MISSION VIEJO, CA — OK, reader warning time for this week’s column! We are going to use the “W” word. No, not the “W” who currently resides in the White House and who will be seeking a renewal of his four-year term in November. We are going to use the other “W” word — Wal-Mart — as an example of the ultimate success story when it comes to sharing data. Both of the “W” words have at least one thing in common — controversy — and we’ll keep our political leanings to ourselves. But the retailing giant “W” is certainly worthy of mention when it comes to successful data sharing.
We touched on the potential benefits of data mining last week. Deep veins of valuable customer information and insight lie hidden and waiting to be discovered, buried within the vast archives of sales data accumulated by most companies today. The relational database structure and efficient analytical tools of state-of-the-art technology is required to fully tap this information resource.
But what about the value of sharing your own company’s data with stakeholders in your business? In a competitive, multi-tiered industry like the automotive aftermarket, sharing timely, in-depth sales data up and down the various selling channels happens infrequently, if at all. Whether the barriers are lack of technology and infrastructure, or just the obvious emotional barrier caused by fear and uncertainty regarding how the information will be used, a real “information partnership” rarely matures. But the tide is beginning to shift as computing power and excellent new software tools make the aggregation and analysis of this data possible. Cost effective data extraction and transmission capabilities have the ability to facilitate data sourcing from a broad array of computing platforms at any level of the supply chain.
Our respondents to last week’s “DST Asks” question were a representative sample of the diverse opinion about this topic, equally divided between believing in the tremendous value of sharing sales data and uncertain of the potential benefits.
If we think about what makes a national enterprise like (here it comes, the “W” word) Wal-Mart successful, most observers (especially suppliers!) see their tremendous procurement leverage owing to their ability to move all that product volume. Wal-Mart is a real sales juggernaut across virtually all merchandising categories, and a voracious negotiator when it comes to stocking all those gigantic stores with products at the absolutely lowest costs attainable.
But what enables Wal-Mart to sell so effectively and efficiently in the first place? Closer inspection reveals an absolute command of product movement through a very well developed supply and logistics process, all driven by perhaps the best information technology infrastructure in business today. The connection between real-time sales flows at the store level with restocking requirements through its distribution system, coupled with electronic ordering processes and well developed business rules to suppliers, creates a well-oiled selling machine with few, if any, peers.
Easy for them, you may say. They have a captive, closed-loop system with their own distribution and control of all that data. A manufacturer in the automotive parts industry may say, “I sell brake parts in three different quality tiers, in 12 different packaging configurations, to five different market segments, both directly and through independent distributors, not to mention my sales agent that covers Asia and the South Pacific. Some of my distributors sell directly to independent installers, and others have retail parts stores that sell to many customer types. Bottom line: I know what leaves the factory, and that’s about all that I know. How my brakes actually get placed on cars and trucks is something of a mystery, even with all these computers, software products and Internet solutions surrounding me.”
Oversimplification? Perhaps, but our more progressive Tier 1 customers are not sitting still, hoping for insight on what’s happening “down the channel” with end-users of their product lines. Competition is simply too intense, and timely, accurate sales information at all levels in the supply chain is simply too valuable to guess at, or worse, ignore.
One major customer discovered through a simple survey process that its 200-plus distributors had more than 100 different “flavors” of business computing platforms, each with a unique way of storing and managing customer information and sales data. This problem may sound daunting, but it’s common to our industry and most others. In reality, there are a variety of good software tools that, when put to task in a collaborative venture, will yield a reliable stream of detailed sales data that can be extracted daily and sent “upstream” to other supply chain participants at very low cost using secure Internet communications.
Understanding that all players in the various segments are computerized gives us a viable starting point. In this case, the first line of actual distribution to ultimate end-users of these automotive and powertrain product lines are all independent parts distributors, still the bread and butter of the automotive aftermarket today. Our OEM customer worked through this problem by creating good, collaborative processes and business rules with its independent distributors. Trust was cultivated by carefully soliciting distributor input into the project plan, communicating goals and objectives, and sharing the end result — actionable sales information and reports shared with distributors so that all parties benefit equally. They are literally making part of their data warehouse “public” so that supply chain participants can look at relevant information for their business, market areas and product lines. It’s an excellent example of what’s possible through partnering, planning and dedicated implementation.
There is another major benefit from an investment in sales reporting technology. Once developed and in place, the infrastructure can be readily adapted to serve as a backbone for fully automated e-business between trading partners. This e-commerce technology links buyers and sellers at any point in the supply chain, or it can allow multiple sellers to transparently combine and “share” inventories for online presentation to buyers. Software automatically matches supply and demand, and accounts for and enforces agreed trading rules between participants. At DST, we call this capability a Virtual Inventory Network, and plan to devote a future “DST Asks” column to the subject.
We are passionate in our belief that our industry needs the benefits that supply chain collaboration will bring, including more efficient production planning, more intelligent stocking, more effective marketing, happier customers, and improved margins. We will supply interested readers with a free whitepaper that provides both a case study of one of our major clients, as well as “7 Steps to Successful Data Sharing.” Just email us at [email protected] . Enter the term “7 Steps” in the subject line and include your name, company name, address, and phone number so that we can shoot a copy off to you and include you in our mailing list for future information on the topic.
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“DST Asks” is written and sponsored by DST Inc. The opinions expressed in “DST Asks” articles appearing on aftermarketNews.com do not necessarily reflect the opinions of AMN or Babcox Publications.