented Vehicle Environment.

When MOVE was launched, it was ahead of its time in helping Honda dealers accurately place orders with the factory. But that was when Honda sold only a few nameplates with limited trim levels, built at two U.S. factories. As the number of Honda vehicles increased -- along with the complexity of specifications, option packages and the production base -- software engineers made temporary fixes to keep the system running.

MOVE had its limitations. As build complexity grew, dealers stopped getting the vehicles they wanted. In the time between a dealer's order and the production run, a request for a red, front-wheel-drive Pilot LX might be filled with a black, all-wheel-drive Pilot EX.

With APEX, Manns said, dealers will get "the right cars at the right place at the right time."

Among areas of improvement:

n Capturing true dealer demand, in terms of aggregating what dealers desire in model, color, trim, transmission and other key options, and matching it to future assembly. "We don't want to offer something we can't supply. It's what we are able to produce and can be instantly confirmed in real time," Manns said.

n Confirming the vehicles coming down the assembly line, which a dealer can see in real time. Under MOVE, build confirmation took two weeks. With APEX, confirmation ostensibly happens instantly, with formal confirmation three days later.

n Incorporating seasonal fluctuations into dealers' turn-and-earn allocations, so in winter, for instance, snow belt dealers get fewer vehicles while Florida dealers with an influx of snowbirds receive more.

n Creating a "marketplace" in which dealers can exchange incoming product, which is then tied in to Honda's factory capacity and production runs. Such an exchange is limited to a specific nameplate -- a blue Civic LX for a red Civic EX, for instance -- but APEX allows this to happen before the car is loaded on a transporter.

"We will always have dealer trades, but this is more about fine-tuning your inventory system," Manns said.

n Helping dealers create a model for future inventory, by tracking and profiling the nuances of their past ordering preferences and selling rates.

Honda representatives have been on a monthlong, 28-city roadshow, training 3,000 Honda and Acura dealership employees how to use the system.

But for all the changes and improvements, APEX uses much the same user interface as MOVE, but with more functionality.

"We didn't want something foreign to them, to be teaching them Latin," Manns said. "The drivers and software are the big difference. We just needed to have a system that could keep up with the pace and be more market responsive."

Norm Reeves' Mugg agreed. "The old system was user-friendly, so I'm glad they didn't change the look and feel," he said. "They just enhanced it. It's a big step forward."

You can reach Mark Rechtin at mrechtin@crain.com. -- Follow Mark on Twitter


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