Technology, the great accelerator

Jan. 1, 2020
Despite the advances, we can’t get away from all that paper.

CHICAGO — If you or your customers want to survive in today’s cutthroat business climate, your data should comply with PIES and ACES. And while you’re at it, make sure your product information passes the industry’s DAC. You’ll also want to use EDI or XML, and, while you’re drowning in the veritable alphabet soup, how’s your eCAT?

Confused? You don’t have to be. You can embrace technology for all it’s worth, freeing up your time to concentrate on what’s important: making money.

This year’s Aftermarket eForum, hosted by the Automotive Aftermarket Industry Association (AAIA) at Chicago’s Hyatt Regency O’Hare in August, drew a record attendance as presenters discussed data standards, expected to eventually save millions of dollars for a marketplace that has experienced little growth. Speakers also shared information on the means, or computer languages, used to share data, as well as Web standards, electronic cataloging, data warehousing and the likelihood (or unlikelihood) of a paperless supply chain. Success in this endeavor will require a “spirit of collaboration” among companies, which became somewhat of a mantra at the convention.

Unlike the business climate of the past where the large consumed the small, Bob Moore, a presenter and Aftermarket Business columnist, told attendees that in the technology-oriented aftermarket, “The quick will eat the slow.” In other words, now’s the time to take advantage of what technology has to offer, regardless of how large or small your company, because those who wait will most certainly get left behind. And as the many professionals who attended the eForum attest, making the switch to e-commerce and electronic data standards will be difficult at first, but is a necessary move for survival.

Technology should only assist you in your endeavors, not replace them, said many presenters, including Bryan Murphy, CEO of Wrenchead Inc., a software company that puts together electronic catalogs for the automotive industry.

“Technology is not a strategy unto itself, it’s a part of what we do,” said Murphy, who added that taking advantage of Web-based applications enables his company to do business 24 hours a day.

“I love the idea of having my business run when I’m asleep,” he added.

Murphy also cited a quote by author Jim Collins, which aptly defines technology’s role in the marketplace: “Great companies use technology as an accelerator of momentum, not a creator of it.”

Starting at square one

The eForum began, appropriately, with an overview of supply chain technology and a definition of data standards and the means for data exchange.

The AAIA has been pushing for companies to use the Product Information Exchange Standard (PIES), which is used across many different areas of commerce, as well as the AAIA Catalog Enhanced Standard (ACES), which contains vehicle-specific information. The information is retained in “fields,” of which there are scores, but the operative categories are determined by trading partners and can be as expansive or as simple as the companies decide, said Scott Luckett, AAIA’s vice president of technology standards and solutions, who added fields may include price, packaging weights and dimensions, as well as Web links for installation information.

Regarding ACES, it helps ensure that all parties doing business describe a vehicle type or model in the same manner, Luckett said, adding, “Everyone is going to call a Ford Taurus the same thing [though] internally, you can call it whatever you want.”

He said data discrepancies could mean not being able to find the right product at the counter, even if it’s sitting in the store, and these inconsistencies add almost $2 billion in transaction costs per year. 

Earlier this year, AAIA introduced its Data Audit Certification (DAC), which is awarded to companies that have complete and clean data. Dana has become the first in the aftermarket to become AAIA data certified for its Wix filters line — an intensive, multi-year process, according to company officials — and other aftermarket companies are expected to follow.

The next step in becoming data compliant is finding the means of communication so computer systems in the supply chain can interact with one another in the same language.

EDI, or Electronic Data Interchange, is one such browser standard. EDI performs business by using electronic transmissions rather than paper, according to AAIA, which adds EDI can list bidding opportunities, send and receive solicitation packages, notify bidders, place purchase orders, send invoices to a purchasing office and even send a payment to the bank through Electronic Funds Transfer (EFT).

“EDI has not only held its own, it’s grown over the past few years,” said Chris Gardner, vice president of marketing for the Motor and Equipment Manufacturers Association (MEMA).

Another data exchanging tool, which AAIA describes as a lower cost alternative to EDI’s high start-up costs, is eXtensible Markup Language (XML), which is a more expansive version of the HTML coding used in a number of websites. XML, said Gardner, assigns values to data and, because it is dynamic, is ideally suited for exchanging electronic catalog information.

