Exceedingly Long Oversimplified Explanation of Maverick Order Allocations

[Huchipapa]

A couple of things to add which are mostly pure speculation on my part.

1) Transportation has been a big constraint and is also scheduled far in advance and involves multiple components like space on trains, space in rail yards, and a truck and driver to deliver it from the final railyard to the dealership. If these cannot be scheduled then it is unlikely that a Maverick will be scheduled to be built since it would just sit in Hermosillo or some random railyard halfway to its destination. It also costs a lot less to ship a Maverick to some place like Texas, Arizona, or Southern California than it does to ship it to some place like New England which is a lot farther away and Ford gets to pocket the savings.

2) It would be naive to think that both the dealership and Ford don't give priority to higher margin Mavericks.

3) The allocation process has changed frequently in the past and likely will change again in the future.

I don't know, my loaded out Lariat Lux hasn't made the cut so far, and the only thing I can think of is the tri-fold constraint. But it appears that is a low constraint....

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[tdonch]

Here's a quote from that article: '...orders are scheduled in the order in which they are received, regardless of dealer, pending any capacity and commodity limitations. Oldest Maverick retail orders are prioritized first.."

So when did Ford stop doing this...prioritizing oldest orders regardless of dealer?

Unfortunately, this was for the last part of the MY22 model year only and where IMO Ford introduced a lot of confusion. MY23 was back to allocations only, which I only was made aware because the @fordvideoguy was kind enough to inform us it had changed back in MY23. There was no announcement that I saw from Ford.

 

[Mav_RICK]

Nice explanation, although it raises one related question. If a dealership has 325 carryover ‘23 orders and only are allocated 325 new trucks for 2024, does that mean they are getting ZERO MY24 Mavericks? And if not, why not?

Well actually all 325 will be MY24 and there certainly is a chance if they have more orders than they were allocated they still might get the order. They definitely did that for MY23.

 

[Mav_RICK]

I just hope MY 24 goes way better than the last two years and I think it will. Way too early to say it won't be.

 

[colinl]

Here's a quote from that article: '...orders are scheduled in the order in which they are received, regardless of dealer, pending any capacity and commodity limitations. Oldest Maverick retail orders are prioritized first.."

So when did Ford stop doing this...prioritizing oldest orders regardless of dealer?

Priority is not the same as allocation. A dealership might have 10 old orders but only 1 allocation. 9 don't get scheduled.

Regarding why it changed after my22.. That's because my23 orders closed in 6 days so there was no difference unlike my22. Ford told dealerships last year to make my22 rollover priority 10 and anything new a higher priority.

This is getting off topic of current orders.

Point is, all you can do is order what you want to own, check the constraints every week and if you can live without something that shows up on the constraints, remove it as soon as possible. The rest is out of your hands and involves a lot of luck.

 

[Donaldw]

A good explanation at the start. A good defense for Ford and dealers, as if they are doing the best that can be expected. I think it is as good as is traditionally expected. What is needed here are system modifications that integrate supply channel issues, with allocations and customer order dates. The blinding flaw in all this is that it is accepted that it is not possible to give the customer accurate information on whether their truck will be built or when. I don't accept the argument that there is not a better situation.

 

[Molsholl]

I don’t understand why orders and allocations live in the same universe. Allocations are based on previous sales while orders are just that: you have a buyer that has money ready to go and will buy that product if you will just build and send the damn thing…. No sitting on the lot, no special offer because you have months worth of inventory. I would think the overall corporate greed would win out and have some semblance of logic in this case. What a way to turn folks off of your product or dealer. Sheesh!

 

[commadorebob]

I don’t understand why orders and allocations live in the same universe.

At some manufacturers, they don't. As in all the dealer gets is allocations and there is no mechanism for retail orders. Again, in "normal" times, this is a non-issue. Even now for most of the remaining models you can place an order and get it fairly quickly.

 

[TomD]

It’s that time of year again. People who have rollover orders get upset that someone with a new order was scheduled ahead of them. But why did that happen?

Below is an oversimplified explanation of allocations. I note that I do not work for Ford. The devil is in the details, but this should help you understand what allocations are and why they are used. Grab a coffee as there really is not way to tl;dr this one.

Why Allocations?
Tim has stated he has 325 carryover orders. At a basic level, Tim took 325 too many orders for MY23. Now, that is not mostly his fault as Ford did not tell dealerships their allocation limits before they took MY23 orders, which led to Ford shutting down the order banks. But he took a gamble and this is illustrative as why allocation limits exist.

