In October of last year, Mitsubishi Motor Sales of Canada (MMSCAN) expanded its service parts distribution center located in Mississauga, Ontario, almost doubling its size by adding 6,200 square meters. This expansion, costing an additional $500,000 to become operational on top of their current lease, enhanced value, resiliency, and cost-efficiency to MMSCAN’s growing aftersales network. Such expansions are essential as MMSCAN continues investing in accommodating new product lines in the upcoming years, a move that is aimed at reducing system waste.
Brian McGrath, the director of aftersales for MMSCAN, highlighted that a fortuitous lease availability next to the existing warehouse provided the needed impetus for the expansion. Prior to the expansion, MMSCAN had to rely on off-site storage for many parts due to space constraints, incurring high costs for storage and transport. McGrath explained that logistical challenges were compounded during the pandemic, creating inconsistencies in inventory availability which magnified the need for additional space.
Addressing inefficiencies, the expansion enabled MMSCAN to reintegrate its winter wheel and tire service onsite—a profitable venture that was previously outsourced due to space shortages. Enhancing in-house operations has not only improved profitability but has significantly impacted customer service by increasing service parts retention rates. This retention improvement drives customer loyalty and facilitates secondary aftermarket sales.
The adjustments also strategically position MMSCAN in preparation for future shifts in the automotive industry, such as the expected increase in parts for electric vehicles (EVs) as Canada moves towards its 2035 all-electric mandate. McGrath mentioned that while the current proportion of EVs in MMSCAN’s operation is modest, it is on an upward trajectory, evidenced by the substantial sales increase of the Outlander plug-in hybrid from the previous year.
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While MMSCAN has contemplated expanding its physical footprint to the western side of Canada, current analyses suggest maintaining the expanded Mississauga facility will suffice for the foreseeable future. The strategic location allows for effective distribution of service parts across Canada even though geographical and logistical challenges persist given the vastness of the country.
In terms of logistics, MMSCAN collaborates with various transport providers to ensure efficient and timely delivery of parts. Firms like FedEx, Just Rush, Manitoulin, Morneau, and Purolator are pivotal in managing both the dispatch and return of parts across the expansive territories they cover.
Further improving operational efficiency, MMSCAN is collaborating with Royal 4 Systems to enhance visibility and management of inventory. This partnership facilitates a more harmonious integration with the existing warehouse management system, aiding in better control and allocation of resources, ultimately streamheading processes and enhancing staff retention through a reduction in training complexities.
These strategic moves by MMSCAN underline their dedication to not only improving operational logistics and customer satisfaction but also preparing for future advancements and challenges in the automotive industry. It is a testament to how strategic facility expansion and technological innovation can significantly impact business functionality and customer service standards in a highly dynamic industry environment.
Words by: Craig Clowes
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