Study of the Sales-to-Delivery Process for Complete Buses and Coaches at Scania CV Anna Elmgren and Anna-Josefina Mattmann Department of Industrial Management and Logistics Division of Production Management Lund Institute of Technology Lund University Foreword With this master thesis we terminate our studies at the Industrial Management and Engineering programme at Lund Institute of Technology. The thesis comprises twenty academic points, and is commissioned by Scania CV AB in Södertälje. It is performed in collaboration with the division of Production Management within the Department of Industrial Management and Logistics at Lund Institute of Technology. We would like to thank our tutor at Scania CV AB, Anders Dewoon, for his support and feedback during our work with this thesis, as well as the rest of the staff at the B department for welcoming and helping us. We would also like to thank the rest of the staff, in Södertälje as well as at the sales companies, that we have come in contact with during our work. We also thank Irizar and Omni for receiving us with kindness and answering our questions. Finally we would like to thank our tutor at Lund Institute of Technology, Bertil I Nilsson, for supporting us with an optimistic attitude throughout our work, and for giving us valuable feedback. Anna Elmgren Anna-Josefina Mattmann Stockholm, the 28th of May 2004 III Abstract Title: Study of the sales-to-delivery process for complete buses and coaches at Scania CV. Authors: Anna Elmgren and Anna-Josefina Mattmann. Tutors: Anders Dewoon, BD department at Scania CV, and Bertil I Nilsson, lecturer at Lund Institute of Technology. Background: Customers for buses and coaches on the European market ask for complete vehicles from one supplier. Since Scania CV are only manufacturing chassis, their sales companies must co-operate with body builders in order to offer a complete product and service back- up. This means that the sales companies in connection with every order have to deal with two order processes, one for Scania CV and one for the body builder. Managing this situation is complicated and time consuming. To be able to offer short lead-times, Scania’s sales companies build up stocks of chassis and completed vehicles. Due to heterogeneity in the specification between markets, safety stock is hard to sell in neighbouring markets and remains over long periods with the sales companies if the market demand decreases. Purpose: The purpose of this thesis is to find ways for the Scania sales force to spend more time on selling vehicles and less time on administrative tasks. The purpose is also to find ways to reduce the lead-time for delivery of complete vehicles, and to reduce the stock levels. Delimitation: The study is focusing on Scania’s Globally Preferred Partners, Omni and Irizar. It concerns the activities and situation on the West- European market. The study of the sales-to-delivery process has been focused on sales and order. Methodology: The study is undertaken with a systems approach, since it allows for taking into account the relations between different actors and for considering how the sub-processes should be designed to optimise the Sales to Delivery process as a whole. Qualitative data has been collected through in-depth interviews with key individuals. Conclusions: Routines for information handling and exchange between the parties in the sales-to-delivery process need to be established. Scania should focus on and enhance the collaboration with the Globally Preferred Partners, and all activities should be performed with a complete vehicle perspective. The sales companies need to have access to proper sales tools, and CESOW could be used to provide such support. Communication between parties should be prompt, and exchanged information must be correct and updated. The sales companies should be allowed to focus on DDD for complete vehicles. By implementing several SD-dates vehicles in pipeline can be accessible for more than one market. Routines for forecasting need to be implemented. V Sammanfattning Titel: Studie av sales-to-delivery processen för hela bussar och coacher på Scania CV. Författare: Anna Elmgren och Anna-Josefina Mattmann. Handledare: Anders Dewoon, avdelning BD på Scania CV, och Bertil I Nilsson, lektor på Lunds Tekniska Högskola. Bakgrund: Buss- och coachkunder på den europeiska marknaden efterfrågar hela fordon från en leverantör. Då Scania CV endast tillverkar chassier, måste deras säljbolag samarbeta med karossörer för att kunna erbjuda en komplett produkt och service. Detta innebär att säljbolagen i samband med varje order måste hantera två orderprocesser, en gentemot Scania CV och en gentemot karossören. Att styra denna situation är komplicerat och tidskrävande. För att kunna erbjuda korta ledtider bygger Scanias säljbolag upp lager av chassier och hela fordon. På grund av heterogenitet i specifikationerna mellan marknader är det svårt att sälja säkerhetslager på angränsande marknader. Om efterfrågan minskar blir dessa lager därför kvar hos marknadsbolagen under långa perioder. Syfte: Syftet med detta examensarbete är att finna sätt för Scanias säljare att lägga mer tid på att sälja fordon, och mindre tid på administrativt arbete. Syftet är också att finna sätt att minska ledtiden för leverans av hela fordon, och att minska lagernivåerna. Avgränsning: Studien fokuserar på Scanias Globally Preferred Partners, Omni och Irizar. Den behandlar aktiviteter och situationen på den västeuropeiska marknaden. Studien av sales-to-delivery processen har fokuserat på försäljning och orderhantering. Metodik: Studien har gjorts med ett systemsynsätt då detta tillåter att hänsyn tas till förhållandet mellan olika aktörer, samt hur underprocesserna ska utformas för att optimera sales-to-delivery processen i sin helhet. Kvalitativ data har samlats in med hjälp av djupgående intervjuer med nyckelpersoner. Slutsatser: Rutiner för informationshantering och informationsutbyte mellan aktörer i sales-to-delivery processen bör etableras. Scania bör fokusera på, och förstärka, samarbetet med sina Globally Preferred Partners, och alla aktiviteter bör utföras med ett helbussperspektiv. Säljbolagen behöver ha tillgång till ändamålsenliga säljverktyg, och CESOW skulle kunna användas i detta syfte. Kommunikation mellan parter bör vara omedelbar, och den information som delas ska vara korrekt och uppdaterad. Det bör möjliggöras för säljbolagen att fokusera på DDD för komplett fordon. Genom att implementera flera SD-datum kan fordon i pipeline göras tillgängliga för mer än en marknad. Rutiner för prognostisering bör implementeras. VII 1 INTRODUCTION .......................................................................................................... 