If Ford went first in; first out (FIFO), Tim would potentially have to take delivery of 325 trucks at the same time! That creates logistical issues for both Ford and the dealership but also means Tim has a massive surge of income and then the rest of the year… nothing.

The flip side of that means retail orders have to wait to be scheduled. As mentioned, Tim has 325 carryover orders. He also has 325 allocations for the year. That means it will take the entire model year to fulfill those orders despite the fact that, mathematically, Ford could fulfill all retail orders before next summer.

Long-McArthur is also a very large dealership. Your local dealership might not be. Long-McArthur has the resources to dedicate multiple people to entering Maverick orders all day whereas other dealerships may not have that ability. Should the smaller dealership be punished by FIFO ordering simply because they don’t have the staff to spam the order banks?

The allocation system is designed to allow every dealership the chance to earn vehicles to sell. It prevents a dealership from loading up the order banks because if they are told they will only get 10 trucks, there is no sense in wasting time adding an 11th order.

However, it is a bit of a catch-22. Dealerships need to sell trucks to earn allocations of trucks to sell. So, for the first few years, the Maverick allocations were earned based on Escape, Edge, and Ranger sales. The thought being markets in which those are popular would also be able to quickly sell the Maverick. That system makes sense as there is no sense sending many high-dollar vehicles to a dealership in a poorer area or Super Duty trucks to a dealership in the inner-city. Details on how allocations are earned can be found here.

Constraints
Ford, for the most part, is an assembler. Very little of the Maverick is built by Ford itself until it rolls down the assembly line. Ford works with other companies to build the parts for the Maverick. Those third-party companies have a limit on how many parts they can build at a time. This is where constraints come in.

Example: The wheel manufacturer can only produce so many rims at a time. In fact, there is opportunity cost to consider: if I am hammering this nail, I cannot be hammering that one. Both need to be hammered so the only thing we can do is allow more time so I can hammer both or bring someone else in to hammer with me (assuming we have a second hammer). If a worker is physically building an XLT rim, they cannot be building a Lariat rim. The parts manufacturer schedules how many rims of each kind to build based on what Ford wants and then plans out how to build them within a given time period. But the Laws of Physics still applies.

And then they have to ship those parts. Only so many rims can fit on a semi trailer at one time and they have to be shipped in sets of four. While Ford has a general idea of how long it takes for parts to arrive, all shipping is subject to unforeseen delays.

Ford also uses “just in time” manufacturing. That means the truck with the rims shows up just in time for Ford to use it. Ford doesn’t keep a large backlog of parts to choose from as that costs money. You need to have staff handle inventory and it takes a person longer to store and then retrieve a part than it takes for it to move directly to the assembly line. The least amount of time from accepting delivery of a part to that part being on a truck that has sold increases the speed in which Ford can make a profit on that part.

For the past couple years, there have been some main fixtures on the constraint list: mud flaps, tonneau cover, hitch. Tim confirmed at one point last year that a MY22 carryover was being overlooked specifically because it had one of those and the moment that constraint was removed, it was immediately scheduled. So, the more constraints and options you have, the longer it will take. I honestly believe there was an unwritten constraint on black-painted wheels for the Lariat that took my MY23 into the summer.

How Allocations?
Once the dealership has allocations, how do they work? Again, this is an oversimplified explanation, but think of the allocations system like the NFL draft. The number of rounds a dealership participates in depends on their allocations. So, Tim getting 22 allocations yesterday means he participated in 22 rounds.

When it is a dealership’s turn, Ford looks at the order with the lowest priority number at that dealership that they can build. So, assume all of Tim’s 325 carryover retail orders are hybrid. If Ford is not scheduling hybrids that week, Tim’s first buildable order will be an EB stock order. Once they pick a buildable order, Ford moves on to the next dealership and repeats the process. This is mainly done electronically so the 22 rounds of 3,000 dealerships takes only a few minutes for each model. We see that in the scheduling emails as they all tend to come within a 30 minute time frame allowing for email host delays.

If a dealership didn’t overbook last year or has no carryovers, their first buildable order for an allocation they earned will be a new order. Remember that the priority number is only relevant to that one dealership. It is basically the dealership telling Ford, “schedule our trucks in this order.” With carryovers moving up to 3, Ford is basically telling dealerships, “we will schedule these first unless we can’t”

Why can’t they? Ford knows they can only build so many XLTs during a given scheduling period due to the number of XLT rims they will receive (and etc. for every other part). Once Ford has eaten up the allotment of XLTs, there is nothing else they can do. Ford has to wait for the next scheduled truck of XLT rims and they are not going to idle the factory. The rest of the vehicles scheduled will not be an XLT. That also increases the chance of a new order jumping ahead of a carryover as the various trims may be more popular at a given dealership than at another.

