Hyundai parts drama

Hyundai's national parts distribution system was dealt a massive blow last month, after a strong hail storm blew through Sydney's west.

The roof of the warehouse collapsed suddenly – and left the importer with just its standing, high-rotation parts in dealer stock to keep its customer cars on the road. As the nexus for Hyundai parts distribution throughout Australia, the warehouse is a critical piece in Hyundai's sales, marketing and service programs.

It was fortunate, according to company COO John Elsworth, that the storm raged on Anzac Day, which fell on a Saturday this year. All the staff who would have been inside the warehouse were away from work on the day of the collapse, otherwise lives would have been lost, Elsworth guarantees.

"Everyone would have been encouraged to stay inside, because of the storm... part of the office building has collapsed into the warehouse; we've got office seats in the warehouse."

Speaking at the launch last week of the upgraded Veloster Series II, Elsworth revealed that the company had moved quickly to shore up its parts distribution in the wake of the disaster.

"We had what you could call a catastrophic failure of our parts warehouse," Elsworth explained.

"I remember getting a text message that night, saying that the parts warehouse had been 'damaged'...

"We decided to visit it on the 26th of April, and I personally could not believe what I saw."

Elsworth revealed that events moved quickly after that. The first recovery meeting was on the 26th at the location. By that night, Elsworth and his senior management team had ordered $10 million worth of emergency stock by sea freight.

Monday of the following week – the 27th – a disaster recovery team was already established, 32 office staff from the warehouse had been relocated to Hyundai's head office, and the pickers and packers employed in the warehouse were informed they could stay home on full pay for the interim without detriment to their annual leave entitlements.

That same day, Hyundai's IT people recovered the servers from the warehouse. These were recommissioned and placed back in operation the very next day – the 28th. The company's parts were "on-line" within two working days, despite having no parts to check off the inventory.

By Friday of that week – May 1 – Hyundai Australia (HMCA) had placed orders for "the top 500 service lines" to be airlifted from South Korea. The company had also secured a replacement warehouse and a deposit was paid. Exactly a week later – May 8 – the shopfitters were at work in the new premises, preparing it for parts storage.

Elsworth took time out to praise Dexion for that company's rapid response to Hyundai's distress. The supplier has scoured the country for new racks, and as of May 18 – the Veloster launch – Dexion was still tracking down racking and shelving for the new warehouse.

"As they put up a row of racks, someone else comes in with forklifts and fills those racks with parts," Elsworth commented.

"I think that the most phenomenal thing though, is that on the 15th – which was Friday – we started shipping parts from that warehouse."

The warehouse staff, back from their enforced stay at home and "working their bums off", were cooked a barbecue lunch by Hyundai as they strove to catch up with a huge backlog of parts orders.

Flown in from South Korea that week, emergency parts began arriving at the new facility in semi-trailers.

It's hard to believe, but Elsworth says the company expects to meet its parts sales targets for May, despite no parts wholesaled until the 15th – halfway through the month.

The Hyundai exec says that the old warehouse (pictured) was fully owned by Hyundai, and it's all covered by insurance, including the parts within. There's no word from the underwriter yet as to whether the warehouse will be written off fully, or whether some attempt will be made to recover the parts inside the warehouse. Elsworth estimates the value of the parts in the old facility would retail for somewhere in the vicinity of $85 million.

Dealers have been asked to log parts that cannot be immediately supplied for customer cars. Hyundai's parts locator has been tracking down those parts from other dealers – sometimes interstate – to transfer across the country to suit the immediate needs of individual vehicle owners.

"As at last Thursday [May 14] we have only 47 cars off the road, nationally. That's out of a car parc of about a million cars. We were tracking every one of them here – and all of those 47 will be back on the road this week, with parts air-freighted in."

In such an inflexible industry, with known demand dictating orders placed many months ahead, to be operational again "within a month" is a remarkable feat of teamwork. It hints that HMCA has been 'fortunate' in its corporate structure – perhaps being less monolithic in scale than one or two longer-established car companies in the VFACTS top 10.

Picture courtesy of Google Street View