Rover’s Custom Order Process Revolutionized Car Manufacturing

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It’s not the three-day car, but it’s pretty damn close.

While U.S. and Japanese auto manufacturers struggle to achieve that perennial benchmark of agility, a small, U.K.-based car manufacturer is driving off with the goods–the promise of delivering a custom-order vehicle to a customer within 14 days (including five days’ ground-transit time).

Here’s a surprise: For the Rover Group Ltd., perfecting the customer end–rather than optimizing the shop floor–has been the route to agility.

Rover (a subsidiary of BMW of Germany) is out to take the sleaze out of the car-buying experience. Its revolutionary new PC-based sales and order-entry system lets customers bypass the disagreeable haggling process in favor of an enlightened exchange with sales “consultants.” With the aid of full-motion car-demo videos and online options and pricing information, the sales consultants empower buyers to choose the right vehicle with the right options at the right price.

As of the end of this year, the PC sales data will then be poured into the factory-floor manufacturing systems without needing to be re-entered or translated.

In the process, Rover has eliminated the need for dealers to keep inventory, with the exception of a few demonstrator models. In addition to straight bottom-line benefits, this approach freed up physical space that the dealers are now free to use for real cash generation, such as putting in a second franchise.

In the past, the theory was: Stock cars and the buyers will come. “You might achieve one sale under that approach, but you don’t make the next two or three,” says David Stubbs, product manager for Rover, in Birmingham, England.

In the midst of a global recession, Rover management went through a painful self-analysis and determined it could not compete with the volume players on price. “We did not have the economies of scale. What we could have was individual attention and individually produced vehicles,” says Stubbs. Thus was born the concept of “customer delight.”

So, beginning in September 1994, Rover removed vehicles from all U.K. dealerships and placed them in six central compounds across the United Kingdom. It also rolled out its PC-based DISCUS (dealer information system for customer satisfaction) program.

The Rover IT staff built its own Windows application in C++. The clients run Windows for Workgroups 3.1 with NT servers. An embedded Videologic MPEG board supplies the video clips. Digital Equipment Corp. was the systems integrator in charge of the massive PC rollout, which averaged 400 PCs installed at U.K. dealerships per month, for a total to date of 2,597.

Digital also worked with the dealers to provide links to any data-management systems that they had installed to prevent the need for double entry of data.

The beauty of DISCUS lies in its ability to help sales consultants offer customers options (air conditioning, leather interior, CD player) and let them discover the cost ramifications of their choices. (“I can’t go any higher than 300 pounds per month. If I give up the A/C, will that put me under?”) DISCUS also lets buyers tinker with financing arrangements such as loans vs. leases.

Another benefit is that the system has a preset discount structure, obviating the need for the salesperson to “bargain” with the manager of the dealership.

“This is always a difficult one with the dealers,” says Stubbs. In some cases, “they still think the customer is quite impressed with them angling for a greater discount with the boss in the back.”

The bottom line? These changes have translated to real pounds in the pockets of the dealers–as well as Rover corporate. Rover compared the pilot group of 12 early DISCUS adopters with the results from the top 25 percent of Rover dealerships. The control group suffered a 29 percent decline in sales, whereas the early DISCUS users showed an improvement of 7 percent in the same period. Unit sales declined in both groups but by 5 percent less at DISCUS dealerships.

“If the system doesn’t allow them to sell even one extra option–if all it does is allow the dealers to sell 1 percent more–they will make an average of an extra 25,000 pounds, bottom line,” says Stubbs. “But we have reason to believe it’s rather more exciting than that.

“The car-acquisition process is a bit like going to the dentist. We wanted to represent real choice. We decided on a new pathway–the empowered salesman.”

Rover management went through a painful self-analysis and determined that it could not compete with the volume players on price.

 

2 Comments

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2 comments on “Rover’s Custom Order Process Revolutionized Car Manufacturing

  1. Gilles M on said:

    Rover has always done pretty innovative things, and I think that’s because they’ve always been one of the smaller car manufacturers. When you look at the Big 3, and even the Japanese heavyweights, it’s easy to tell that even minor changes to their process can cost billions of dollars.

    Agile organizations they are not, and that’s exactly why companies like Rover can exist – they’re fast on their feet.

  2. Brandi Ingram on said:

    Custom order cars are really cool! A dream come true for those who can afford. It is an advancement that not all car manufacturers would be willing to do. It is probaby a risk that Rover bravely took on and is enjoying at the moment.

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