Clean-up Allocations
Once Ford has everything scheduled, there might be allocations for that month that went unused. Ford then tries to use them by moving things around. Let’s go with a basic: a base XLT hybrid with a hitch. Ford might be out of that combination for a given week, but might have leftovers of each of those in other weeks. Ford will shift things around so that one order can be scheduled with leftovers from last week going onto a truck for this week. This is why clean-up week tends to be very light in terms of scheduling. Ford is simply plugging the holes based on the available parts and orders. All remaining unused allocations are rolled over to the next month, allowing dealerships to participate in more rounds.

Tesla doesn’t do this!
One thing to keep in mind is that Tesla isn’t really an auto manufacturer. They are a data mining company that makes cars. Why else would they have a market value far exceeding Ford’s despite selling only a third of the automobiles? (Ford sold more vehicles in CY22 than Tesla, Nissan, and Subaru combined) Tesla's product is the data those vehicles collect (something the Big 3 are catching on to).

Tesla also doesn’t use dealerships and this has caused them issues in some states. For example, there is not a Tesla showroom in Alabama because of a state law that says retail automobiles must be sold at a dealership operating under those rules. So, most people in Alabama who order a Tesla go to Atlanta or Pensacola to pick it up thus completing the purchase in those states (Alabama still gets its sales tax, though). Or they "complete the sale in Nevada" and have it shipped to them.

Why do these laws exist? To protect jobs. Every dealership is going to have dozens, if not over 100 employees each. Multiply that by 3,000 Ford dealerships and you see that there are a lot of jobs dependent on the dealership network. All of them want Mavericks this month.

Conclusion
If you hate the allocation system, don’t blame Ford or the dealerships. Blame the government. The dealer network is extremely protected and Ford has no way of changing that. State laws and union contracts mean that Ford’s hands are tied. The only thing they can do is come up with a way to evenly distribute vehicles. At least we have the ability to place a retail order. My understanding with Toyota is they don’t take them at all.

And this will die down. Maverick up until now has been pretty much built-to-order with backed-up orders. Bronco Sport used to be the same, but you can pretty much walk into a dealership right now and get one or place an order that will be scheduled next week. Even Bronco is getting to the point where (except for extremely limited trims) you can place an order and get it fairly quickly.

The allocation system is designed to ensure dealerships get stock orders. It was never designed to be exclusive to retail. The pandemic shutdown created a pent-up demand Ford is finally starting to clear. In the pre-pandemic era, all retails were scheduled within a couple weeks because there were no retail orders waiting (hell, my dad had to explain to his salesman how to place a retail order for a 2010 Taurus). It will take the better part of a decade to return to a pre-pandemic economy.

We are just caught in the middle.

 

[TomD]

The Ford of today is not the Ford of just a few years ago. Not that long ago, a dealer could order vehicles for inventory "on the lot". They knew what sold in their market, and what they could sell. So there was no problem ordering cars and trucks to have on display since they knew they could sell them.

I'm told that today, a dealer has to have a customer order before they can order a vehicle, so no more "ordering for the lot". I cannot believe that is 100% true but that's my understanding; however my dealer in Michigan also said that Ford was building ill-specified F-series that my dealer couldn't easily sell in his market. They couldn't get the trucks they needed due to...yeah, supply constraints.

The entire allocation nonsense caused in part by covid and also in part by just bad management decisions (single source suppliers) has thrown a huge wrench into the works. So none of the old rules of a just a few years ago completely apply. We used to routinely order vehicles and it was rarely more than a 4-8 week period from order to delivery. That's ancient history today.

As for the JIT, well that's not exactly true. It's more a game with accounting than anything else. Ask anyone who has worked in automotive manufacturing. Textbook JIT simply doesn't work. You cannot risk shutting down an assembly line because a tractor trailer overturned, or there was a snowstorm or whatever. What is more likely is that the suppliers carry the burden of inventory. Parts are shipped to the assembly plant but not booked until the manufacturer retrieves them. This was explained to me years ago by a friend in manufacturing at Wixom Assembly (now long gone) when I asked why there were HUNDREDS of trailers in the parking lot. He laughed and explained that it's the "parts warehouse", and that as items are needed for manufacturing they are fetched from the trailers and then booked as shipped/received. But to think that there's finely tuned machine like the Swiss trains with trucks arriving just in time or JIT as they are needed, well, that wouldn't really work.

