Turning a deaf ear to our customers' needs, again

I don't mean to imply that the systems don't work. The ones I observed functioned wonderfully. What bothered me was the basic business model and philosophies on which most of the available systems are built.

When it comes to online ordering, every tier in the supply chain seems to have a different agenda. Everyone seems to have approached the issue of electronic parts lookup and ordering from a selfish perspective and hasn't given enough consideration to the real customer: the independent service center. I see far too many people attempting to leverage the activity to gain control, grab market share for themselves, galvanize their position, maximize their revenues or some combination thereof.

Let me explain what I mean by the differing agendas and motivations I have observed regarding the various steps in the supply chain.

Manufacturers want to regain the control they lost with the advent of electronic catalogs (eCats). They view paying eCat providers' fees to "normalize" their product and application data as onerous, redundant and adding little value to the product and application research they already do. They are frustrated with the amount of time it takes for their products to "appear" on computer screens at the point of sale.

But their real frustration goes well beyond these relatively trivial complaints. There are two things really keeping most mainstream manufacturers up at night.

The first is the invasion of low-cost country (LCC) competition.

LCC competitors are able to sell at price points substantially lower than established manufacturers. Many of the LCC competitors are using the intellectual property of the established manufacturers to compete against them and are "borrowing" part numbers, cataloging, images, tech support and other value-added services from manufacturers. The second is the degradation of their brands. In recent years, established manufacturers have not been good stewards of their brands, and channel partners have aggressively promoted their own private label brands.

Manufacturers now have a renewed desire to control their intellectual property and access to their value-added services. I have heard talk of trying to copyright part numbers and of requiring techs to provide a number stamped on a part to get tech support and to keep LCC parts sellers from enjoying the benefits of the established manufacturer's infrastructure. Many view technology as an enabler that allows alternative suppliers access to a large part of the market, and would like to exclude the usurpers from access to systems that provide those opportunities.

Resellers may have the most proprietary tendencies of all. Most of them have created one-off solutions designed to route orders from technicians to their outlets. In some instances, solutions offer access to several resellers, but make it cumbersome to switch away from the "preferred" provider.

Shop system providers struggle to integrate their systems with the one-off proprietary solutions created by various program groups and resellers. In the end, they have the time and expense of staying in sync with a half dozen or more ordering systems. That only adds cost and delays to the marketplace.

Technology providers are attempting to sell their eCats to every level of the supply chain. They charge manufacturers to load the application data, charge distributors and jobbers to use it and then levy transaction fees on top of that when installers order electronically.

Techs want a broader view

So what do independent service centers want? They want to be able to look up a part and see what it costs and if it is available. And they want the ability to order from any major supplier in their trading area.

They would like to see the availability of the brands they prefer, and not just the ones that are available in a single store. They would like to see all the parts required to do a particular job, not just the ones they might need. They would like to pay the same as if they ordered the part over the phone. And they would like their ordering system to integrate with their shop management system to update work orders, estimates and invoices.

Not a single system I looked at was able to do all six of those things. Why?

As I thought about why, I was struck with a powerful sense of déjà vu. So I went back and found this little tidbit from a column I wrote way back in November 2002:

Somewhere along the line, many in the aftermarket got the idea that technology could be used as a proprietary selling tool...many, including manufacturers, distributors and third party providers have made technology available, but with a caveat. Specifically, if you want it, you gotta buy your stuff from me.

This practice is fairly common among program distribution groups. They have for some time attempted to put part lookup and ordering systems into installer bays with the proviso that any orders would default to their stores. I fully understand the business case for this approach. Many times there is significant development cost, and companies are only trying to recoup their investment. However, enlightened parts sellers must realize that the leveraged use of technology is a regressive practice. Success will require using technology as an inclusive device rather than an exclusionary one.

Not much has changed. Most folks are still pursuing self-serving, restrictive forms of technology. Most of the models are still adding costs. The irony is that electronic parts lookup and ordering should reduce costs. It reduces the number of printed catalogs and the number of people who answer phones, and it speeds the transmission of orders, all of which reduce costs in the supply chain. Yet, the systems I looked at add costs back in by charging a transaction fee for online ordering.

In a day and age where consumers can purchase things over the Web at reduced prices and receive extras like bonus points in frequent-flyer programs for electronic bookings, it seems incongruous to attach a fee or surcharge for such purchases. Most businesses would not think to charge more for orders placed through a toll-free number, yet many of these same businesses upcharge technicians for placing orders in a way that ultimately reduces their own costs.

What the marketplace needs is to create a workable compromise where everyone gets as many of his or her needs met as is reasonably possible, but where the installer gets all or close to all of what he or she wants.

Technology providers are going to have to figure out a new model. Perhaps they will have to live with flat fees that are less than the offset savings realized by manufacturers and distributors, or create a Google-type model where advertising funds their operation. In any event, such a service must be free from fees that add costs for the technician.

Manufacturers are going to have to get comfortable with their competitors appearing side by side with their brands. It is what the tech wants to see. Distributors and jobbers are going to have to accept that installers buy from more than one source and that pricing and availability shopping will take place. Hiding price or inventory information from techs will not make them more likely to buy. In fact, it will have just the opposite effect.

I was talking to a jobber/distributor I admire very much: Ron Decker of Decker Auto Parts in Fresno, Calif. He is a true pioneer doing nearly 30 percent of his business with installers via electronic parts ordering.

At the Aftermarket eForum, Decker shared what he has learned. He said techs have to see both price and actual quantity on hand. They want to see all lines and interchange to lines he doesn't carry. Some want estimate capability, while others want their parts ordering to be integrated into their shop management system like Mitchell or R.O. Writer. And most importantly, they want accurate and reliable product and application information.

"We can't be naïve about how shops use technology," Decker says. "Every time I walk into one of their operations, I see that they have upwards of eight screens open on the desktop of their PCs. I know we are being shopped for price and availability, but we always have been. With technology, they can just do it a little faster."

Decker summed up how we have to approach ordering technology: "The point is, you have to provide them with a technology experience that is better than any other they can find. That may come as a shock to some, but if you provide better service, you don't have to have the lowest price. But you sure can't charge a premium for the right to use technology."

Again I had a powerful sense of déjà vu, so I went back to that November 2002 column and found this:

Ultimately, it is critical for an installer to have complete access to a broad range of parts...from a variety of sources. An "abridged" eCat that contains only the lines offered by a particular manufacturer or distributor is of no use to the technician. He needs an "industry" eCat that includes all the product lines he uses regularly along with those he may only need occasionally. And the ability to choose where he wants to source the product.

And as I read over it, I decided to reprint it verbatim because, even after five years, I wouldn't change a word. Maybe it's Pollyanna of me to think it's possible, but I still think that giving our one true customer what he or she wants is what is best for all of us.

Bob Moore is president of Bob Moore & Partners, a consulting firm that specializes in the automotive aftermarket. Moore can be reached at [email protected].