Dealer Allocation for Liincoln MKX

[leroyl]

Can anyone explain how allocation works please?? i.e. what dealers are affected, how many vehicles do they get per month, any idea how long allocation will be in place, can they trade allocation with other dealers? etc.

Thanks

[Former Ford ZM]

Sure thing.

 

Allocation is how we divy up our production for our dealer body. Everything that is built is sold already, hence we go out and negotiate a commitment from the dealer months in advance. This gives our supplier base a heads up on what we order from them and we know in advance what vehicle lines are going to need to reduce or increase line speed, cut or add shifts, or begin spending incentives on.

 

The dealer is free to order as little or as much vehicle production as they would like. However, the Zone Manager only has a certain amount of allocation which is guided based on what is called "Share of Nation." As a dealer sells Ford products, they, in theory, earn their fair share of future allocation. The wholesale is conducted, and future production allocation is committed to. A week later, production scheduling starts and the allocation is divided into weekly orders. This is when orders get serialized and assigned a VIN. It is here where retail customers and dealerships experience their limits on patience when a retail order is taken. The retail order may have come from the customer when the dealer has exhausted all their allocation or has a boatload of allocation for production at least a month away. Depending on how many weekly orders the dealer gets also determines if orders with "commodity controls" get scheduled first or are heldover and remain unscheduled. Commodity control is placed when certain vehicle options, either a series line, GT500, FX4, SEL, engine option, 6.4 diesel, 5.4 Triton, or option, 18" wheels, AWD, Hybrid, is ordered way beyond the capacity. At this point, it is determined that only a certain percentage of orders will get scheduled for production with those controls. That percentage is dished out weekly. So if say 10% of all orders can have an option that week, then the dealer has to prioritize his orders accordingly.

 

Say a dealer has 10 units of one vehicle to order in a week and he has two customers that want 18" wheels where the commodity control says only 10% available. Dealer can get at least one of the orders schedule while the other one is probably passed over while 9 more units for the lot get scheduled. In the following week, the percentage is upped to 20% due to increased supplier production. Good thing, the dealer only has 5 to order that week, the second customer can get their order scheduled. However, maybe another dealer that had 10 orders as well didn't order any with the restricted option, so the regional control will find another order with the option and get it scheduled in the first week.

 

Confused enough? Hell, I sure am.

[leroyl]

ZM: Thanks so much for this..basically I think what you are saying is "when demand exceeds supply we have a process, confusing as it may be, to allocate vehicles." I strongly suspect that this is the situation my order is in.

 

I have always thought that there are better ways to retail vehicles and at the same time boost boost consumer satisfaction and manufacturers' margins. Your response has strengthened this thought.

[Former Ford ZM]

Well the allocation process is always there, regardless of how in demand the vehicle line. Hence, some lines are no brainers and some really take strongarming the dealer to agree to your wholesale number. Basically it leaves the middleman, the dealer, as a way that Ford stays in business. It's like the saying, Ford always gets their money. That's why dealers are so anal about the deals they do and the warranty work they take on. In the end, we're holding the pursestrings and have the final say on if they get paid or not. Bottom line is, we do need to become more retail oriented, the problem is we definitely are not geared for that, especially with our production system.