Scott gets to drive them then bitches at the plant & tells them whats wrong lol

 

Do I get to play?

Ack... probably wouldn't be fair.




Anyhoo, as a protection to the problem you describe, Purchasing quotes "actual" volume (HAHAHAHAHEEHEEHEEHEEHAHAHAHA... sorry, couldn't resist...) and then quotes a 15% over-actual requirement also (actual volume plus 15%).

So, in a nutshell, if a program is planned for 100,000 units per year, and a given component gets assigned an actual market penetration of 50%, the volume quoted for capacity purposes is (50,000 + (50,000 x .15)) or 57,500 parts.

Contracts require that we do not increase piece price or tooling for any volume up to the 57,500, but we will only be seeing 50,000 parts per year unless the vehicle is a sales hit. Go over 57,500 and the suppliers smell blood and will start ringing up charges for overtime and expediting etc... that sounds harsh, but those ARE actual costs and we have to recoup them.

OEM's only pay for tooling and piece cost for most components - they will not pay for capital equipment. What this means is that any capital equipment apportionment is financed in the piece price by the supplier. Depending on the supplier, capital payback will happen in 3-5 years if the OEM hits it's actual volume per year (50,000 parts).

If the OEM hits 57,500 every year then the capital is paid off more quickly - good for the supplier. If the OEM doesn't hit actual volume (50,000 per year), the supplier takes it on the chin. In the end, the hope is that everything balances out on the capital end... it rarely does. Historically the suppliers get hit pretty hard here and there is no recourse with the OEM on the issue - they tell ya to go pound sand. So... with some suppliers when the volume exceeds 115% the OEM is paying for a couple of other programs that didn't hit volume.

I wish our business could just operate on the following premises:
1) The customer is entitled to a world class product at a fair price.
2) The supplier is entitled to a fair profit.

I've never stated this before here, but part of the problem with the situation right now in the American Automobile Industry is the fact that the customer and supplier relationships are incredibly antagonistic. It is literally like a war now, and folks get to the point where they HATE each other.

It is not helping the OEM's AT ALL, and suppliers are looking to deal with the European and Japanese OEM's instead.

They get the best technology first from the supply base in many cases because the US OEM's are CONSTANTLY demanding money (in outrageous amounts) back. The Europeans and Japanese don't do that, they expect their supply base to have the opportunity to make a profit.




Maybe I shouldn't have wrote that, and I feel like Jerry McGuire now... but dammit, it needed to be said.

 

Clutch problems If my "inside" information is correct there is an issue with the clutch.

EDIT...Just saw this was already posted elsewhere. I knew last week there were issues with the clutch in the tranny.

 

Isn't that just how it is? When I started working as a co-op student for an auto supplier, I got put on a project for GM. I remember GM seemed to be regarded as this evil entity that came to the building every now and again to taunt and torture it's supplier minions.

 

Yes it is WAR and it keeps getting worse.
Hence, aggresively trying to broaden customer base.

 

Make it a "no option" option. Build it into every single Vette you build and just tack it onto the already too expensive for my blood price tag. If the customer doesn't want it, make one model (ie. Z06) that doesn't have it.

How do you like my solution?

 

My guess is 20% penetration for the option. I also believe that there will be more orders for it right off the bat, as those who have been on C6 waiting lists for a year or two would likely check every option box available.

 

Assuming it's a quality and not too expensive unit, I'd say at least 40-45 percent...vette drivers are usually very interested in all the bells and whistles that come with the car (refer to HUD when it was new)...and based on my 5 years of lurking on the corvette forums, there is a lot of competitive d!(k measuring going on, especially among the wealthier owners. many of them HATE to see someone else's vette have a cool option that they don't...

 

Call me old fashioned.....but I usually get my directions form Mapquest.com or but a $2 map at the Quicky Mart.....to me this is a silly option. Bells and whistles for the sake of bells and whitsles.

BUT, having said that....Dan's example is obviously from the supllier's side and holds a lot of merit....BUT GM is saddled with costs that imports simply do not have......that being nearly $2,500 PER VEHICLE in retirement and health costs.....so they gotta remain competitive somehow.....not a good postition for either side to be in though....

Personally, I'd check with historical analysis and competitor sales figures for this option........................................and then pull a number out of my @$$. LOL! (sorry, just had to throw that out there.)

 

thanks for saying what needed to be said...Rand McNally has never steered me wrong, and at a fraction of the price

 

My guess is that you look at the % of what other cars in the market segment or in close markets order their cars with DVD navigation are. Compare and contrast that with your surveys taken on focus groups or whatever. Look at the income of your average buyers, looks at other demographs that could possibley corrolate with the task at hand. Then buy a few %'s more than the final % you come up with to meet any potential demand. If there ends up being less demand than thought, then order less the next model year and save the extra nav systems left over for next model year

 

You said it before I could. I'd take a hard look at what the competition is doing in a particular market and make a judgement based on that. How many cars did they put it in, how many cars did they not sell because of the option. Then go to the customer base and poll with a grain of salt.

Then say 'I dunno, we should go build a Camaro'

 

Amen, nothing wrong with the $3 map from a gas station, its a lot cheaper than a nav system. I think that option isn't about the functionality, but about the status of having the option because its so expensive. Like having a diamond ring or designer clothes.

 

I'd say 20%. That seems conservative enough and gets you through the first year and some market data to forecast 2006.

I'm a product manager in the IT business and while the products are vastly different from cars, predicting sales for a first year run are equially difficult. I tend to take a conservative aproach. It's the 5 year forecast that's more meaningful - in my business anyway.

 

One good thing to know is how many Vettes are ordered each year with every available option. i would assume first year, dealers with allocations with no orders will order "loaded" cars because most will be able to get at least msrp or more for the cars. Kinda like the Buick Grand National. When it was announced that it was done, GM built all of the last cars loaded to the hilt.