Projecting Motorcycle Parts and Accessories Sales
|Client||a large US manufacturer of motorcycles|
For planning and strategy purposes, the company needs to be able to project parts and accessories revenues several years into the future. These revenues are generated by shipments from the factory to dealers. In the mid-1990s, these shipments became harder to project, as dealer incentives were phased out. An SD model helped the client understand and anticipate better what was going on with consumer demand at the retail level. Demand for parts is a function of several factors, one of which is the average number of miles driven by consumers, associated with wear and tear, breakdowns, and collisions.
The company was concerned, based on one imperfect type of data, that miles driven was declining rapidly and would lead to a significant contraction in parts demand. Through a careful triangulation of other data and stock-flow logic, the model led to the conclusion that miles driven may be declining but not rapidly. This analysis allowed the company to better project parts and accessories sales.
Homer J. Structure, Data, and Compelling Conclusions: Notes from the Field. System Dynamics Review, 13(4): 293-309, 1997.