1 1.1 BACKGROUND...........................................................................................................1 1.2 NEEDS FOCUSED ON IN THE STUDY..........................................................................1 1.3 STAKEHOLDERS........................................................................................................1 1.4 REQUIREMENT SPECIFICATION................................................................................2 1.5 DELIMITATION.........................................................................................................2 1.6 PROJECT AIM...........................................................................................................2 1.7 DISPOSITION.............................................................................................................3 2 METHODOLOGY ......................................................................................................... 4 2.1 WORK PROCEDURE..................................................................................................5 2.2 METHODOLOGICAL APPROACH...............................................................................6 2.3 CHOICE OF METHODOLOGICAL APPROACH............................................................7 2.4 PROJECT ALIGNMENT..............................................................................................7 2.5 CHOICE OF PROJECT ALIGNMENT...........................................................................8 2.6 WORK PROCESS........................................................................................................8 2.7 CHOICE OF WORK PROCESS....................................................................................9 2.8 APPROACH OF STUDY...............................................................................................9 2.8.1 DEPTH, WIDTH, OR TIME SERIES........................................................................10 2.8.2 QUALITATIVE OR QUANTITATIVE.......................................................................10 2.8.3 PRIMARY OR SECONDARY DATA........................................................................11 2.9 CHOICE OF APPROACH OF STUDY..........................................................................12 2.9.1 DEPTH, WIDTH OR TIME SERIES.........................................................................12 2.9.2 QUALITATIVE OR QUANTITATIVE SURVEY.........................................................12 2.9.3 PRIMARY OR SECONDARY DATA........................................................................12 2.10 VALIDITY AND RELIABILITY.................................................................................13 2.11 VALIDITY AND RELIABILITY OF DATA USED IN THE MASTER THESIS.................13 3 THEORY ...................................................................................................................... 14 3.1 LEAD-TIME.............................................................................................................14 3.2 POSTPONEMENT.....................................................................................................15 3.3 CENTRALISATION OF INVENTORIES.......................................................................16 3.4 FORECASTS.............................................................................................................17 3.5 THE ROLE OF INFORMATION TECHNOLOGY IN SUPPLY CHAIN MANAGEMENT...19 4 EMPIRICAL STUDIES ............................................................................................... 22 4.1 BUS AND COACH.....................................................................................................22 4.2 THE BUS AND COACH MARKET..............................................................................23 4.3 SCANIA....................................................................................................................24 4.3.1 SCANIA BUS ORGANISATION..............................................................................25 4.3.2 THE SALES-TO-DELIVERY PROCESS AT SCANIA CV............................................28 4.4 SALES COMPANIES.................................................................................................32 4.4.1 SALES COMPANIES ORDER OMNI.......................................................................33 4.4.2 SALES COMPANIES ORDER IRIZAR......................................................................37 4.4.3 THE SWEDISH SALES COMPANY.........................................................................38 4.4.4 THE BRITISH SALES COMPANY...........................................................................41 IX 4.4.5 THE GERMAN SALES COMPANY.........................................................................45 4.4.6 THE ITALIAN SALES COMPANY..........................................................................49 4.5 BODY BUILDERS.....................................................................................................54 4.5.1 OMNI.................................................................................................................54 4.5.2 IRIZAR................................................................................................................59 5 ANALYSIS ................................................................................................................... 63 5.1 SALES......................................................................................................................63 5.2 ORDER HANDLING..................................................................................................66 5.3 STOCKS OF CHASSIS AND BUILT-UP VEHICLES......................................................69 5.4 RESERVATIONS AND FORECASTS...........................................................................70 5.5 INTERNAL COMMUNICATION.................................................................................72 6 CONCLUSIONS .......................................................................................................... 73 7 SUGGESTIONS ON CONTINUED STUDIES........................................................... 75 8 REFLECTIONS ON FULFILLMENT OF OBJECTIVES AND CHOICE OF METHODS ........................................................................................................................ 77 8.1 FULFILMENT OF OBJECTIVES.................................................................................77 8.2 CHOICE OF METHODS............................................................................................77 REFERENCES .................................................................................................................. 79 CONCEPTS AND DEFINITIONS ................................................................................... 83 APPENDIX ........................................................................................................................ 87 X