Matador Red Mica
07-22-24, 09:48 AM
#31
Instructor
You think that the 244 US Lexus dealers are all telling Lexus what color cars to send them? Really?
Who said "nobody" wanted red cars? Did I say that? I don't believe I did. Can you quote that for me?
How do you know how much I have looked in to this? Have you been looking in my window?
You're amusing.
Who said "nobody" wanted red cars? Did I say that? I don't believe I did. Can you quote that for me?
How do you know how much I have looked in to this? Have you been looking in my window?
You're amusing.
You said, and I quote, "they build what dealers order". That clearly, and unquestionably, insinuates that the 244 US dealers tell Lexus what color/options cars to send to them. Are you claiming that you were only referring to 202 dealers? Or perhaps 186 dealers?
You have absolutely no idea what you are talking about. I worked at Sewell Lexus in Dallas for many years. You just don't know how manufacturer allocations work. No one 'orders' allocations through corporate or regional. They sent us what they thought would sell well in our particular market (hot environment - not a lot of dark cars), and forced us to take models that weren't selling well in other markets in order to give us the cars that we told the regional manager would sell quickly. There was never any mechanism, through our district or regional managers, to tell Lexus Corporate what to send to our dealership. That is an absolute fantasy, and proves that you have absolutely no understanding of how things work in the new vehicle market.
But, thank you for telling me that I have a "lack of knowledge" of the car business"
You have absolutely no idea what you are talking about. I worked at Sewell Lexus in Dallas for many years. You just don't know how manufacturer allocations work. No one 'orders' allocations through corporate or regional. They sent us what they thought would sell well in our particular market (hot environment - not a lot of dark cars), and forced us to take models that weren't selling well in other markets in order to give us the cars that we told the regional manager would sell quickly. There was never any mechanism, through our district or regional managers, to tell Lexus Corporate what to send to our dealership. That is an absolute fantasy, and proves that you have absolutely no understanding of how things work in the new vehicle market.
But, thank you for telling me that I have a "lack of knowledge" of the car business"
You think that the 244 US Lexus dealers are all telling Lexus what color cars to send them? Really?
Who said "nobody" wanted red cars? Did I say that? I don't believe I did. Can you quote that for me?
How do you know how much I have looked in to this? Have you been looking in my window?
You're amusing.
Who said "nobody" wanted red cars? Did I say that? I don't believe I did. Can you quote that for me?
How do you know how much I have looked in to this? Have you been looking in my window?
You're amusing.
Did I say I didn't think red cars would sell well in Dallas? I don't recall saying that. Can you please quote that so I can go back and read it?
And, now that I thoroughly explained to you how dealer allocations work, you're pivoting to wood on the dashboards of Mercedes automobiles and classes of cars? In case you have forgotten, we were discussing your assertion that manufacturers build what dealerships order and how wrong you are about that.
Again, this has nothing to do with your previous assertion. In fact, it mentions nothing about dealers telling manufacturers what to send to them. Manufacturers don't need dealers to tell them what colors do or don't sell LOL. They track that data at corporate and make the necessary production adjustments. You really think a dealer principle asks the regional manager not to send them blue cars, for example, and that actually happens??
"Dealers prefer to stock only the most popular-selling colors" - well there's an earth shattering revelation!
And, now that I thoroughly explained to you how dealer allocations work, you're pivoting to wood on the dashboards of Mercedes automobiles and classes of cars? In case you have forgotten, we were discussing your assertion that manufacturers build what dealerships order and how wrong you are about that.
Again, this has nothing to do with your previous assertion. In fact, it mentions nothing about dealers telling manufacturers what to send to them. Manufacturers don't need dealers to tell them what colors do or don't sell LOL. They track that data at corporate and make the necessary production adjustments. You really think a dealer principle asks the regional manager not to send them blue cars, for example, and that actually happens??
"Dealers prefer to stock only the most popular-selling colors" - well there's an earth shattering revelation!
cgvt, you have enriched this discussion with legitimate points, and I thank you for contributing them.
I have made what I consider to be legitimate points as well, and I get the sense that you do not want to acknowledge them. I cannot control that, and I will stop trying.
I have made what I consider to be legitimate points as well, and I get the sense that you do not want to acknowledge them. I cannot control that, and I will stop trying.
