Thomas Aliotti, Vice President and General Manager of Activant Solutions Automotive Group

Posted: Feb. 6, 2006, 9 a.m., EST

SANTA CLARA, CA —

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aftermarketNews recently sat down with Aliotti for a discussion about the challenges and opportunities related to aftermarket distribution technologies.

What are the key technology challenges facing today’s aftermarket distributor and jobber?

Every distributor and jobber is challenged on a daily basis to deliver additional value to the customer, and in doing so to differentiate themselves from dealership-based parts operations and lower-cost or better-capitalized competitors. Our company has demonstrated that technology can play a huge role in helping aftermarket businesses enhance their competitive advantage through smarter inventory decisions, increased accuracy and faster response to customer needs. In fact, we believe technology can be leveraged for the benefit of virtually every business process, from the daily analysis of market and product trends, to warehouse operations, to Web-based ordering and customer services, to parts lookups. The ultimate challenge, therefore, isn’t identifying what technology can do for the distributor or jobber, but determining the best way to apply their capital to the unique demands of their businesses. Aftermarket distributors rely on us to help them optimize this technology investment, and we’ve responded with a new generation of powerful, flexible solutions that come with a pedigree of success in real-world installations.

How can technology play a role in reducing returns, picking or delivery errors and other problems?

We, like many of our customers, see the counter position as a huge area of opportunity when it comes to minimizing returns and strengthening customer relationships. It’s simply not enough to arm the counterperson with product data – they also need detailed photos and diagrams, technical service bulletins, installation instructions, warranty information, instant VIN lookups and more to be certain they’re providing exactly what the customer needs. Fortunately, our latest generation of electronic catalog technology empowers the counterperson with almost instantaneously access to this additional information. The industry has been talking about functionally rich “graphical eCatalogs” for several years, and this important technology is now here.”

Picking errors have also been a major challenge for distributors, but we’ve seen several customers dramatically reduce errors and labor costs through their investment in modern “paperless warehouse” technologies. This technology eliminates opportunities for human error while reducing the costly manual labor and paperwork associated with warehouse operations. A paperless system automatically enters the order, assigns and maps picking activity and tracks results. In the case of a conventional, paper-based system, picking results have to be verified at the staging area, which slows delivery. Of course, a mistake caught in the staging area or on the truck leads to further delays. Paperless technologies virtually eliminate this issue by instantly alerting the picker to an error through his or her wireless scanning equipment.

Sounds expensive. Is this sort of technology really affordable in such a price-competitive industry?

Actually, it’s far more expensive not to invest in modern warehouse solutions given the margin pressure and competitive demands facing distributors.

Can you put a price on a lost customer? What’s the cost of falling behind the competition in terms of service quality? I think most WDs would agree that those costs are far higher than the price of a technology that can pay for itself in a matter of months.

A lot has been written about the immediacy of parts data being provided to the jobber counter. What is Activant doing to address this issue?

First, I think we can all agree that speed alone isn’t the concern – simply pushing raw or flawed data from the manufacturer to the parts counter doesn’t solve anyone’s problems. The aftermarket’s value proposition – having the right part at the right place and time – is easily undermined by inaccurate data that leads to an unhappy customer. Validating these millions of data files, therefore, is a vital step in the process of publishing an electronic catalog, and it takes time.

On the positive side, we’ve continued to compress the cycle time for “scrubbing” data, which has led to significantly faster delivery of updated files to the thousands of counters served by an Activant eCatalog. One of our recent monthly catalog updates, for example, included more than twice the number of updated manufacturer files than the same month in 2003. We’ve also revolutionized the way in which we deliver data to the counter, with bi-weekly Web-based updates. This service alone has helped distributors and jobbers access new data information weeks earlier than when they rely solely on our DVD updates. These enhancements have helped ensure that our eCatalog products are not only the most accurate, but also the most timely in the industry. And we’re not stopping here – we continue to aggressively invest in process improvements and manufacturer services that will further compress the time required deliver accurate, comprehensive parts data to the counter.

Can distributors and jobbers use business management technologies to strengthen their customer relationships, beyond enhancing order accuracy?

Absolutely. Integrated customer relationship management technologies can help aftermarket businesses of all sizes capture new accounts and strengthen existing relationships. One of our latest distributor business systems includes an interactive CRM module that enables executives and counter professionals to focus on the unique needs of each customer to ensure a more personalized and profitable relationship. Imagine calling a local jobber and having them instantly know not only who you are but also your brand, product, delivery and invoicing preferences. That’s a huge differentiator in the mind of that shop owner or technician. We can also use CRM to track service dealer purchases in multiple ways and trigger outbound calls to anticipate their needs in many cases. CRM, in our view, is a tremendous new opportunity for distributors and jobbers to demonstrate their unique value to the service dealer segment.

Would you say that aftermarket distributors and jobbers are as aggressive in their use of business technologies as their counterparts in other industries? Why or why not?

There’s no other industry like the aftermarket, so it’s not fair to compare the way supply chain businesses apply their capital resources. I will say that aftermarket distributors are appropriately judicious in their adoption of technology. By that I mean they understand the need to build a business case for any significant capital expense. In doing so they aren’t likely to take risks on unproven technologies or little-known solutions providers. I spoke recently with a very successful distributor in the Midwest who told me that while he never wants to be the first to try a new solution, he wants to be right behind the first guy who successfully uses a technology to enhance his competitive position. I’d say that’s a smart approach.

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