BETHESDA, MD — This week, we hear from Scott Luckett, vice president of technology standards and solutions for AAIA. Luckett is also chairman of the Aftermarket eForum Planning Committee. The 2006 Aftermarket eForum takes place in Chicago next month – July 17-19 at the Hyatt Regency O’Hare. Join us as Luckett gives us an update on the aftermarket technology landscape.
Much has been done by the industry to improve efficiencies through best practices in e-commerce and technology. Where does the industry stand at this point?
I think the industry gets a passing grade but certainly there is still plenty of room for improvement. As you would expect, there have been early adopters and companies that have quickly embraced new technology and are using it to their advantage. Most companies, however, have not made standards-based e-business a corporate priority and the boardrooms have not yet recognized that they are still pouring good money after bad with their legacy systems and processes.
Going forward, what do you expect to be the most important technology issue for the aftermarket over the next five to 10 years, and why?
The most important priority is synchronization of product data between trading partners. Suppliers and distributors are losing billions of dollars each year in efficiencies due to the cost of errors attributable to incomplete or mis-matched product attribute information. One of the largest automotive chains blames “bad data” for 50 percent of the new part returns they experience. That’s huge. Data synchronization is a long-term priority because it forms the foundation for all of the collaborations that folks like to talk about.
Better forecasting, channel visibility, reverse logistics and data warehousing all depend on pure, clean, synchronized product data. These collaborative processes simply will not work if the trading partners can’t agree on how many widgets come in a box.
How much of the industry has adopted open standards and what will it take to get the rest of the industry on board?
Without hard data my gut says the 80/20 rule applies – but it depends on the standard you’re talking about. In some cases, those suppliers who account for 80 percent of the sales volume in a typical distributor have adopted some form of the standards for their data formats and communications. But the majority of supplier companies are medium and small sized and don’t have sophisticated IT shops to adopt technology standards. They continue to represent most of the expense borne by their distributors – 20 percent of the sales volume accounts for 80 percent of the expense. To get the SME’s on board requires that technology solution vendors incorporate the standards in their products and make them affordable and accessible to companies of all sizes. This trend has begun to take place, but needs to penetrate deeper into the market before costs can be fully driven out of the chain.
How many in the industry are truly driving cost out of their businesses by changing their IT strategies and internal processes? Are you able to provide us with any examples?
For decades many in the aftermarket thought e-commerce was limited to exchanging purchase orders electronically. But channel partners are realizing the significant savings and process improvements that come from exchanging advance ship notices, electronic remittance and inventory velocity data. This growth in the number and variety of electronic documents exchanged is contributing to rising EDI communications costs. So, we’re excited to see the tremendous growth in the adoption of communication solutions that use the Internet to lower costs and nearly eliminate EDI communication costs. Several automotive chains, from traditional retail, tool distributors and performance warehouses, are working to get their vendors on board with e-commerce solutions that are effective and affordable. One vendor offering a hosted solution for e-commerce reports a 400 percent increase in live sites so far this year. This kind of growth in suppliers and distributors from all aftermarket sectors “getting on the grid” bodes very well for the industry.
In comparison to other industries, how does the aftermarket fare when it comes to adopting new technologies and keeping up-to-date?
It’s a challenge for aftermarket companies to identify and set aside the resources needed to adopt new technology. Margins are squeezed, costs are rising, sales are stagnant – where are you going to find the courage and funds to support a major IT initiative? But the winning companies recognize that investments in technology are among the few ways to gain a competitive advantage and differentiate themselves from the competition. In a mature market such as ours, the company that is easiest and most efficient to do business with will win. Or as Affinia’s Jerry McCabe said at the eForum, “the quick will eat the slow.”
In your opinion, where is the best place for an aftermarket company to start, if they want to bring their business up to speed?
Visit your local trade association website. Each of the major trade associations is active in developing standards and best practices. We work together and share content through the Aftermarket Council on Electronic Commerce (ACEC). Someone can learn a lot quickly by visiting the technology pages at www.aftermarket.org (AAIA); www.SEMA.org ; and www.MISCouncil.org for MEMA. Most of the tools needed are open standards and free to download. In addition, we’ve got a segment at this year’s Aftermarket eForum called “e-Commerce 101 – How to Get Started With Standards-based Technology.” That would be a great place to start.
One of the best forums for discussing e-commerce issues is the Aftermarket eForum that AAIA started six years ago. How have the issues changed and/or stayed the same during this time period?
This is one of my favorite topics. For two days aftermarket decisions makers can immerse themselves in strategies to improve their businesses with technology. One word describes what has remained constant: collaboration. Most of the challenges that the aftermarket faces require cooperation between buyers and sellers. Collaboration requires that partners agree on standards and practices that reduce their shared costs. We can’t just push costs around … we have to eliminate them.
A new topic that’s coming into its own is e-marketing, e-tailing and protecting intellectual property on the web. No one disputes that the Internet is a key component of any new technology strategy. But there’s a lot to learn and a lot at risk when you “put it out there” on the web. We’re addressing these topics from several directions at the eForum this year.
There are a lot of interesting topics up for discussion at this year’s eForum. What are you most excited about?
I’m most excited about the quality and variety of presentations and speakers we have on the program. We have experts in e-tailing, supply chain management, intellectual property rights, customer relationship management, collaborative inventory processes and business intelligence … to name a few. There’s a lot to be excited about.
Is there anything new and different this year that attendees can look forward to?
We took a fresh look at the format, schedule and vendor component to make sure the eForum provides the greatest value to everyone in the shortest possible timeframe. The conference opens on Monday, July 17 with an afternoon of new educational tracks on three topics that can be explored in detail in a classroom setting. The 2nd day, on Tuesday, July 18, is devoted to general sessions with a generous amount of time for networking and visiting with the vendor exhibitors. And the conference concludes on the morning of Wednesday, July 19, with 90-minute breakout sessions on often-requested topics. We listened to the past attendee feedback and have responded with a strong program and a great value.
Is it too late to register for eForum? If not, where can readers go for more information?
It’s a big hotel and we still have space. Anyone who thinks technology may be a part of their business future should try to spend two days in Chicago. The full agenda and registration information is available at www.aftermarketeforum.com. The event takes place July 17-19 in Chicago.
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