Background history of MOENCO Ethiopia

In the heart of Addis Ababa, around the area commonly known as Mexico, a small garage with a
capital of 200, 000 Ethiopian birr was founded by Mr. Y. D. Lappine on January 1959 in a small
rented house. His far sighted vision became reality with the help of other resourceful people,
such as Ato Menasseh Lemma, the then Governor of the National Bank of Ethiopia, and the boss
of Imperial Insurance Company.

Nine years later, MOENCO took over the TOYOTA franchise business for Ethiopia when
Inchcape, a London based international organization, became a major shareholder and injected a
considerable amount of capital. This was a milestone moment in the firm’s journey to become
the MOENCO of today.

In addition to the TOYOTA business, at different times MOENCO used to represent General
Motors for various types of American vehicles and trucks. All the experience gained from
working with our partners has allowed MOENCO to focus on people, service, and innovation
over the past five decades. The strength we have acquired in these years has also endowed
MOENCO with the resilience to survive during the many difficult times.
 Demand Forecast Method of MOENCO

Holding optimum inventory and satisfying customers demand with sufficient service level is a
challenging task. To keep a good balance between inventory level and sufficient service level
implementing appropriate demand forecasting model plays important role in inventory
management system of spare parts. Companies, who implement appropriate demand forecasting
model will have less tied up capital, reduce operational & overhead costs, and lower wastage of
wealth due to obsolescence & scraping while satisfying customers demand with sufficient
service level that helps to sustain in business with good profit. A model suggested in called
approximation demand forecasting model selected to simulate sample spare parts data obtained
from MOENCO database. With 2 weeks aggregated demand, and 4 months lead time period
optimum values of smoothing constant of demand size (αz), smoothing constant transaction
interval (αi), and forecasted demand identified by simulation with Microsoft Excel, that provide
the least average MAPE. Then, the stock amount and service level calculated, and compared
with the existing inventory model to prove its effectiveness. It is observed that approximation
model can be considered as a good managerial tool for automotive parts inventory management
system of MOENCO to have optimum stock holding position with sufficient service level so
that, it reduces capital tied up, enhances efficient cost management, and efficient utilization of
for ex with acceptable service level, and hence maximizes the profitability of the business. This
thesis work can be more enhanced by testing spare parts inventory data of other similar
companies using approximation method that include different demand patterns.

TOYOTA makes use of various forecasting techniques depending on trends in customers’

behavior in order to plan capacity and production processes. Regional dealers provide monthly
reports, including data on forecasting for the next three months, as well as contacting distribution
centers to discuss the demand.
MOENCO uses specific demand forecasting software to control inventory management and set
the objectives for operations management. The updated version of this software allows for
including more factors that can influence increases and decreases in demand. Thousands of
forecasts are analyzed with the help of this software monthly. With reference to the forecasts and
analysis provided in the MOENCO Ethiopia plc Report for 2013, it is possible to predict further
increases in demand for products in Amhara region , Tigray , Oromia, and other regions.

Demand forecasting method of MOENCO Delphi Method

MOENCO as the main distributer of the global Toyota car manufacturer in Ethiopia, MOENCO
imports a wide range of Toyota and similar Japanese Vehicles and spare parts. As a result,
MOENCO conducts different customers demand forecast as its branches in different regional
cities in Ethiopia Hawassa, Addis Ababa , Gambela, Bahirdar…..etc.

MOENCO conducts demand forecasting with extreme caution as its offers products with high
quality standards that require high technical expertise and deal with experts. As a result, it uses a
long term demand forecasting method that enables the company to have accurate forecasts of
customer demand.

The Delphi method was developed with the assumption that forecasts from a group are generally
more accurate than forecasts from individuals. As such, this method uses a panel of experts that
provide their forecasts and justifications anonymously.

These forecasts are then summarized and shared with the rest of the group to allow each
individual expert to adjust their forecasts. This process is repeated multiple times until a
consensus is achieved. Consensus is determined by non-significant modifications to their
answers.

When executed properly, the Delphi method can provide an accurate forecast that may not have
been achieved by any individual person on the team. The downside of this method is that it can
be very time-consuming and depends on the facilitator’s expertise to identify the important
information of each forecast.

