Work With Me!

Smack anybody who suggests to you that the automotive aftermarket is a sleepy, mature industry.

Take note of last month’s Global Automotive Aftermarket Symposium. In a day and a half, attendees heard a couple of dozen speakers talk about what they’re doing differently today than yesterday, and what they’re going to have to differently tomorrow.

And it wasn’t this namby-pamby, motherhood issue stuff about “taking things to the next level” (whatever that means). There were real, fact-laden presentations that ran the gamut from data mining to how to dig yourself out of a hole.

Of all the words, though, my favourite statement came during a panel discussion on the future of distribution. There’s coverage on many of the key points elsewhere in this issue, but of note was a comment by Steve Odland, chairman and president of AutoZone. As you well know from either your own experience or reading this space, AutoZone has embarked on a campaign to have all payables contingent on having sold the product first. It requires manufacturers to retain ownership of the inventory in stores–and the responsibility to manage that inventory–until the product is actually sold to the customer. They call it “Pay on Scan.” I called it ridiculous in my comment in April. Many others have called it unworkable. Remarkably, Odland called it in the best interest of suppliers.

“The whole objective of ‘Pay on Scan’ is to get people thinking about the customer,” he said. “If the manufacturers controlled the inventory, you could plan more smoothly, have your lines run more efficiently.” They would, he suggested, have more profit at the end of the day. It would be a good thing. He wants, it seems, manufacturers to “work with AutoZone.”

It was a statement met with audible groans and more than a little nervous laughter. And it got me thinking. What other ways could you get your suppliers and customers to “work with you” in a way that would be consistent with the “Pay on Scan” approach?

When you get a call for a part, call the local rep to come and deliver it. That way you could insure that the needed support information was provided. The rep could then bring the invoice to the customers as well as the payment back to you. You wouldn’t have to pay for it till you felt like it though. Think of the benefit to the customer! Think of what you’d save in delivery costs!

Require a record of whose cars the parts you sell are installed on. That way, you can monitor who the service provider’s customers are (that’s what you tell them) and then if they go into arrears on payment, you can repo the parts from the consumer.

Promise a discount on parts to your trade customers, but only if they pay them up front. Way up front. This will require them to pay today for the parts they’ll need next month. This will solve your receivables problem, and you won’t have to send them a bill when they get the parts.

Combine your customers’ warranty payments and core credits under a single policy. This will make bookkeeping a cinch. For you that is. When they send you a core, tell them it goes against the warranty payment you already credited. When they ask for warranty, tell them you already put it against the core credit. I figure you’ll get a minimum of three months’ free ride out of this, two years if the shop owner doesn’t know how to do his own books.

To make any of this work, you’ll need to be able to tell any unbelievers that you have their best interests at heart, without choking on the words. For most of you, this is going to take a lot of practice, so start now.

Or you could just take the honest approach and deliver solid value on reasonable terms, and take the risk for your own business.

It seems to be a bit out of fashion in some circles, but I suppose it might still work in this sleepy little industry.

Feedback: aross@jobbernews.com

Next Month

The July issue will feature an in-depth profile of our 2003 Jobber of the Year, plus we’ll look at the clean air: Cabin Air Filters, Emissions Components; Air Conditioning.