Backorders on electronic components can have significant impacts on brand positioning for automotive Original Equipment Manufacturing (OEM) firms. Drivers can have negative reactions to long wait times for repairs, and auto dealerships can end up with slower churn times while their service departments wait for parts. While backorders may not be a direct issue for OEMs to deal with on a daily basis, they can certainly affect the end-user’s perception of the brand. Even though OEMs don’t usually deal directly with angry drivers, or overburdened auto dealer service departments, backorders can still threaten brand integrity - and profits.
We’ve compiled a few of the most common reasons backorders occur, and steps OEMs can take to alleviate customer fallout and maintain brand integrity.
OEM Backorders Can Stem From a Lack of Support
OEM product support typically lasts about 10 years until OEM manufacturing of semi obsolete parts and components is phased out to focus on meeting new product demands. With the lack of product support for older iterations of technology, resources diminish as the number of viable cores on the market reduces. This lack of support can lead to backorders, and problems with brand integrity.
The solution is to rely on a remanufacturing service center with the ability to maintain inventory levels and the equipment needed to support older parts until antiquated.
New Technologies Can Lead to OEM Backorders
Components within the units change as technology advances. For example, the type of light bulbs used in dashboard units are now being replaced with LEDs lights. This can mean backorders on older or outdated technologies.
The solution is to keep service centers supplied with the correct part (the new LED bulbs, in this case) for replacement when a core arrives for remanufacturing.
Lack of Product or Component Availability Results in OEM Backorders
OEMs may misproject the parts needed for repair for fear of saturating the market with inventory that eventually becomes obsolete, thereby becoming a waste of resources. There may also be lack of funding to manufacture enough product and components to meet demand. The result is backorders of parts needed for repair at the service center level.
Unfortunately, a lack of product and component availability is sometimes unavoidable. If the service center can’t get the parts needed for repair from the OEM, it can’t fill orders. To eliminate OEM backorders, try manufacturing and finding a healthy balance of product and components to keep readily available in inventory.
Failure to Keep Supplies on Hand Causes OEM Backorders
A service center has a responsibility of maintaining inventory (unless unavailable at the supplier/ OEM level) to meet demands. Failure to keep supplies on hand means they aren’t available when they’re needed, and can hold up the entire process.
The solution is to use a reliable service center with an updated MRP system that can facilitate analysis of product trends from the last 30 days to the last 365 days and prompt the service center to order supplies accordingly.