We're all just venting because we are all tired of the new reality.

I wrote something about this yesterday however I feel the need to chime in again. People seem to be just assuming that the October orders are new not rollovers. People whose 2023 didn’t get built do to bad luck or an unfillable

 

[baseballchamps]

A good explanation at the start. A good defense for Ford and dealers, as if they are doing the best that can be expected. I think it is as good as is traditionally expected. What is needed here are system modifications that integrate supply channel issues, with allocations and customer order dates. The blinding flaw in all this is that it is accepted that it is not possible to give the customer accurate information on whether their truck will be built or when. I don't accept the argument that there is not a better situation.

Agree! The customer is buying the vehicle not the dealer and should be given the priority.

 

[TomD]

I wrote something about this yesterday however I feel the need to chime in again. People seem to be just assuming that the October orders are new not rollovers. People whose 2023 didn’t get built do to bad luck or an unfillable selection of options may very well be the same people whose orders are being filled. In my case my 2023 did not get built. My sales person was contacted by ford and was told that my 2023 was not going to be built. However he was told to create a new order for a 2024 to replace my 2023 order. The salesman put in the order. Now did I have a new order or a rolled over 2023 order?
Back October of 2022 when the 2022 stopped there was something like 20,000 orders rolled over onto the 2023 books. Ford announced last year and again through out the year that they were discontinuing the rollover practice. In other words no more chasing their tale trying to catch what they can’t. When it was close to order time Ford announced that if you have an unfulfilled order to order put in a new order. The people who had order 2023 numbers went to the top of the pile to get their new order processed.
To me the new order issue seems to be a matter of Symantec’s. There are no rolled over 2023 orders. If you ordered a 2023 you got to cut the line for your new 2024 order.
In my case it seems like the salesman was told what to do get me a truck. There are two unfortunates in my case. I unfortunately believed that my getting a truck built was as likely as a chicken growing lips so I worked very hard to find what I bought. So now I my new order is placed and it is supposed to be built in October. Also unfortunately the Alto Blue was discontinued so to get a blue truck I had to get an Atlas Blue truck. Which I like but not as much.
Does anyone know if it is too late to change from Atlas Blue to black? Is it too late to add a sunroof.
I am not thrilled that the prospect of getting a 2023 never existed. If you have a 2022 or 23 order and never got the 2024 letter about reordering or your salesperson didn’t contact you then you can safely assume that you are not going to get a truck. This is all based on my communication from Ford, the Ford announcements and what I have read in this blog. I do believe that what is written by me is an overly long and I could have cut to the chase a lot sooner.

 

[commadorebob]

Agree! The customer is buying the vehicle not the dealer and should be given the priority.

Nope. The dealer is buying the vehicle from Ford and simply promising to sell it to the customer. There is no consumer direct-order capability with Ford. That's why the allocations matter. It's the dealership that being given a vehicle to sell to the consumer.

It's also why a lot of the people who have their trucks sold out from under them have no real legal leg to stand on. Until you sign the papers upon delivery, it is not your truck. Any contract that would force them to sell it to you would also force you to buy it as soon as it comes in.

 

[Automate]

Nope. The dealer is buying the vehicle from Ford and simply promising to sell it to the customer.

I know a lot of people try and make this argument but I disagree. It's just an excuse to try and justify bad Ford/dealer behavior. The dealer is just the middleman. It's like me going to Home Depot and buying a John Deere riding mower and saying I am not a John Deere customer.

Ford is the one that guarantees the specifications of the vehicle to the customer, not the dealer.
Ford is the one that gets sued by the customer if someone is hurt due to a safety flaw in the vehicle, not the dealer.
Ford is the one that guarantees the warranty to the customer and is responsible for repairs if the vehicle fails.
Ford is the one that buys the vehicle back if it falls under the lemon law.

Ask anyone in Ford sales and marketing they will tell you the end user is the target of their advertising and their customer.

 

[Oscarcat]

Interesting writeup, Thanks! Tesla: my son just bought a new Model 3, 26 miles on the odo. The driver's window was misaligned and the car pulls to the right. Tesla fixed the window but said the suspension was to spec. When my son said it pulls regardless of being in spec, they told him Tesla is technology company, not a car company. He told them they can call themselves whatever they want but his Tesla has a VIN and four wheels so they sold him a motor vehicle. They are making it difficult for him to schedule a service appt. MEANWHILE, I just received a VIN for the Mav hybrid I ordered in June 2022, will be built as a 2024 the week of October 16, 2023.

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