You are being too polite and respectful, considering the level of tone and connotation from this poster @gcvt , but that's ok; I'm just warming up! While I initially aimed for a more understanding approach, their persistent condescension and disregard for others have made it clear that continued politeness would be futile. Their attempts to flaunt expertise while dismissing alternative viewpoints demonstrate a profound lack of respect for genuine dialogue. Consider this a mere warm-up; let's see how logically challenged they believe I am once I shift into high gear. Let's not get the message twisted; the education portion of my piece isn't for you; it's for those who are interested in a more comprehensive, less contentious perspective; the pointed stuff is for you!
My point isn't to flaunt arrogance or tout my knowledge or skills, or to flex my knowledge base, but I have credibility that is backed up by countless receipts and nuggets throughout various threads and posts. There are just as many other well-versed posters with an extensive knowledge base. I won't brag, but facts are facts; I've proven myself and can back up most of my points without the need for conjecture. That's part of my foundation. So let's get to it.Let's be absolutely clear: the Lexus allocation process isn't a dictatorship run by Lexus International, and your insistence that dealers have zero influence is not only wrong, it's ludicrous. The reality is far more nuanced and collaborative than your simplistic portrayal suggests. While I wouldn't say you're completely clueless, your understanding of the process seems severely limited, and your dismissive attitude is rather telling.
Lexus International, as the manufacturer, does indeed establish the overall production plan. However, to claim that dealers are mere order-takers with no say in the matter is utterly absurd and demonstrates a fundamental misunderstanding of how the automotive industry operates. Lexus dealers are deeply ingrained in this process, acting as trusted advisors with invaluable insights into their local markets and customer preferences. They actively communicate with regional and corporate offices, advocating for their customers and directly influencing production decisions. This isn't some fantasy; it's the reality. Lexus has even publicly stated that dealers play a "crucial role" in providing feedback that shapes production plans.
To suggest that dealers simply wait for scraps from Lexus HQ is laughable and frankly insulting to the intelligence and expertise of those working in the automotive industry. It's akin to saying a chef has no influence over the menu in a restaurant, or a pilot has no say in the flight path of an airplane. Dealers have the power to negotiate with regional managers for specific models and trims, demonstrating their direct involvement in shaping inventory. They place specific orders based on their local knowledge, creating a tangible demand signal that the manufacturer cannot ignore. In fact, a significant portion of Lexus vehicles are pre-sold through dealer orders before they even hit the production line, highlighting the importance of dealer input. This isn't speculation; it's backed up by dealer documents, contracts, special order forms, direct conversations with Lexus personnel, and my own extensive experience working with Toyota in an upper management capacity for several years.
For example, dealers in regions with a high demand for hybrid models can request increased allocations of those models, influencing the overall production mix. Conversely, if a particular model isn't resonating with customers in a certain area, dealers can provide feedback to reduce production of that model. This collaborative approach ensures that Lexus produces vehicles that align with market demand, ultimately leading to increased sales and customer satisfaction.
Your baseless accusations and dismissive rhetoric demonstrate a lack of understanding of the complexities involved. Of course, I am not saying that the situations you described couldn't have happened; in many instances, they likely could have happened with respect to getting less-than-desirable inventory, especially considering the recent supply chain disruptions and production issues. Many dealers were lucky just to get a heads-up on what inventory was coming, let alone have much say in it.
Based on your references to managers, I'm inclined to believe that you were likely not in a position to have a full understanding of the process and simply did as you were told or made assumptions based on limited information. This is common, as most employees aren't privy to the inner workings of such complex systems.
However, that's not the crux of the matter here. The issue is your blatant denial of certain key facts and your unwillingness to consider alternative perspectives. By acknowledging the crucial role dealers play and recognizing the collaborative nature of the allocation system, we can have a much more accurate and informative discussion. It's time to ditch the dismissiveness and embrace a more nuanced perspective that reflects the realities of the automotive industry.
Now, let's get into the details of the Lexus allocation process...
- Allocation Preference Database: This is the dealer's wish list, but it's far more than a casual request. It's a meticulously maintained database where dealers specify their desired vehicle configurations down to the finest detail: model, trim level, exterior and interior colors, packages, and options. Lexus utilizes this data, along with sales figures and market trends, to determine each dealership's allocation. It's a dynamic, ongoing process, with dealers continuously updating their preferences based on real-time sales data and customer feedback.