Conjoint Analysis or survey method

MOENCO Ethiopia is a company that has been able to create a good name for quality in the last
60 Years. The company, which has spent years in supplying the car and car spear parts according
to the needs of customers understands the need of customers and offers a variety of vehicles
products and spear parts.
In the MOENCO organization, the customer survey method of demand forecasting is mainly
applied by the company, which reflects what the customers want and also the demand
forecasting situation of the company with other organization.

Conjoint analysis uses surveys to obtain consumer input about the most favorable attributes of
their products. These surveys ask consumers how they would use and respond to certain product
attributes.

When selling a product, it is important to recognize the most important attributes that consumers
are considering when buying. Trade-offs happen with all goods, so it is important for companies
to identify why consumers are choosing certain products over others and which features they
value most.

Conjoint analysis can help the company beyond demand forecasting by identifying the products
that are most attractive to consumers. This is done by having consumers rank their preferences
for features which is then translated by an analysis into a report that shows what customers
prefer. The technique provides a forecast of the market preferences to explore market potential
for new products or features.

Inventory Management System of MOENCO

MOENCO provides genuine parts for the vehicles and machinery it supplies and genuine
accessories. Our objective is to deliver the right quality at the right time and the right place.
When we say "the right quality" we mean genuine parts for trouble free performance, long life
and safe environment. When this say "At the right time" which mean an optimum availability of
parts, insuring continuous supply based on customer demand. A fully computerized sales, stock
control and electronic parts catalogue system has enabled us to achieve a very high sup pliability
of parts resulting in remarkable customer satisfaction. "the right place" MOENCO are referring
to the dealers in different parts of the country and our branches in Addis Ababa, Gambela, Dire
Dawa, Awassa and Bahirdar. MOENCO are committed to serve customers with quality service,
wherever they are. parts operation is one of the primary value chain systems. It is based on "JIT"
operation system (Just in time) which in turn is based on "sell one buy one" philosophy. In
effect, our parts operation is backed up by extensive inbound and outbound logistic activities
recent trends show that the market in the motor industry is characterized by increasingly fierce
competition in after sales.

The value of the after sales market is increasing due to longer vehicle ownership and
diversification of customer needs. To be the winner in this competition, satisfying the customer
is no longer enough. electronic parts catalogue system (EPC) has enabled our salesmen to
identify part numbers easily and accurately. This computerized sales and inventory control
system has helped increase productivity and efficiency of staff. We are continuously improving
our services to our customers using the concept of "kaizen" which is a Japanese term for
continuous improvement.

MOENCO apply kaizen at every step in the parts logistics activity (inventory control, parts
sales, warehousing, parts marketing, etc.) In this regard, technology has a big role in simplifying
different processes, cost saving, promptness and accuracy which lead to higher customer
satisfaction. We apply improved system (software and hardware) in the inventory control
process, sales and warehouse activity.

Among the inventory management systems that MOENCO uses, just in time is the most
important, and the company mainly uses this system for its insurance customers.

Warehousing System of MOENCO

MOENCO warehouse management and utilization is quality based and product safety is
considered. There are more than eight different types of warehouse and MOENCO uses public,
private and bonded warehouse types.
Public Warehouses Public warehouses are owned by governmental bodies and made available
to private sector companies as compared to different types of warehouses. Public warehouses can
be lent for both business and personal use. If you’re an SMB owner and want to store your goods
for a short period of time, a public warehouse can be a great option as compared to other types of
warehouses. Although typically not that advanced technologically like different types of data
warehouses, they’re generally the most affordable and accessible option and thus a solid choice
for e Commerce startups and SMBs as compared to private warehouses.

The main type of warehouses MOENCO uses are public warehouse these warehouse hold a large
volume of goods and allow MOENCO to handle the high volume of customers and government
demand and store products appropriately.

MOENCO has more than 10 public warehouses in different parts of the country and these
warehouses cover the entire needs of cars and spare parts that MOENCO imports in the country.
From 2010 to 2014 E.C, various vehicles spare parts worth more than billion birr were stored in
this warehouse.

Private warehouse a private warehouse is a warehouse that is privately owned by wholesalers,

distributors, or manufacturers. Large retail and online marketplaces also have their own privately
owned warehouses. Although generally more expensive than public warehouses, private
warehouses can still be a great option for e Commerce SMBs if they need a major, long term
strategic presence in an important region in comparison to different types of warehouses in the
supply chain. Though the capital investment is pricier than other warehouses, private warehouses
still remain a great warehouse option.

