Volkswagen and Audi dealers around the world are experiencing parts shortages following problems with a new computer system at a warehouse in Kassel, Germany.
Software difficulties have caused parts arriving from suppliers to pile up at Kassel. Since September, overseas customers have had to wait up to several weeks for parts.
The problem surfaced in the autumn, when Volkswagen launched a new operating system at the massive, high-tech Kassel warehouse. The operating system is based on software from SAP AG of Walldorf, Germany. Volkswagen enhanced and modified the program.
The shortage has been compounded by robust sales in North America. Some Volkswagen and Audi suppliers have been unable to keep up with the demand for replacement parts.
The new operating system eventually will make the central warehouse more efficient in receiving, processing and managing inventory, said Eric Johnston, executive director of service and parts at Volkswagen of America.
A bottleneck was created at the point where suppliers deliver parts to the warehouse.
'Stuff was literally not getting brought into inventory when it was in fact there,' said Johnston.
A team of specialists from Volkswagen's information technology division was dispatched to Kassel from world headquarters in Wolfsburg.
'We launched with some problems and they've been working ever since to resolve them,' said Johnston. 'It was probably a much bigger undertaking, in terms of the launch of the system, than they had anticipated. It's a very complex system.
'They've made dramatic improvement in the system, and now the material is starting to move,' he said. 'While it's not over yet, I think the systems part of it is pretty much behind us.'
The volume of back orders in January, compared to December, has gone down about 30 percent, said Johnston.
Volkswagen's rapid growth in North America also has contributed to the parts shortage, he said. Volkswagen of America orders parts from Kassel based on sales forecasts.
'We probably understated some of our forecasts and have grown at a rate higher than we had expected, and that put additional burden on Kassel,' said Johnston.
Volkswagen initially projected sales of 295,000 in the USA during 1999. But it sold 315,563 Volkswagens last year, up 43.6 percent from 1998. It was the first time in 25 years that VW sales have topped 300,000. Including Audi, which was up 38.8 percent last year, the group's US sales totaled 381,522.
'Any time you have an increase in sales as dramatic as Volkswagen has experienced, you're going to have some parts problems,' said dealer Bob Lewis, of Bob Lewis Volkswagen in San Jose, California. His dealership carries $600,000 worth of Volkswagen parts.
'It has been a problem, but I think the worst is over,' said Lewis.
Volkswagen acted quickly by assigning special 'expeditors' to various dealerships to help them locate critical parts, said Lewis.
'The expeditor will search the system to find a dealer who has that part,' said Lewis. 'He'll call dealers, he'll call Germany, to find the part. When the factory calls to get a part from you, that's a little different than when you call a dealer in another state and ask if he'd send it to you.'
Ten expeditors manned a hotline established in early January, said Johnston.
Volkswagen of America acknowledged the problem and said dealers should see some relief in the next few months.
'It's a huge problem,' said Jerry Miller, an Audi dealer in Conshohocken, Pennsylvania, in suburban Philadelphia. 'They're sincerely working on it, but there is no quick fix. From the customer's point of view, it looks like incompetence. It's caused a real credibility problem with dealers.'
Dealers are giving customers free loan cars when they must wait on delivery of a part and their car is off the road, said Johnston. Dealers also can request a 'gift amenity' and a letter from Volkswagen of America addressed to the customer apologizing for the delay and clarifying why it has occurred, he said.
The difficulty in obtaining parts has become the No. 1 concern among US dealers, said Miller, past chairman of the Audi National Dealer Council.
Indeed, dealers are receiving numerous complaints from angry customers. 'What are you going to do, the part's not here,' said dealer Bob Kissick, at Boardwalk Auto Center in Redwood City, California. 'They get angry at us. Then they calm down when we explain the problem and they're usually pretty understanding, especially when we give them a free loan car.'
But sometimes it takes a little more to soothe angry customers, said Kissick. He has sent roses to a customer's house.
Kissick said: 'By and large, it's embarrassing. But when you are growing so fast, it's just overwhelming.'