Hyundai Revamps National Parts Operation in Illinois

Fri September 24, 2004 - Midwest Edition
Darryl Seland

In response to its rapid growth in the western hemisphere, and in an effort to continue that growth, Hyundai Construction Equipment is revamping its North American parts warehousing and distribution operation.

The company’s comprehensive plan tackles organization, inventory, marketing, brand image and, according to Erik Wirjan, assistant parts manager of Hyundai Construction Equipment, is reflective of the company’s desire to bring confidence at the customer level.

“We would like to be at the level where customers buy a machine and know exactly what they are getting,” said Wirjan.

Hyundai began this venture with a reorganization of its centralized warehouse in Elk Grove Village, IL. The warehouse will serve North American, South American and Canadian dealers and distributors.

“We’ve invested a lot of money here,” said Jayne Choi, national parts manager of Hyundai Construction Equipment.

The facilities in Elk Grove Village total more than 90,000 sq. ft. with more than 37,000 parts worth in excess of $10 million.

To help manage and maintain this inventory, Hyundai has created Construction Equipment Resource Support (CERES), an Internet-based system featuring an improved parts catalog and ordering system. The system is powered by an upgraded company-wide server described by Wirjan as very quick with less downtime than the company’s previous setup.

“We had our computer system for about four or five years, but it wasn’t the greatest tool that we had,” said Choi. “Now, for the last year we have been upgrading and implementing new programs. It’s more of a friendly system where dealers can use the databases to check parts information and order through the system. There are a lot of new features that allow better access to the system.”

Wirjan commented, “We mentioned to [the dealers] that this is what we are going to add and you guys have full access to what you need right at your fingertips.”

He expressed this sentiment at Hyundai’s first-ever parts conference, held on Aug. 13.

“A lot of the things we have in place our dealers did not realize we had before,” said Wirjan. “Now, they have a better idea of the way things operate and what is expected and what they can expect from Hyundai. I’ll bet they feel very confident now that they know what we have accomplished and what we are going to do in the future.”

Hyundai’s goal is to eventually have as much inventory as possible at its dealer’s sites so a downed machine can be fixed and running as soon as possible.

The company hopes to bring this bold plan to fruition by reducing inventory risk by providing discounts and services that enhance response to downed machines and emergencies –– at no cost to the dealer.

According to Wirjan, if parts managers do the planning –– using the tools Hyundai is providing –– and stay ahead of their usage, they can potentially save thousands of dollars.

“We break part usage down by region and into patterns and percentages,” he said. “And at the end of the year if you don’t use a particular part you can return it to us with no restocking fee.”

In essence, Hyundai is providing its dealers with a 100 percent money back guarantee, on top of a discount they receive for full stock orders.

“Every parts manager would love to have parts in stock, because if a customer comes into the store and you don’t have it in stock who is going to buy a machine,” Wirjan said.

But, like with every plan, it is almost impossible to plan for every contingency. Having every part for every machine at exactly the moment it is needed is virtually impossible. And Hyundai has made it part of the plan.

“With machine down, even if it’s a large component, we will get it from Korea at no charge for the air-freight to the dealer,” said Wirjan. “I think Hyundai is the only one that does that.”

The system and plan are already showing signs of success. It’s parts fill rate from the warehouse is running at 91 to 94 percent and parts sales are up 30 percent from last year.

“We like to move at a fast pace, but this is no quantum leap. We know what the problem is and identifying the problem is not always easy,” said Wirjan. “Our main target is to have dealers and customers feel comfortable and confident with our products by having our product support revamped.”