Auto Service World
News   June 9, 2003   by Auto Service World

Aftermarket Complains But Does Little To Address Critcal Issues, Says Study


“Few industries have talked more about — but then done less about — critically eroding business conditions than the automotive aftermarket,” concludes a recent study by Park City Research (PCR).
The report identifies new marketplace and technology dynamics that will at last drive significant industry change. CCITriad, which had anonymously sponsored this independent research, presented an overview of the findings at the June 2003 meeting of the Aftermarket Auto Parts Alliance, Inc. in Little Rock, Arkansas.
CCITriad is donating $5,000 U.S. in scholarship funds to Northwood University as a token of appreciation to the many industry executives and business owners who assisted PCR in the study.
“This research is part of a much bigger top-to-bottom CCITriad strategic business review,” says Hoon Chung, the company’s senior vice president and general manager, Automotive. “The study confirmed our view that businesses must transform to reach new levels of supply chain and operating efficiencies to thrive — and in some cases survive — in these challenging business conditions. While the study identified that CCITriad was best positioned to be a catalyst for change, it also highlighted that the company would need to significantly alter how it interacts with its customers and the marketplace to be able to assume this role.”
“We set out to do a different kind of study — the industry already knows the challenges it faces and the difficulties with its inventory and operating models,” according to PCR chairman Richard Currier, who directed the research. “Our research focused on practical forms of solutions, and especially on the drivers that could force change in an industry that has long known the challenges, but has yet to transform its business models. Our focus was less on enumerating the problems and more on what sets these problems apart from other industries.”
The study concluded that the aftermarket has a “network-model supply chain,” a fundamentally different environment from other manufacturing and distribution markets. The network model is characterized by the sideways and backwards movement of goods and information. This is in stark contrast to the traditional straight-line industry model where business effectiveness is defined by increasing speed and efficiency of the flow of goods and information. In the network-model, an individual manufacturer or a warehouse distributor cannot readily optimize their position.
Supply chain optimization can only be realized at the market level. “It’s not that the aftermarket ‘missed the boat’ on the inventory efficiencies that have swept every other industry, it’s that they need a different boat,” notes PCR’s Currier. The study examined potential “carrots” and “sticks” for compelling change. The research predicts that carrots will come in the form of better “market- level” solutions for a network-model environment.
Additionally, the study also found that recent “combinations” of problems have further impacted the pressure to act. The study concludes that with the right “carrot and stick” many industry participants will now make quantum leap improvements in their inventory and operating efficiencies. And, as industry leaders move well ahead of the pack with implementing these changes, other participants must rapidly catch up, or be swept away.


Print this page

Related


Have your say:

Your email address will not be published. Required fields are marked *

*