Are you facing a technology crisis?

The traditional automotive aftermarket has a reputation for being slow to adopt technology, so it should not be surprising that a recent Jobber News survey found that many auto parts wholesalers are unprepared for an increasingly e-business-heavy world, or at least unsure whether they are prepared or not. But that makes it no less troubling.

The survey, conducted in late summer of this year, found that most of you have started down the information highway at least a little way, but also that many are doing so using the computing equivalent of my old 1978 Buick LeSabre: big, reliable, powerful in a straight line, but hardly what one would call agile or up to modern standards.

These days you can do a lot more with a lot less (or a whole lot more with the same amount of capacity), and that applies as much to the technology you run your business with as it does to the cars your inventory had better be focused on serving.

The good news is that you know it. While some 42% say that you’re good to go for the next two years, 46% say that a major upgrade will be or will probably be required. An additional 10% don’t know. Well, if you don’t know, it is safe to say you should start planning.

These results mesh reasonably well with the fact that 56% of you said that you had done a major upgrade of your computer system in the last two years. Yes, 10% have five- to 10-year-old systems, and a few have even older ones; about one-third have two- to five-year-old systems. The fact that so many of you still see the need to consider upgrades shows that at least those individuals understand that the pace of change will not allow them to see technology reinvestment as a once- or even twice-a-decade phenomenon.

Specifically, what the survey looked at was the state of progress in a variety of technology categories. Some, such as having an online presence (a website), have become almost a given, though this is often very modest and should be considered a web page rather than a website. Still, it represents marked progress over only a few years ago, and it does give you something to build on. The survey found that nearly three-quarters of you made this leap to an online presence more than a year ago, while a further 17% now have it in place. We did specify non-transactional so that we could follow up with that question separately.

It is at this point that it is worth noting that, because Jobber News conducts this type of survey via e-mail, we can only survey those companies that are at least technologically advanced enough to both have e-mail and comfortable enough with the e-business world to not guard it jealously (do you even have it on your business card?). This will automatically skew the results at least slightly toward the tech-savvy; the true picture out there may lean a little more towards the Stone Age than our survey reveals.

Even so, there is quite a distribution across the responses, as shown on the key graph. Think about where your business fits in and draw your own conclusions.

Overall, though, the picture is not so good. A full one-third of you are still trying to get a business-to-business (B2B) e-strategy together, and 5% say you’re not even trying. Nearly half of you do not have any e-marketing in place, and fewer than one in five have voice-over-Internet-protocol in place, despite the fact that 55% admit they will have it “eventually.”

Not to dismiss the importance of personal contact and relationships, but in the face of increasingly sophisticated ways that businesses are reaching your customers, and the need to become ever more efficient, you folks need to step it up.

I found those responses in the “Never” category particularly striking. I wonder who in their right mind could ever say “Never” about any technology in this day and age. You may not know when, but most businesspeople will admit that if something is out there being used in other industries, it may eventually make its way to the aftermarket. To me, a refusal to consider change sounds like fear talking.

Jerry Fugina of Rinax Computer Systems says that at least part of the reason for a reluctance to change is that owners and managers are being stretched to the limit.

“Many managers and owners are working the counter for the first time in years, because they simply can’t find help. The best management plan goes awry the first time the phone rings; suddenly that call becomes your highest priority. As a result, managers and front line supervisors aren’t getting the time to work on the business, as they say. Consequently, managing margins, inventory levels and so on are pushed to the back burner: a time bomb.”

Bob Worts of Carrus Technologies says many jobbers are at the edge of a virtual precipice. “The older-style, non-upgradeable systems in the marketplace today are in need of upgrading in both software and hardware in order to meet the challenges of today. This is a looming crisis because as the old systems come close to replacement, there will be a mass rush to find an appropriate system that meets the need.”

Tom Aliotti, Activant Solutions vice-president and general manager automotive business, says that technological progress can be tracked by where businesses fall in the food chain. There is a top tier of leading-edge, often large distribution businesses using e-cat, e-commerce, and a host of analytical tools to help them be more efficient and better at serving the customer. A second tier, single and multi-branch operations, is battling for market share and margin.

“The owners of these businesses can go in one of two directions,” he says. “They can accept the status quo, avoid investing in their future, and try to control the rate of erosion, or they can invest in proven technologies that will help them reverse the decline by operating their businesses more efficiently and in a more customer-focused manner.

“These owners are often also thinking about the long-term marketability of their businesses–will they simply go out of business one day, or will their companies have value for a potential buyer? The decision to invest in technology, when made at the right time, can play a significant role in helping you ultimately sell your business for a much higher price.”

Below these are small operations that refuse to invest in their business.

“They’ve basically decided to bide their time until retirement. The unfortunate side of this equation is that a fairly modest investment in technology today could help position their businesses for sale to new owners.”

In other words, steadfast refusal to accept change sounds like fear to him too.

“The middle and lower tiers are certainly at a point of crisis, but we expect a large share of the middle tier to recognize that technology can help increase their competitiveness and set the stage for long-term growth,” he says.

