The source went on to say, “There are four or five groups of substance: The others will have to merge or find partnerships to absorb them.”
Certainly, efficient inventory management is key to any discussion of where the market is headed. It is an issue that seems to be bigger than any one player and may be the issue that will help push the market into further consolidation. Inventory control is not only a practical issue, but also one that has kept the aftermarket on the outs with Wall Street. Rightfully or wrongfully, the aftermarket is tainted with inventory control problems. Wall Street analysts just don’t buy the argument that the distribution system must be ready to supply someone... somewhere... at sometime... with a part that they might need.
Many think category management can fix all that’s wrong with the aftermarket’s inventory. The need for category management is greater than ever, they think, because of the ever-increasing number of SKUs and slower sales growth.
As you will read in our news analysis cover story, "A cold reception", program groups for the most part are not among those who think category management is the cure to the industry’s inventory woes. It’s not that they don’t recognize the problem, it’s just that they think category management is best suited for fast-moving parts such as motor oil, chemicals, wipers, etc.
The groups, which are more installer-customer oriented and, thus, heavy into application parts, are more concerned with cleaning up their data warehousing processes so they can check parts availability within their own groups.
One of the most vocal opponents of category management is Parts Plus President Mike Lambert. He makes it clear that he’s not going to share inventory data with retailers who are vying for his group’s installer business. “If they (retailers) had our data on movement of prescription parts, they might get 90 percent coverage. As they increase their competitiveness, we become even more dependent on the slower-moving parts. So we see no advantage in sharing data with them. We would be more inclined to share data with other groups.”
Apparently, what’s right for the groups is not right for the retailers and vice versa, which simply means that we need to be selective in where it’s used and how it is used. Under no circumstances should the competitiveness that now exists be breached.
This may not be what Wall Street wants to hear. But if there’s any hope of not living out the prophecy I quoted at the beginning, it rests on how the industry cleans up its inventory, while at the same time, maintaining uncompromised parts fulfillment to both installer and DIY customers. Nothing...I mean nothing...should ever thwart that.