Beyond the data and the language is software, such as the Partnership Network, which AAIA describes as the “basic plumbing” to connect online users. Other types of software are available for sharing data, and a number of software companies attended the eForum to discuss their new technology and solicit business from aftermarket manufacturers and distributors.

So where does a company begin in this pursuit of electronic business?

“It starts at the top,” said Moore, who added companies must get over their proprietary hang-ups and be willing to collaborate, and the decision-makers within the company must be willing to take the leap into the electronic realm.

As redundant as it sounds, a computer is an essential first step, though some companies still do not own them. Even if you need to buy the computer for customers in your distribution chain, the investment is minimal and the returns are great, especially when you’re using clean data all the way down the supply chain, said conference speakers.

The panelists recommended consulting trade associations like MEMA and AAIA. To eliminate duplication, an inter-association group called the Aftermarket Council on Electronic Commerce is at work coordinating electronic commerce standards across all segments. Visit www.aceconline.org for more information.

Success may be a click away

Marketing your business has become much more sophisticated than the days when Vic Edelbrock cruised down the Sunset Strip showing off the parts he made in his garage, said Dan Jondron, president of Advanced Digital Strategies, a marketing and technology consulting firm.

Jondron shared some low-cost Web marketing solutions for eForum attendees, including optimizing search engines, developing electronic newsletters and measuring “pay-per-click,” or each time a Web user clicks to your site using a particular search word. Words can be purchased ranging from a penny a click-through to 10 cents a click-through, said Jondron.

He recommends carefully tracking which words are being used and eliminating the words that aren’t offering a return. One such company, for example, is getting a dollar return on every six cents spent, which can add up to a healthy ROI. Jondron recommends websites such as wordtracker.com and digitalpoint.com, which offer help in tracking click-through returns.

Drawing attention to your site through search engines among the millions of companies vying in cyberspace is an art form unto itself, and one that still is not being used to its full potential, he added.

“(Search engine optimization) is something we’ve been talking about for nine years, but people still aren’t doing it right,” said Jondron, who recommends placing the text that appears in a search engine on your home page, as well as linking your site to other websites to move your site up the hierarchy of search results.

“If you convince people to link to your website, you’ll get better search engine results,” he said.

Some search engines, like Google and Yahoo, offer free use for a one-time fee.

Companies can hire an outside firm to optimize search results and help move their site up in search rankings, but beware of false promises to get your company in the “Top 10” of search results, he cautioned.

Another valuable marketing tool is an electronic newsletter sent via e-mail, or e-newsletter. It offers a company the chance to stay in touch with customers and offer promotions that can guarantee a certain amount of readership. E-mail newsletters, said Jondron, should consist of 85 percent valuable content and 15 percent marketing.

Jondron also recommends setting up a presence on automotive enthusiast websites, which can draw millions of visitors per month, and asking an enthusiast within your company to get involved with chat groups and discussion groups and post articles on these forums.

Jondron added you may even want to consider offering giveaway prizes like T-shirts in exchange for demographic information and newsletter subscription forms.

A paperless supply chain?

The use of the word “paperless” in the term “paperless warehousing” is something of a misnomer.

“Paperless is a great unfulfilled promise,” said Bill Schlatterer, COO of Parts Warehouse, Inc. He said invoices are still printed for his customers, who have nonetheless developed trust in the Activant (Activant Solutions, Inc.) system’s high accuracy rate.

“I think you’re always going to have a certain amount of paper, no matter what,” said Paul Agather, executive vice president and treasurer of Automotive Jobbers Supply in Spokane, Wash.

Automated warehouse systems have reduced overtime and load times considerably, said members of the “Going Paperless” panel. The panelists also shared some roadblocks they encountered when integrating automated warehousing systems.

Some customers didn’t understand the new invoices. Others said the thermal printed bar code stickers unpeeled and fell from the boxes when the weather warmed.

Kirk Swarbrick, director of distribution operations support for Federal-Mogul, said his company did not perform a live environmental system test when integrating a paperless warehouse system, which “brought us to our knees.

“We had an overly aggressive project plan when we implemented the technology. That was not realistic,” he added. “It was a disaster, I don’t mind telling you, but we learned from that.”

