Auto Service World
Feature   May 1, 2004   by Andrew Ross

Bits, Bytes & Business

How the Right Technology Can Unleash Hidden Opportunities

The automotive aftermarket has been under increasing pressure to be more agile, more efficient and more of everything, for less of course. So why do so many jobbers still rely on decades-old computer technology?

The ratcheting-up of competitive issues has placed a premium on accuracy of information, and the ability to access that information with clarity. It is an environment where the old green screen–the most recognizable face of the parts lookup systems employed by jobbers–has been having trouble keeping up for some time. But those systems persist.

Activant, formerly CCI/Triad, recently reported that half of the U.S. customers of its Jobber Management System (JMS)–a Microsoft Windows-based system currently being readied for the Canadian market–have upgraded from the Series 12 system, technology that harks back to the early days of the company. While there have been upgrades and additions over the years, it is generally recognized that this system has been around for longer than 25 years in Canada, and new systems haven’t been sold in Canada for a decade. Furthermore, it is based on the company’s Series 10 system, which was the platform created when the company was founded; its database structure and its operating system architecture are basically from 1970.

It doesn’t come as a surprise to Jerry Fugina, president, Rinax Systems Ltd.

“A lot of them are antiquated still,” says Fugina. “A lot of jobbers could use some new tools to help with their business.” And even among those who don’t have systems as old as the Series 12, there are undiscovered opportunities.

“In general there are several things. Some of the most important ones are that older systems don’t manage pricing well. That goes straight to gross margin.” He says that this is driven by competitive issues that are forcing jobbers to be more sophisticated about the way that they price products, and also in the way that manufacturers have made pricing available.

“A number of years ago they would provide consistent pricing across the board. Now individual part numbers have different pricing rules applied to them. What we have had to do as an industry is enable the jobber to split out sub-product group pricing.

“Older systems never had to deal with that,” he says, adding that being able to apply more sophisticated pricing tools can, in and of itself, pay for computer upgrades.

And yet so many individuals fail to do so. Jim Franco, president of Autologue Computing, likens it to pushing a rock up a hill. He says that the slowness of the market to adopt Internet-based connections with customers is a good example.

“I think the Internet is the most advanced thing since the fax machine. In the beginning, the Internet was seen as the mom and pop store’s opportunity to sell to the world. The real value is the connection with the customers in your area,” says Franco, who was a jobber before he was in the computer business.

He says that too many jobbers look at getting connected to too few of their customers. “Don’t just give it to your three big guys. B2B can empower your existing business–fleet customers, commercial accounts.

“It is like a counterperson who can take 15 orders at the same time and the customer never has a busy signal.”

The aftermarket as a traditional slow adopter of technology means that often, even those jobbers that do consider connecting to their customers are often not aware of what is required, and how simple it can really be.

Autologue’s E-Part Connection product allows jobbers with any one of a variety of computer systems to offer an Internet on-line ordering facility to their customers without hardware or software upgrades, though a broadband connection is required.

Franco says that on-line ordering can reduce the cost of sales, which can be of particular importance to smaller customers, as well as improving the accuracy of those orders.

“If you have the guy order the part, he is going to take the onus of responsibility for it. There will be fewer returns because ordering is now more accurate.”

Franco says that it is important for jobbers to recognize that if they don’t put newer tools to use, someone else in the market will. The ability to use the appropriate tools for a jobber’s business, tools that enhance, not replace, the personal nature of their market approach, is no longer an option. It is an imperative.

“You can’t stay where you’re at with technology. If you do, you are going backward,” says Franco.

One of the key difficulties that many in the aftermarket face is that having hung onto their current system for so long, they may not be able to salvage much during an upgrade.

Concerns regarding cost, comfort level, and security of data have caused more than one jobber to have cold sweats during a transition to a new computer system, but it doesn’t have to be an all-or-nothing affair.

Bob Worts, regional director, Carrus Technologies, says that many jobbers are surprised that a transition can be spread out. The first step is likely to replace the existing terminals with PCs if they are looking at a Windows-based system.

“You have to buy some new hardware–dumb terminals won’t work–but you can stay with the same type of system.” Then, piece by piece, hardware and software functionality can be added.

In the meantime, emulation software allows the existing core of the system–the server–to think that it is still working with the old green-screen terminals.

In the interim, before converting to a Windows server, a certain degree of Windows functionality can be added, though these functions aren’t integrated into the ordering system until total system conversion puts all the data and reporting functions into a Windows environment.

“It doesn’t change the reporting,” says Worts, “but you can use Excel and Word and e-mail. What you do is spread your costs out over time, rather than having heavy-duty costs all up front. A lot of the bigger jobbers are taking this route. It is not really a solution; it is a phase-in process.”

Those jobbers who do choose to take this approach generally complete the transition within a year. Then they really start to see the impact.

“Electronic catalogues, use of the Internet to order–it all saves time at the service provider’s place. It reduces or even eliminates returns. They are much more precise when they order out of a catalogue.”

