In today’s rapidly evolving automotive industry that is significantly impacted by macroeconomic challenges, government regulations, geopolitical tensions, software proliferation, and changing customer expectations, optimizing supply chain processes has become crucial for maintaining a competitive edge. Southeast Toyota Distributors, the largest independent distributor of Toyotas in the world, has embarked on a remarkable journey of supply chain transformation in partnership with Blue Yonder, to elevate and sustain their market leadership position.

This blog post summarizes the presentation given by Arun Baskaran, Director of Deerfield Vehicle Operations at Southeast Toyota, at the 2024 Gartner® Supply Chain Symposium/Xpo™. He discussed trends in the automotive industry, Southeast Toyota’s strategic priorities, and the transformative impact of digitalization, forecasting, advanced planning, and optimization on their vehicle allocation and distribution processes. These advancements, made in collaboration with Blue Yonder, have significantly enhanced business value and upheld their commitment to be “Dealer-Driven.”

Southeast Toyota Distributors stands out as the largest independent distributor of Toyotas worldwide with a 25% share of National Toyota sales across Retail and Fleet segments. Serving 177 dealers across five states: Florida, Georgia, Alabama, North Carolina, and South Carolina, Southeast Toyota’s mission is to support dealer success through shared vision, accountability, and trust. At Blue Yonder, we are proud to have played a pivotal role in Southeast Toyota’s transformation journey.

Driven by the need to significantly elevate their vehicle supply chain and distribution capabilities, Southeast Toyota began their transformation journey back in 2012, to modernize their vehicle allocation platform and overcome the limitations of a Mainframe based legacy solution. The legacy process required manual, time consuming efforts from dealers to manage their vehicle requests and lacked the ability to optimize vehicle assignment across all dealers.

Recognizing the need for a modern, efficient and dealer focused system, Southeast Toyota turned to digitalization and advanced planning capabilities. Moving to a more intuitive dealer sales and inventory strategy-based request process, the new allocation platform aimed to provide Southeast Toyota with the necessary inputs to help order the right mix of vehicles from the original equipment manufacturer (OEM) (in this case Toyota Motors of North America) and allocate those vehicles to best meet their dealers’ inventory strategy needs.

In 2013, Southeast Toyota launched the PATHWAY initiative, a project aimed at:

  • Enhancing Southeast Toyota dealers’ ability to order the right product for the Retail segment by providing inventory target mixes and preferences for various key vehicle attributes.
  • Optimizing Southeast Toyota’s retail allocation process capability to place the right vehicles at the right dealers at the right time.
  • Maximizing Southeast Toyota’s share of  Toyota Motors of North America’s national sales to fuel sustainable growth and profitability.

The modernized vehicle allocation platform built as part of this initiative was called “VIN Sight” and it employed Blue Yonder’s solution platform to execute the vehicle assignment process, by optimally matching vehicle supply with dealer demand for retail customer sales. Over the following years, Southeast Toyota achieved impressive results using the VIN Sight allocation platform. The objective to meet every dealer’s vehicle inventory strategy (defined using model, accessories and color target mixes along with individual vehicle preferences) using global optimization techniques helped maximize the placement of the right vehicles at the right dealers at the right time. This enabled various other inherent strengths of Southeast Toyota and their dealers’ processes to interplay constructively and increase Southeast Toyota region’s share of the national retail sales.

Southeast Toyota’s national sales share for the Retail segment increased to 20% in 2018 from an average of 17% prior to the 2014-15 launch, and dealer ground stock trades were reduced by around 30% during the same timeframe. The reduction in ground stock trade was a direct consequence of achieving a better match of allocated vehicles to dealers’ sales strategies thereby reducing the need to trade with other dealers to get vehicles their customers required. This improvement in the efficiency of vehicle allocation led to increased dealer satisfaction and better customer experience. These achievements underscore the importance of a modern, optimized supply chain in maintaining a competitive edge in the automotive industry.
 
Looking ahead, Southeast Toyota continues to pursue a multi-year facility and technology modernization effort through their DRIVE project (Delivering Results Innovation Value and Excellence) for both vehicles and parts supply chains. Southeast Toyota has extended their relationship with Blue Yonder to enhance their service and accessory parts distribution business with advanced parts planning and forecasting capabilities, i.e., order the right part, with the right quantity at the right time. The Blue Yonder Platform will predict dealer parts demand at their new Parts Distribution Centers (PDC) and generate distribution plans and supply/PO recommendations. These changes are aimed at improving visibility to inventory and minimizing supply chain disruptions to their customers. Additionally, Blue Yonder’s highly automated forecasting process enhances productivity. It processes hundreds of internal and external demand signals, resulting in unbiased predictions that lead to more profitable business decisions.

Some key themes that were called out as critical success factors for their supply chain transformation journey include:

  • Large technology transformation projects are a partnership between business and IT teams.
  • Early focus on change and engagement management efforts for customers and associates is essential.
  • Choosing the right partnership for the end-to-end technology lifecycle enables achieving the right results.

Blue Yonder remains a strategic technology provider, supporting Southeast Toyota’s ongoing efforts to optimize their supply chain planning processes. Southeast Toyota’s supply chain transformation journey highlights the critical role of technology and strong partnerships in achieving business success. Our collaboration has not only improved efficiency and dealer satisfaction but also supported their leadership position in the automotive industry. As they continue to innovate and modernize, Southeast Toyota sets a compelling example of how strategic investments in supply chain optimization can drive significant business value.

To learn more about how Blue Yonder can support your supply chain transformation journey visit blueyonder.com.