- Special Orders: Dealers can and do place special orders for customers who want specific configurations not readily available in existing inventory or the pipeline. While the pandemic-related chip shortage did temporarily limit this option, Lexus has gradually reopened its special order program for many models. Although customization is limited to the available options for a specific model year and trim level, this mechanism allows dealers to cater to unique customer requests that fall outside the standard allocation. Both myself and @Lexfinally have successfully placed special orders for our respecive 2022 ES ULs, mine process thoroughly documented from order to delivery including Change request/Special Order forms commuinicatinos with my contacts , all teh way through to the actual contract within this very forum, demonstrating a standard practice, not an anomaly.
- Pipeline Inventory Management: Once vehicles are allocated, dealers actively manage their pipeline inventory. They can make changes to factory-installed options, add dealer-installed accessories (like paint protection film or wheel locks), and even swap vehicles with other dealers to optimize their stock based on real-time market insights and local demand. This hands-on approach gives dealers considerable control over their inventory's final composition.
- Vehicle Exchange/Swap Requests: Dealers operate within a network, not in isolation. They can request changes to the specifications of their allocated vehicles, which Lexus evaluates and may fulfill through swaps with other dealers or adjustments to the production schedule. This flexibility ensures that vehicles are placed where they are most likely to sell, benefiting both dealers and Lexus.
It's important to remember that the Lexus allocation process is a complex interplay of various factors. Dealers don't have absolute control, as production is ultimately dictated by global demand, mix planning, and other considerations. And it’s not a guaranteed process, nor is it always accurate. However, dealer input and actions significantly shape their inventory and, consequently, influence Lexus' production decisions.
If you’re still skeptical, it is what it is, and I’m not here to alter your perception; it’s likely futile. No, I’m just setting the record straight for those who are interested in this topic as you’ve laid down a proverbial gauntlet insinuating expertise in this matter, and there needs to be another voice that provides a more thorough explanation surrounding the significant role dealers play in the allocation process. After all, an informed discussion requires understanding all sides of the story, wouldn’t you agree?
Now for the boring actual post that thoroughly beats this topic to death but is still important for clarity and understanding. ***( I'm breaking up this post into two parts that include the remaining details.)
07-22-24, 09:50 AM
#32
Instructor
*******Continued ....
Now for the boring actual post that thoroughly beats this topic to death but is still important for clarity and understanding. I give you, “The Fine Print!”
Regional and dealer level allocations
Regarding Vehicle Allocation, here is a "brief" overview highlighting a very small part of the process. I've skipped a few steps down to the regional and local level.
Vehicle Allocation-
National, regional then on to the dealer level.
Regional allocation-
Is performed monthly 6 weeks prior to the production month.
Once the monthly allocation is done the region must create a vehicle order for each unit.
Dealer allocations-
The dealers can maintain an allocation preference database that describes the type of vehicle specifications that they desire—or do not desire. Similar to a profile.
Dealers can also submit special orders from customers.
Once the dealers receive their allocation of vehicles, they have a few days to accept the vehicles.
After the dealers accept the vehicles, they appear in a pipeline inventory report. At this time, dealers can make changes to some of the factory specifications and also add accessories that will be installed at the marshaling yard and/or port
Now that the dealers know which vehicles are scheduled for production and approximately when they will be built, they can use information regarding these vehicles in combination with the dealer stock to fulfill demand.
The primary difference between the Lexus allocation model and other allocation models (Toyota does it once a month regionally and twice a month at a dealer level.) is that Lexus vehicles are allocated to dealers based on a quarterly sales plan. Unlike the Toyota models that are based on actual sales to “turn-and-earn,” Lexus’s vehicle allocation is based on the forecasted sales of each dealer as a share of each region’s total sales
Dealer fulfillment-
There are four options for dealers to fulfill customer demand.
1. Dealer Stock. The first option is to fulfill the customer’s order from dealer stock. The salesperson will attempt to influence the customer to select a vehicle already in stock. Such an approach is preferred by the dealer because the sale can be consummated immediately, before the customer leaves the dealership. The salesperson is always concerned that once a customer leaves without the keys to the car, she will change her mind and end up buying from another dealer or a competitor. The order-to-delivery lead time for vehicles purchased from stock is usually zero to two days.
