As the owner of an aftermarket parts business, I’m always interested in examining how my peers adapt modern business management and communication technologies to the challenges associated with a distribution enterprise.
The Fast Undercar story is different, however, in that we’ve built our business by leveraging information technology.
Fast Undercar was founded in 1996 as a two-stepper dedicated to providing an unusually high level of customer service. Two years later, we established a franchising model that has proved to be very popular. The key attraction has been an obvious commitment to investing in and using technology for the benefit of a superior customer experience.
We essentially provide service in the form of 97-percent order fill and immediate delivery to any of our more than 20,000 professional accounts. Our typical delivery is a single line item on a single invoice — a model many other distributors would be hard-pressed to support.
When an account calls, they receive immediate pricing and availability information from a counterperson who has access to a leading electronic catalog. They know the required re-placement parts will be delivered immediately.
Adopting a just-in-time culture
What is transparent to the customer is that their order will have activated a just-in-time replenishment process involving an electronic purchase order that is quickly aggregated and transmitted to the manufacturer, who restocks the appropriate store’s inventory the next day. All products delivered to our stores are documented using a modern bar code system.
This model enables Fast Undercar to offer substantial inventory breadth, but very little depth, across a carefully selected field of replacement parts.
We eliminate the need for depth by leveraging multiple store inventories, relying on leading manufacturers who can support our just-in-time model, and capturing, processing and analyzing point-of-sale information on a real-time basis.
To better understand our business model, first consider the competitive demands inherent to the West Coast service environment: “Rack time” is the driving factor for most successful shop owners in this region; they understand that the consumer will not wait an extra day — or even a matter of hours — for the shop to locate the required replacement parts. This places tremendous pressure on the service provider to access immediate, accurate parts availability and pricing information.
Having been a shop owner, I sensed this shift toward a just-in-time service environment and recognized that we could devise a distribution model that would allow us to capture a sizeable share of this market.
Identifying the right products was relatively easy; we built our offering based on average ticket total and frequency of repair. These criteria led, not surprisingly, to our key focus on undercar products.
Fast Undercar has strived to be a technology-driven service enterprise with an almost limitless capacity to adapt to the unique demands of our customers. As just one example, we have many accounts that prefer to pay us on a weekly basis and some who pay within two or three days. And our technology allows us to easily accommodate their needs.
The technology interface
Our business model wouldn’t have been nearly as effective 10 years ago. Aftermarket manufacturers were still largely focused on customers who ordered parts by the trailer-load. In addition, many of the business management and communication technologies that have fueled our growth simply did not exist.
Our distribution business is fundamentally different than most others because we were a technology company from day one. As the initial business plan was developed, I knew success would depend on our willingness to embrace technology.
Our technology framework began with a “workhorse” UNIX-based POS system integrated with a best-in-category electronic catalog. These tools are key to our ability to offer immediate price and availability information by telephone. (We also offer online eCatalog lookup, pricing and availability.)
The next step was more challenging: As we expanded our market area and store network, we knew that inter-store communication would become increasingly important. Remember that our business model calls for leveraging multiple store inventories to provide nearly 100-percent order fill. To accomplish this, we developed a virtual private network (VPN) that utilizes Voice Over Internet Protocol (VOIP) technology to enable toll-free data and voice communication among all of our stores. This extensive connectivity enables us to share sales and inventory information, trade parts and maximize the efficiency of our delivery services.
This VPN wasn’t inexpensive — to run our POS system, file sharing and VOIP application, each store is linked with full or fractional T-1 lines and/or DSL connectivity — yet our investment now seems almost insignificant when compared to the value it generates for our stores and customers.
Eliminating paperwork
Minimizing paperwork is another key element of our success. Thousands of invoices are generated each day with virtually no back-office staff by combining our VPN with data imaging technology created by Activant.
Data imaging allows us to capture an electronic image of every invoice as it is generated. The next step in this paperless model — which we’re now field-testing — is to capture an electronic signature at the point of delivery. The customer’s signature — collected via a wireless handheld device that also scans the invoice bar code — is then married to the electronic image of the invoice.
Delivery and beyond
There’s no question that one of the biggest challenges facing our business is managing the costs associated with immediate delivery. Technology is helping in this area as well, thanks to our ability to capture and analyze our complete transaction cycle — from order entry (via our POS system), to invoice generation (data imaging), to acceptance of delivery (electronic signature capture), to the truck’s return to our store. We are preparing to test a technology that will make this delivery management information available to each store location via a website, a standalone function that is continuously and seamlessly refreshed.
Management of customer statements is another difficult challenge facing most distributors. With more than 20,000 professional accounts — many of which require custom statement periods — Fast Undercar has a driving need to move toward electronic statement delivery. We soon will offer our customers the option of not only seeing a consolidated electronic statement, but also images of every transaction matched up with proof of delivery.
Next step: More power to the counter
Our business has thrived by centralizing strategic administrative and purchasing functions while empowering the store owner/ manager to make the right decisions for his or her market area.
We’re also committed to empowering the counter professional since virtually all of our downstream efficiencies depend on their ability to provide immediate, accurate pricing and availability information. We’re investing in a new “cover-to-cover” eCat that includes thousands of product images as well as key part specifications, TSBs, installation instructions and other information.
Our unique structure has helped us make more strategic, results-driven investments in new systems and other advanced capabilities. We enjoyed a double-digit sales increase in 2004 and added five new locations; in spite of this aggressive growth, we were able to eliminate one administrative position within our headquarters. That’s precisely the kind of efficiency we envisioned when we wrote that first check to our technology partner in 1996.
