Ford Motor Co. is trying to take the guesswork out of dealership inventory ordering, using advances in big data technology to offer its stores sophisticated recommendations for their orders.
Some dealerships, however, have been hesitant to embrace the data.
"I order my own vehicles," said Ford Hall, fleet and commercial sales manager for LaFontaine Ford in Lansing, Mich. "I've been doing this for 16 years, and I know what I want in my parking lot. They don't."
Other dealers use the system, which Ford supplies free, but the varied reception is not surprising to experts. Using big-data tactics to fine-tune inventory orders is in its infancy, they say. One analyst says effective use of big data could save $100 or more per car sold.
Ford rolled out its Smart Inventory Management System in 2009, providing relevant regional data and inventory recommendations to dealerships in the United States and Mexico. The company's predictive analytics group sees the tool as a way to cut the days that cars sit on dealer lots by better predicting consumer demand. While other automakers use some analytics for dealership inventory, Ford has made it a priority.
"Our goal is twofold," said Bryan Goodman, a Ford research scientist. "To help dealers have better, faster-turning inventory and to better predict what dealers are going to
order to better manage the supply chain."
Five years after the system's introduction, however, independent companies have begun to develop their own inventory and pricing software.
And one executive for a competing system notes that dealers tend to be suspicious of factory recommendations. (See related story, at right.)
Karen Newman, vice president of the automotive and aerospace industries for IBM's Global Business Services in the Americas, said the auto industry produces massive amounts of information that lends itself to data crunching.
"There is a real value around the use of big data and using these kinds of tools," Newman said. "It's how we can do things smarter, better, faster and cheaper."
The predictive analytics group at Ford, led by data scientist and manager Michael Cavaretta, decided to take big data to Ford dealership inventories in 2007. According to Newman, there has not been much activity from other automakers in the use of data analytics to shape dealership inventories.
"I think this is a great place to apply big data and analytics to help OEMs and dealers solve problems," she said.
Anil Valsan, global automotive lead analyst for EY, said that although most automakers use analytics in inventory management to some extent, Ford's Smart Inventory Management System, or SIMS, is a more sophisticated program. As a whole, he said, the industry has not matured in the application of big data to inventory.
"From our engagement and discussions, a number [of automakers] are thinking of having similar programs," Valsan said. "Ford is a reflection of the benefits that such analytics provides."
He added that though inventory management analytics is in its early days of development, it has the potential to save two- to three-digit figures per car on the dealership lot.