2. Dealer trade. In that case, the salesperson can access a dealer locator system to determine if the vehicle is in another dealer’s stock in a nearby city or state. Usually the distance is limited to less than 500 miles, because if the vehicle is driven more than 500 miles before it is sold, the excessive mileage may violate the warranty. This issue can be avoided by hauling the vehicle on a trailer. In most cases, the dealers actually swap vehicles, meaning that two vehicles need to be transported instead of one. This method of fulfillment will add several hundred dollars to the dealer cost, because the dealer must pay a driver as well as cover the cost of fuel to transport the vehicle. That extra cost may or may not be passed along to the customer depending on how anxious the dealer is to sell the vehicle. It also adds miles to a new car before customer possession. The order-to-delivery lead time is usually two to three days.
3. Locate a vehicle in the dealer’s pipeline. These are vehicles that have been allocated or assigned to the dealer but have not arrived at the dealer. The pipeline can be divided into three segments:
1) Vehicles produced and in transit from the plant
2) Vehicles that are either in the process of being built or for which the specifications
have been frozen just prior to production
3) Vehicles scheduled for production with specifications that have not yet been frozen
If an exact match of the customer’s specifications can be located in the first two groups, then the vehicle can be reserved for the customer and should be delivered in two to three weeks.
The next choice is to locate a vehicle that is scheduled for future production and request a change in specifications. That step requires the manufacturing plant to agree to change the vehicle specification. The process is as follows:
* The dealer submits an online request to change a vehicle that has still not been produced. The change request can be a simple one-for-one change; for example, “I have a red ES 350 and I want a blue ES 350.” The change request can also be one-to-many or many-to-one; for example, “I have a red ES 350 and I want either a blue or white ES 350,” or, “I have a blue ES 350 and a black ES 350 and I want a silver ES 350.”
* The next step is for the sales company’s computer system to analyze and determine if any of the change requests can be satisfied by simply swapping the vehicle with a dealer who has submitted a change that is the exact reverse change request. For example, if a dealer in Boston wants to exchange a blue ES 350 Lux. for a black ES 350 Ult. Lux. and a dealer in Chicago has a black ES 350 Prem. and wants a blue ES 350 Lux., then the computer can simply swap the dealer assignments. If this online swap is successful, then the virtual swap is made and both dealers will be notified.
* If the above swap is not available, then the changes are sent to the manufacturing computer system that checks to ensure that the change can be made without exceeding any of the manufacturing constraints. Each assembly plant establishes a fluctuation allowance for each vehicle option, including color. Each dealer change request is systematically evaluated to make sure that none of the allowances are exceeded. If the change is accepted, the vehicle specifications are changed and the result is sent back to the dealer via the sales company. Also, the dealer will be notified if the change cannot be accepted, so the dealer can modify it or leave it in a pending status to be reprocessed the next day. Vehicles changed at the factory are usually delivered in 30 to 40 days.
4. The last resort (or fourth option) is to request a build-to-order vehicle from the regional office. That step would require the region to input the special order in the next month’s order cycle. A special request order typically has a very long lead time (usually three or more months).
Vehicle allocation process Toyota/Lexus overview
This overview is a partial/condensed summary. It starts more globally and then works down to Lexus-specific information. The purpose is to shed some light on how/why supply chain disruptions and other factors can drastically impact production output.
Vehicle Allocation
At Toyota/Lexus, vehicle allocation in North America is a two-step process. In the first step, the national sales company allocates vehicles to their regional areas. In the second step, the regional areas allocate these vehicles to dealers.
Regional Allocation
The regional allocation is performed monthly, about six weeks prior to the start of the production month. If the next production month is July, then the regional allocation would occur mid-May. The purpose of the regional area allocation is to allocate the number of vehicles by model to each region. The quantity is calculated using a share or percentage of the total national market that each region will receive. The following are some of the factors that are used to determine each region's share:
* Sales versus previous month and model-to-date objectives
* Regional weather conditions that can impact future sales, such as floods, snowstorms, drought, etc.
* Regional economic conditions and trends that impact future sales
* Competitive strategies that may affect market share in a region and necessitate more aggressive marketing strategies
Once the volume of each model is allocated to the regional area, the region must create a vehicle order for each unit. The regional vehicle order is an input to the sales and operations planning process, which was described in Sales and Operations Planning. After the monthly order is scheduled by manufacturing, regions receive a file containing the details of each vehicle along with the tentative scheduled date. These data are used to perform the dealer allocation.