The upside, he said, is, “We know exactly where our inventory is.” Before, “we were just hoping it was there.”

The automated warehouse system will not iron out problems that existed before the technology was put into place, said Chris Tessier, general manager of Ohio Warehouse Group, Parts Depot, Inc. “Unequivocally, you have to have a good material handling system in place before you implement a (warehouse) management system.”

Additionally, said Tessier, “You cannot do enough training to go into implementation at every level, from sales staff to customer service. Everybody needs to know what those changes are going to be.”

“We still live in a paper world if you think about it,” said Mark Toebben, president of DCi, during a breakout session centered around Web marketing. “(Because) every so often, the lights go out.”

Using eBay as a closeout source

A representative from eBay offered eForum attendees a proposition of sorts: use the online sales system as a closeout source for excess or obsolete inventory.

“Eventually, the product goes into an end-of-life stage where it becomes obsolete or excess,” said Paul Nadjarian, senior manager of parts and accessories for eBay Motors.

More than 600,000 parts and accessories are being sold at any given time on eBay, and more than $1 billion in gross parts or accessories are sold on an annual basis, said Nadjarian.

He compared the system to the apparel industry, which generates seasonal closeouts every quarter. “The parts industry is actually more complex than the apparel industry (and) has much more of a need for a reliable, credible, branded closeout source.”

And eBay’s system of exchanging feedback for both buyer and seller is like going to a business and reading about every past transaction and comment posted on the company’s doorhose, he said, adding with physical locations can leverage their brick-and-mortar store on eBay as an asset, selling parts and installation as a total package.

Chimneys, chutes and chickenheads

“It doesn’t seem business should be quite so adventurous,” said Terry Ross, vice president of product development for Activant Solutions, Inc., who spoke in front of a backdrop of rock-climbing terms and images. “Like any serious climber, the aftermarket distributor needs a frank, clear understanding of the value and potential risks associated with every move.”

A chickenhead is a protruding rock that serves as a handhold or foothold, said Ross, who displayed flow charts against rock images, and said, “I’m going to offer up a chickenhead today.”

Some companies prepare strategies on a month-to-month basis, but the plans are sometimes obsolete by the end of the month. “Your workflows don’t work as fast as they need to to respond to the business dynamic,” said Ross, who suggested devising weekly strategies instead.

When integrating software into your company, some vendors may try to sell you more than you need, but, “the reality is, you can’t consume all of that very quickly,” he added. Some vendors focus on feature and function and not enough on how the software integrates with other systems, Ross added.

Ross used the ubiquitous Microsoft Word as an example of having more than you need: “I can’t imagine what percent of MS Word I can use. I’m guessing around 2 percent.”

Other speakers used real-world examples of how technology has benefited their bottom line.

Panelists from Dana Corporation and O’Reilly Auto Parts shared their journey to AAIA data compliance, which has been earmarked as the Technology Enabled Standards-Based Trading (TEST). The panel meets regularly to serve as a model for others.

Moore, a noted industry consultant and member of the TEST panel, shared what he calls the “seven steps to heaven:” Vendor data gathering and database population, data certification, initial data synchronization, Partnership Network implementation, data transfer documents, reseller data management and reseller rollout.

The TEST panelists stressed that it’s important the systems be flexible and that the manufacturer and vendor are in explicit agreement over compatibility.

And remember that ultimately you are still in control of the information. “It’s not a blind computer-to-computer process,” said Ed Heon, vice president of industry programs for Comergent Technologies. “People who mine data can still manage it.”

To illustrate just how competitive the marketplace is, Wrenchead’s Bryan Murphy equates the situation to this year’s Olympic Games.

Though the difference between first- and fourth-place in the marathon trials could be 20 seconds, or 2 percent, the first-place runner goes to Athens and the fourth-place runner stays home and watches the games on television.

“If you’re the guy getting the fourth call, you’re getting nothing,” he said. “The small differences mean everything.”

The 2004 eForum was presented by AAIA, MEMA, the Specialty Equipment Market Association (SEMA), the Automotive Warehouse Distributors Association (AWDA) and Canada’s Automotive Industries Association (AIA).

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