Sophisticated tools are often seen as the sole preserve of big distributors, but who needs a more efficient operation: a multi-store business that can spread its costs and inventory out over several local markets, or the one- or two-branch operation that needs to squeeze every penny out of its inventory, staff, and delivery operations just to compete?

A tight integration of electronic cataloguing with the business operating system, and support of RF scanning, electronic document management, delivery tracking, and a combination of phone and point-of-sale that opens up a customer’s records as soon as they call, are not usually found on older systems. The impact of such new tools on efficiency can be considerable.

Jim Franco, whose Autologue Computer Systems has been highly focused on delivering Internet-based products, says that tools like document retrieval have enabled smaller companies to offer larger-company services. And services such as Autologue’s eDelivery program, for example, can provide real savings. The company’s eDelivery Tracking System enables customers to view when the invoice was printed, when the driver was dispatche
d, what parts were on the invoice and an approximate time of delivery.

The eDelivery Tracking System, he says, has increased drivers’ productivity and accountability by as much as 20% for one Southern California jobber.

So, how do you know when it’s time?

Peter Quattro of Capp Associates, says that the age of a system is not necessarily the measurement of the point at which a replacement of the system is necessary. “What is important to evaluate is if a path of incremental improvement of both the hardware technology and software solution functionality is available.

“The ideal approach involves a continuous process of updates and upgrades to both the hardware and the software environments that will ensure minimal disruption in the business process, yet maintain the opportunity for wholesalers to continue to move forward.”

Newer systems, he adds, allow wholesalers to exchange information both to customers and customers’ computer systems in the form of e-mail, fax, FTP of files and XML.

Fugina, a proponent of Windows-based computing offered by Rinax, says that jobbers who have not upgraded aren’t standing still as much as they’re losing ground.

“Many jobbers are still using older systems (more than five years old), and even though they are familiar with them and can be good at compensating for their shortcomings, they simply can’t match the results that Windows-based systems designed for the aftermarket can deliver. This is especially true in pricing management, which has become complex because of the proliferation of parts and also due to the fact that there are so many pricing exceptions now.”

“The leading sign that it’s time either for an upgrade or complete replacement is when you can’t utilize important new software that is helping businesses like yours,” says Aliotti. Retail operations are often on the leading edge of customer service–accepting credit cards, scanning bar codes, etc.–but even in the trade things are picking up.

“At the same time, installers are asking for the ability to electronically retrieve their invoices and statements, look up and order parts, and even track their deliveries online. The state of your current technology might preclude you from offering these services.

“Customer relationship management software can have an even more dramatic impact on sales and profitability–but only if you have a computer system that will run it.”

“Depending upon the trading area, the biggest potential gain may be in e-commerce,” says Fugina. “It makes sense that if customers look up their parts and place orders online (many prefer to do business this way), the time required to serve a customer is cut significantly. All that’s left is to pick and ship, or hold the order for pick-up. Some jobbers do 40% of their business online; imagine how much time that frees up and what that does to the bottom line.”

Relational Databases (e.g., SQL), Open Source operating systems (e.g., Linux), and Virtual Private Networking (VPN) enable jobbers to make advancements in their computing speed, productivity, storage, functionality and communications, says Fugina.

“There is a lot at stake for the jobber who does not offer [e-commerce] functionality,” says Worts. “On average a technician may spend 10 to 25 minutes per vehicle hunting down parts at the best price. This takes away from actual working time on a customer’s vehicle and reduces productivity. Time is money, and when using a VIN decoder and online ordering, this time can be saved.”

One additional benefit noted by many is the way the newer technology makes a business more attractive to employees, particularly younger ones. In a time when the industry is having difficulty recruiting new staff, and training those staff, having modern systems and modern interfaces can be an important factor in hiring and retaining younger employees.

Looking ahead, Quattro says that GPS, wireless communication, and RFID are just a few of the technologies that will help automate wholesale distribution processes. He presents the following scenario:

A modern repair shop receives trouble codes from their customer’s vehicle automatically via wireless transmission.

The shop system forwards request for parts and pricing to the wholesale jobber store system.

The jobber store system responds after verifying stock and locating buyout requirements at warehouse distributor.

If the order is accepted, systems will release the order and RFID will ensure accuracy in the warehouse process.

“Every day, we move closer to a fully automated environment,” says Quattro. “Each of these incremental steps in automation are leading to a cost effective supply chain where vendor managed inventory at the source will one day be an important part of the process.”

“We have been working with a number of distributors who have come to the realization that their businesses are at a crossroads,” says Aliotti. “Their sales are flat, margins are getting thinner, yet they have both a passion for this business and a vision of what it will take to get back onto a growth track. In several of these cases, they have decided to invest in the best solutions possible to bring their operations into the 21st century. We expect many of their peers to make the same decision, which is good news for the entire aftermarket.”

“Start now; take time to talk with software developers and make an educated decision,” says Carrus’ Worts. “Look what is available, the developer’s track record, and talk to other users. Then make your decision and move forward. Do not just look at price for today. Look forward to the future.”