Dealer Allocation
Toyota uses several methods in the United States to allocate vehicles to dealers, and the methods vary for Toyota and Lexus.
Lexus Brand Allocation
The primary difference between the Lexus allocation model and the other allocation models described previously is that Lexus vehicles are allocated to dealers based on a quarterly sales plan. Unlike the Toyota models that are based on actual sales to "turn-and-earn," Lexus's vehicle allocation is based on the forecasted sales of each dealer as a share of each region's total sales. The allocation share is revised each quarter to adjust for market changes. The allocation process is consistent with the idea that firms can take greater risk with products that have a higher margin.
Metrics
Metrics are an important method to monitor order fulfillment. The following are some of the key metrics:
* Sales. The total sales by model and by mix
* Daily selling rate. The sales divided by the selling days in a month
* Dealer stock. The number of units in dealer stock that have not been delivered to a customer or put into demo service
* Company stock. The number of vehicles produced that are still at the factory or in transit to the dealer
* Days supply. The number of vehicles in stock divided by the daily selling rate
* Aged stock . The number of vehicles in stock over N days (usually 90 or 120 days)
* Order-to-delivery lead time. The number of days from the time the customer orders to the day of delivery
Mix Planning
Mix planning is an important process for companies that manufacture and distribute products to retailers in multiple market areas. For vehicle manufacturers, this decision is extremely important because of the complexity of a vehicle. This complexity creates millions of possible vehicle build combinations or variants. The objective of mix planning is to reduce the variants of each vehicle manufactured by several orders of magnitude, from millions to hundreds.
Mix planning is a process that is undertaken during major model change preparation. It can also be adjusted annually during minor model change and to a lesser degree during the model year. The model change mix planning is completed about 12 months prior to new model introduction, to enable the following to happen:
* Marketing strategies for each region to be synchronized with product offerings
* Manufacturing to fill the supply chain pipeline with parts
* Sales regions to order vehicles to have in stock in time for new model introduction
Mix planning at Toyota deals with choosing the specific mix of vehicles that will be offered at sales regions across the country. The goal of mix planning is to carefully manage dealer-level product demand so as to enable stable production at the manufacturing plant. That also translates into stable orders to suppliers. In other words, the aim of mix planning is "to nip some of the demand variability in the bud" through careful planning. The associated upstream stability because of mix planning permits a focus on improved quality, cost reduction using kaizen, and ultimately higher value to customers that enables higher customer satisfaction and retention.
Now for the boring actual post that thoroughly beats this topic to death but is still important for clarity and understanding. I give you, “The Fine Print!”
Regional and dealer level allocations
Regarding Vehicle Allocation, here is a "brief" overview highlighting a very small part of the process. I've skipped a few steps down to the regional and local level.
Vehicle Allocation-
National, regional then on to the dealer level.
Regional allocation-
Is performed monthly 6 weeks prior to the production month.
Once the monthly allocation is done the region must create a vehicle order for each unit.
Dealer allocations-
The dealers can maintain an allocation preference database that describes the type of vehicle specifications that they desire—or do not desire. Similar to a profile.
Dealers can also submit special orders from customers.
Once the dealers receive their allocation of vehicles, they have a few days to accept the vehicles.
After the dealers accept the vehicles, they appear in a pipeline inventory report. At this time, dealers can make changes to some of the factory specifications and also add accessories that will be installed at the marshaling yard and/or port
Now that the dealers know which vehicles are scheduled for production and approximately when they will be built, they can use information regarding these vehicles in combination with the dealer stock to fulfill demand.
The primary difference between the Lexus allocation model and other allocation models (Toyota does it once a month regionally and twice a month at a dealer level.) is that Lexus vehicles are allocated to dealers based on a quarterly sales plan. Unlike the Toyota models that are based on actual sales to “turn-and-earn,” Lexus’s vehicle allocation is based on the forecasted sales of each dealer as a share of each region’s total sales
Dealer fulfillment-
There are four options for dealers to fulfill customer demand.
1. Dealer Stock. The first option is to fulfill the customer’s order from dealer stock. The salesperson will attempt to influence the customer to select a vehicle already in stock. Such an approach is preferred by the dealer because the sale can be consummated immediately, before the customer leaves the dealership. The salesperson is always concerned that once a customer leaves without the keys to the car, she will change her mind and end up buying from another dealer or a competitor. The order-to-delivery lead time for vehicles purchased from stock is usually zero to two days.