MOENCO uses private warehouse in addition to public warehouse in addition to public

warehouse for the number of vehicles and spare parts it imports. these private warehouse that
meet Toyotas warehouse are purpose built modern ware houses utilization standards and are
specially controlled by the company.

Due to their versatility, private warehouses are ideal for organizations like MOENCO that can’t
be limited to a single warehouse. Over the past 60 years, MOENCO has been growing in
popularity and has been distributing its products by leasing large warehouse in various cities of
region.

Bonded Warehouse; The government and commercial entities own, operate, and regulate these
warehouses. Storage facilities where import duty has not yet been paid are utilized for imported
products that have been stored in bonded warehouses. To acquire a license from the government,
these privately operated bonded warehouses are required to do so.
This lets the government authorities maintain control over private companies in order to ensure
that they pay their taxes on time. Importers will not be able to either acquire over or open the
products if they do not pay tariffs. This observation has been shown to be correct when looking
at global warehouse data. While bonded warehouses are subject to two different taxes, they are
liable to both excise duty and import duty.

Since it establishment in Ethiopia, MOENCO has been improving various Vehicles and Vehicles
Spare parts through air transport and sea transport, and store these products in these warehouses
during the time of tax payment. MOENCO will store imported Toyota spare parts and vehicles of
various contents in bonded warehouses at KALITY and MOJO dry ports until the appropriate
customs clearance period has passed.

MOENCO has different warehouses in its branches in the sales centers in different parts of
Ethiopia and these warehouses are well maintained and prepared according to TOYOTA
standard.

MOENCO warehousing system and operations and strategic to keep up the cost and efficiency of
their spare parts deliveries, particularly considering the volume of their parts and demand list that
they handle. The volume moving in and out of their core parts centers every day simply
fascinating. Their facilities in Addis Ababa, Gambela, Hawassa, Dire Dawa, stored some
270,000 exclusive parts and delivery around 115,000 order lines each month. Dealing with this
complexity everyday requires huge number of regular procedures and system also great stock
visibility.

The Ethiopia parts operation has a diverse of parts delivery centers and proprietorship model in
Ethiopia. According to MOENCO keeping these major operations in warehousing is a priority
for Toyota, specifically when it comes to implementing the Toyota production system (TPS) and
its procedures.

MOENCO has more than 12 private warehouses in Ethiopia, and various spare parts are
available in these warehouses. These spare parts are controlled in computerized manner until
they reach to desired production and sales levels of the company.
 Marketing channel and channel management of MOENCO

Digital marketing;- Digital marketing one of the MOENCO marketing channels, which includes
various social media applications as well as the company official website. This digital marketing
approach has helped MOENCO to easily promote its imported products and dominate the market
better than its competitors.

Events;- Large car dealership like MOENCO are involved in different advertising process for
products. These events are one of the most important means of advertising where the company
shows its status directly to its customers and introduce new customers.

MOENCO channel management secret behind the customers’ longer vehicle life is nothing but
the strength of our After Sales Service where we deliver the right quality of parts at the right time
and the right place. MOENCO supply genuine parts for trouble-free performance, long life, and
safe environment.

MOENCO always maintain an optimum level of parts stock, ensuring continuous supply based
on customer demand. A fully automated sales, stock control, and electronic parts catalog system
has enabled us to achieve a very high availability of parts resulting in remarkable customer
satisfaction.

MOENCO are continuously improving the services to the customers using the concept of
“kaizen” which is a Japanese term for continuous improvement. We apply kaizen at every step in
the parts logistics activity (inventory control, warehousing, parts marketing, parts sales, etc.).
This emanates belief that satisfying customers is no longer enough.

Among the marketing channels used by MOENCO are Events, digital marketing and billboard
advertisement. This marketing channel usually makes the product reachable around the
customers who primarily buy the product.
  The different modes of transport are air, water and land transport which includes Rail

ways, roadand off road transport.- MOENCO utilizes mainly:

Multi- modal transportation system.

Water transport with ships from product origin to ports

Rail way system from the port to customs.

Road transport from customs to the company hub and the different branches of
thecompany throughout the country