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Intro Level Notes
Egyptian Automotive Society
Profit = Revenue – Cost

Profit = Revenue – Cost

Spare Parts Management

Selling Purchasing

Marketing Supply Chain

 Introduction to Supply Chain

In our discussion, we split spare parts supply chain into the

following:
1) Purchasing & Logistics
2) Inventory
3) Warehouse

1) Purchasing & Logistics process:

a) Identify the spare part
b) Identify the quantity needed
c) Look up suppliers and contact them
d) Get quotation from the suppliers
e) Set the agreement on the Payment Term & Incoterm

Common Payment Terms:

• Advance payment: before shipping the product.
• Cash Against Documents (CAD): when the products are
shipped (before arriving to the buyer).
• 30, 60 or 90 days after delivery.
 Introduction to Supply Chain

Incoterms (International Commercial Terms):

clarify the rules and terms buyers and sellers use in
international and domestic trade contracts.

Most common in the market are EXW, FOB and CIF.

 Introduction to Supply Chain
2) Inventory
When inventory is managed well you avoid lost sales (stock
less than demand) and dead stock.
We will divide inventory into Stock Structure & Forecasting

Stock Structure Categories:

• Fast moving items: highly consumed ex. Filters, oils,..
• Medium moving items
• Slow moving items: ex. Engine parts
• Dead stock: rarely demanded or expired

Forecasting:
Forecasting can be conducted using spreadsheets or different
softwares. The most important points to focus on are:
a) Trend (increasing or decreasing sales)
b) Seasonality: ex. Wipers higher demand in winter and AC
freon higher demand in summer

3) Warehouse
The most important points to focus on in storage are the
location of the parts and the arrangement of the parts in
accordance to their categories (fast, medium or slow moving).
 Introduction to Marketing
Marketing of a product is divided into 4 key categories:
Product, Price, Place & Promotion
1) Product:
Spare Parts Categories:
• Original parts
• OEM/OES : original equipment manufacturer/supplier
• After Market High Quality
• After Market Low Quality

2) Price:
Pricing is commonly based on:
• Cost (unit price + shipping & customs + overheads)
• Company Objective: pricing strategy (penetrating,
skimming,..)
• Competitor
• Customer

3) Place: where the marketing and supply chain meet.

The classic chain includes the source, agent, wholesaler,
retailer and end user. Which has been reduced nowadays in
the presence of E-commerce.

4) Promotion: Where, how and when you advertise for the

products to reach the end user.