2. Dealer trade. In that case, the salesperson can access a dealer locator system to determine if the vehicle is in another dealer’s stock in a nearby city or state. Usually the distance is limited to less than 500 miles, because if the vehicle is driven more than 500 miles before it is sold, the excessive mileage may violate the warranty. This issue can be avoided by hauling the vehicle on a trailer. In most cases, the dealers actually swap vehicles, meaning that two vehicles need to be transported instead of one. This method of fulfillment will add several hundred dollars to the dealer cost, because the dealer must pay a driver as well as cover the cost of fuel to transport the vehicle. That extra cost may or may not be passed along to the customer depending on how anxious the dealer is to sell the vehicle. It also adds miles to a new car before customer possession. The order-to-delivery lead time is usually two to three days.
3. Locate a vehicle in the dealer’s pipeline. These are vehicles that have been allocated or assigned to the dealer but have not arrived at the dealer. The pipeline can be divided into three segments:
1) Vehicles produced and in transit from the plant
2) Vehicles that are either in the process of being built or for which the specifications
have been frozen just prior to production
3) Vehicles scheduled for production with specifications that have not yet been frozen
If an exact match of the customer’s specifications can be located in the first two groups, then the vehicle can be reserved for the customer and should be delivered in two to three weeks.
The next choice is to locate a vehicle that is scheduled for future production and request a change in specifications. That step requires the manufacturing plant to agree to change the vehicle specification. The process is as follows:
* The dealer submits an online request to change a vehicle that has still not been produced. The change request can be a simple one-for-one change; for example, “I have a red ES 350 and I want a blue ES 350.” The change request can also be one-to-many or many-to-one; for example, “I have a red ES 350 and I want either a blue or white ES 350,” or, “I have a blue ES 350 and a black ES 350 and I want a silver ES 350.”
* The next step is for the sales company’s computer system to analyze and determine if any of the change requests can be satisfied by simply swapping the vehicle with a dealer who has submitted a change that is the exact reverse change request. For example, if a dealer in Boston wants to exchange a blue ES 350 Lux. for a black ES 350 Ult. Lux. and a dealer in Chicago has a black ES 350 Prem. and wants a blue ES 350 Lux., then the computer can simply swap the dealer assignments. If this online swap is successful, then the virtual swap is made and both dealers will be notified.
* If the above swap is not available, then the changes are sent to the manufacturing computer system that checks to ensure that the change can be made without exceeding any of the manufacturing constraints. Each assembly plant establishes a fluctuation allowance for each vehicle option, including color. Each dealer change request is systematically evaluated to make sure that none of the allowances are exceeded. If the change is accepted, the vehicle specifications are changed and the result is sent back to the dealer via the sales company. Also, the dealer will be notified if the change cannot be accepted, so the dealer can modify it or leave it in a pending status to be reprocessed the next day. Vehicles changed at the factory are usually delivered in 30 to 40 days.
4. The last resort (or fourth option) is to request a build-to-order vehicle from the regional office. That step would require the region to input the special order in the next month’s order cycle. A special request order typically has a very long lead time (usually three or more months).
Vehicle allocation process Toyota/Lexus overview
This overview is a partial/condensed summary. It starts more globally and then works down to Lexus-specific information. The purpose is to shed some light on how/why supply chain disruptions and other factors can drastically impact production output.
Vehicle Allocation
At Toyota/Lexus, vehicle allocation in North America is a two-step process. In the first step, the national sales company allocates vehicles to their regional areas. In the second step, the regional areas allocate these vehicles to dealers.
Regional Allocation
The regional allocation is performed monthly, about six weeks prior to the start of the production month. If the next production month is July, then the regional allocation would occur mid-May. The purpose of the regional area allocation is to allocate the number of vehicles by model to each region. The quantity is calculated using a share or percentage of the total national market that each region will receive. The following are some of the factors that are used to determine each region's share:
* Sales versus previous month and model-to-date objectives
* Regional weather conditions that can impact future sales, such as floods, snowstorms, drought, etc.
* Regional economic conditions and trends that impact future sales
* Competitive strategies that may affect market share in a region and necessitate more aggressive marketing strategies
Once the volume of each model is allocated to the regional area, the region must create a vehicle order for each unit. The regional vehicle order is an input to the sales and operations planning process, which was described in Sales and Operations Planning. After the monthly order is scheduled by manufacturing, regions receive a file containing the details of each vehicle along with the tentative scheduled date. These data are used to perform the dealer allocation.