Despite all the focus on the Internet, though, many jobbers will find the greatest impact internally.

“For most jobbers, living and dying can be in a couple of points of gross margin,” says Fugina. “If your competition down the street has a lot better tools at his disposal, you can be in trouble.” He says that many of the great strides that have been made in business systems are not just in capability, but in ease of use.

“Most older systems, from five to 10 years ago, used a flat file database. They were typically proprietary and very difficult to extract information from, or input information to, like pricing.

“This has been replaced by a new technology: relational databases.” Fugina says that beyond the added capabilities of these databases, the fact that there are industry standards means that different suppliers can have their information reside in a common database, and have the information appear consistently.

This opens doors to improved reporting, which is really just a way of saying that you get to know what is going on in your business.

“Crystal Reports is a very popular report writer. The significance to the jobber is that it was like pulling teeth to get a report that he wanted. The new relational databases allow a manager to basically be limited only by his imagination. And he can display it in any format he wants: as a pie chart, a bar graph, whatever.

“It helps them see more clearly what they have to do with their business. If they can see the picture more clearly, they can see how to address problems.”

The ability to display the information with as little or as much detail of sales, margin, part numbers, or inventory, is referred to as “drilling down.”

“It’s like peeling an onion. Take
a product group sales summary. Let’s say that for every product group, the jobber wants to know what his cost of sales and perhaps unit volume are for that product line.

“When he brings the report up on the screen, he can take the mouse and when he has the cursor over a product, the cursor becomes a magnifying glass. Double-click and a new page appears that gives you all of the detail that made up that summary information.

“Then, if you go to an individual part number on that second page, it will take you to the individual invoices that made up that information.”

In this way, a jobber could very easily find out if a “margin problem” was in fact due to a single large order and the consequent discount, or whether it might have been due to a pricing or invoicing error.

“And, it’s environmentally friendly too, because you don’t print as many reports,” says Fugina.

“Traditional business systems are not full business systems,” says Peter Quattro, CAPP Associates. “There are many more demands on the small jobber. What you’re dealing with [today] is that the business system has been totally integrated.”

From reports to accounting, the ability to pull information in and use it efficiently without having to continually re-enter data is key. This is true from an individual jobber’s perspective as well as for the industry.

The idea of an integrated data network, running from manufacturer to service provider and feeding information back up again, has its obvious forecasting benefits, but the idea of transactions being transparent to their warehouse or their manufacturers can give jobbers the willies. They simply don’t want to give up their customer data. They don’t have to, says Quattro.

“The integration should be from a data standpoint, not a point of sale aspect. Let’s forget cost for a moment. If the data is standardized, everyone will call that spark plug the same thing. I refer to that as the synchronization of data. That allows you not to have to rekey data, and when you minimize rekeying, you minimize errors.”

Retailers, he says, have already faced many of the issues only now being tackled by the wholesaler. “The system has to be totally integrated, and complete,” he adds, continuing on to say that this does not mean that it is the end of the journey.

“People outgrow their system every five years or so.” This reality stands in stark contrast to the current state of the automotive aftermarket’s reluctance to change. That old habit has put many behind the eight ball.

“That has hurt people big time,” says Quattro. “And some of the folks who did buy systems just didn’t build in technologies that allow for expansion. If a jobber wants to get a system, make sure it is a system that can grow with him.”

Truth be told, there are probably two basic camps out there: Windows proponents, and those who view mini-type systems as the better option. Quattro, as an IBM Partner, says that the I-Series platform is worth looking at.

“It does make a difference, depending on what you’re doing.” Data entry, he says, is not well-suited for mouse use–most accounting people prefer a keypad-based method–but presentation issues with Windows do allow for different options too, better at clicking down through screens for example.

Though he doesn’t mention it, there are also cultural issues to deal with. Many younger employees may be more comfortable with the Windows look, while older employees may be more at ease with the traditional screen appearance.

“The bottom line is that you still need to have it all integrated–general ledger, accounts receivable, inventory. The traditional jobber system does a wonderful job of counter sales, but the job is not done till all the paperwork is done.

“Dynamically balancing inventory, for example, is one of the things that is going to take cost out of the system. How about automatic cheque routing, managing discounts, invoice approvals?

“Even the smallest jobber needs the whole enchilada,” Quattro adds.

Integration saves time and labour, and considering E.K Williams’ findings that the average jobber is probably short one person on the counter and one in the office, this is even more critical. “He can afford one entire person less than the big player.”

Still, there is that nagging reality that incurring a capital expense the size of a new computer system is not to be taken lightly. Many jobbers, looking at the payback in traditional terms, may believe that retirement will come before the system has been paid for and pull back.

“Everybody wants to protect their nest egg,” says Tony Alderdice, sales manager, Canada, Activant Solutions Inc. “The real scary part is that guys want to protect their nest egg and don’t see that it is slowly eroding away. People want to hear [a system] will last forever.” That is just not on, he says. “If you look at those with a better bottom line, it is the ones looking at new things.”