Dealer Allocation
Toyota uses several methods in the United States to allocate vehicles to dealers, and the methods vary for Toyota and Lexus.
Lexus Brand Allocation
The primary difference between the Lexus allocation model and the other allocation models described previously is that Lexus vehicles are allocated to dealers based on a quarterly sales plan. Unlike the Toyota models that are based on actual sales to "turn-and-earn," Lexus's vehicle allocation is based on the forecasted sales of each dealer as a share of each region's total sales. The allocation share is revised each quarter to adjust for market changes. The allocation process is consistent with the idea that firms can take greater risk with products that have a higher margin.
Metrics
Metrics are an important method to monitor order fulfillment. The following are some of the key metrics:
* Sales. The total sales by model and by mix
* Daily selling rate. The sales divided by the selling days in a month
* Dealer stock. The number of units in dealer stock that have not been delivered to a customer or put into demo service
* Company stock. The number of vehicles produced that are still at the factory or in transit to the dealer
* Days supply. The number of vehicles in stock divided by the daily selling rate
* Aged stock . The number of vehicles in stock over N days (usually 90 or 120 days)
* Order-to-delivery lead time. The number of days from the time the customer orders to the day of delivery
Mix Planning
Mix planning is an important process for companies that manufacture and distribute products to retailers in multiple market areas. For vehicle manufacturers, this decision is extremely important because of the complexity of a vehicle. This complexity creates millions of possible vehicle build combinations or variants. The objective of mix planning is to reduce the variants of each vehicle manufactured by several orders of magnitude, from millions to hundreds.
Mix planning is a process that is undertaken during major model change preparation. It can also be adjusted annually during minor model change and to a lesser degree during the model year. The model change mix planning is completed about 12 months prior to new model introduction, to enable the following to happen:
* Marketing strategies for each region to be synchronized with product offerings
* Manufacturing to fill the supply chain pipeline with parts
* Sales regions to order vehicles to have in stock in time for new model introduction
Mix planning at Toyota deals with choosing the specific mix of vehicles that will be offered at sales regions across the country. The goal of mix planning is to carefully manage dealer-level product demand so as to enable stable production at the manufacturing plant. That also translates into stable orders to suppliers. In other words, the aim of mix planning is "to nip some of the demand variability in the bud" through careful planning. The associated upstream stability because of mix planning permits a focus on improved quality, cost reduction using kaizen, and ultimately higher value to customers that enables higher customer satisfaction and retention.
Last edited by UltraLux22; 07-22-24 at 09:59 AM.
07-22-24, 10:03 AM
#33
I'll have to get back to you in about a week after I have time to read that wall of text you just posted. Just kidding. I'm not going to waste my time.
But let's review, shall we? I posted that luxury car buyers, by and large, are not interested in red cars which is absolutely the case. And what was your response? Did you ask for data to back up my claim? Did you offer any information to contradict my claim? Did you say you had doubts and would like to discuss?
You did none of those things. Then, you lost all credibility when you posted this.
Grow up.
But let's review, shall we? I posted that luxury car buyers, by and large, are not interested in red cars which is absolutely the case. And what was your response? Did you ask for data to back up my claim? Did you offer any information to contradict my claim? Did you say you had doubts and would like to discuss?
You did none of those things. Then, you lost all credibility when you posted this.
Grow up.
07-22-24, 10:11 AM
#34
Instructor
You took issue with my statement that the majority of luxury car buyers do not want red cars, but that is absolutely the case. In the past 20 years, red has rarely had more than 10% of the car color market share.
Next we discussed your assertion that manufacturers send dealers what they order. I explained, in great detail, why this is very clearly untrue and backed that up with an explanation of how the dealership allocation process works.
There's really nothing left to discuss.
Next we discussed your assertion that manufacturers send dealers what they order. I explained, in great detail, why this is very clearly untrue and backed that up with an explanation of how the dealership allocation process works.
There's really nothing left to discuss.
--Me
Congratulations on your unwavering confidence, even when you're wrong! Remember, mistakes are human, but condescension is a choice. Let's aim for more humility and accuracy next time. This thread has veered off course and could rightfully be shut down. Descending into this rabbit hole goes against my better judgment, but sometimes it's hard to resist. I'm done for now, and I hope this is the end of it. I know, I know wishful thinking! But a guy can dream, right?
07-22-24, 10:23 AM
#35
Not quite done just yet! I have no issue with you; just your delivery, lack of knowledge, and dismissive, condescending behavior in the face of incomplete and inaccurate information. But it's okay; we all make mistakes. Just this week, I thought I made a mistake... And I was right. I did make a mistake. The mistake was thinking I made a mistake.
--Me
Congratulations on your unwavering confidence, even when you're wrong! Remember, mistakes are human, but condescension is a choice. Let's aim for more humility and accuracy next time. This thread has veered off course and could rightfully be shut down. Descending into this rabbit hole goes against my better judgment, but sometimes it's hard to resist. I'm done for now, and I hope this is the end of it. I know, I know wishful thinking! But a guy can dream, right?
--Me
Congratulations on your unwavering confidence, even when you're wrong! Remember, mistakes are human, but condescension is a choice. Let's aim for more humility and accuracy next time. This thread has veered off course and could rightfully be shut down. Descending into this rabbit hole goes against my better judgment, but sometimes it's hard to resist. I'm done for now, and I hope this is the end of it. I know, I know wishful thinking! But a guy can dream, right?
07-22-24, 10:49 AM
#36
Instructor
I'll have to get back to you in about a week after I have time to read that wall of text you just posted. Just kidding. I'm not going to waste my time.
But let's review, shall we? I posted that luxury car buyers, by and large, are not interested in red cars which is absolutely the case. And what was your response? Did you ask for data to back up my claim? Did you offer any information to contradict my claim? Did you say you had doubts and would like to discuss?
You did none of those things. Then, you lost all credibility when you posted this.
Grow up.
That's cute!
But let's review, shall we? I posted that luxury car buyers, by and large, are not interested in red cars which is absolutely the case. And what was your response? Did you ask for data to back up my claim? Did you offer any information to contradict my claim? Did you say you had doubts and would like to discuss?
You did none of those things. Then, you lost all credibility when you posted this.
Grow up.
--Me
@Mods, I will do my best to stay on topic, but this might be beyond my ability to control.. . #theStruggleISreal
07-22-24, 10:54 AM
#37
The banality of your statement, , is where this started. The revelation that some luxury car buyers eschew red interiors is about as groundbreaking as Captain Obvious declaring, "Newsflash: water is wet." It's a self-evident truth that hardly warrants mentioning. But you did, and then you continued, and here we are. Good luck to you! I've already invested more time than I should have, but it was fun. I also interject that it didn't help that my logical nature was questioned. But you are forgiven this time. @gcvt I would like to formally apologize for the derailment. I hope you can accept my apology. I promise to be better about staying on topic in the future. I will do my best to curtail any further input that isn't a direct response to the OP topic. Again, I would also like to add that I have no issue with you, just your delivery, lack of knowledge, and dismissive, condescending behavior in the face of incomplete and inaccurate information. But it's okay; we all make mistakes.
--Me
@Mods, I will do my best to stay on topic, but this might be beyond my ability to control.. . #theStruggleISreal
--Me
@Mods, I will do my best to stay on topic, but this might be beyond my ability to control.. . #theStruggleISreal
07-22-24, 11:09 AM
#38
Instructor
07-22-24, 11:38 AM
#39
Is that not the purpose of this forum...to ask and answer questions?
Or is that just not your purpose on this forum? Do you regularly insult people like a 12-year-old girl when they are attempting to help answer questions posed by other members?
07-22-24, 11:43 AM
#40
You took issue with my statement that the majority of luxury car buyers do not want red cars, but that is absolutely the case. In the past 20 years, red has rarely had more than 10% of the car color market share.
Next we discussed your assertion that manufacturers send dealers what they order. I explained, in great detail, why this is very clearly untrue and backed that up with an explanation of how the dealership allocation process works.
There's really nothing left to discuss.
Next we discussed your assertion that manufacturers send dealers what they order. I explained, in great detail, why this is very clearly untrue and backed that up with an explanation of how the dealership allocation process works.
There's really nothing left to discuss.
07-22-24, 12:26 PM
#41
Mods, can we close this thread now, please?
The following 2 users liked this post by F3Woody:
93SCMax (07-23-24),
LexFinally (07-22-24)
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