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R.L. Polk & Co.’s Ask The Industry Explores the Philosophy of Collaboration

For this edition of Ask The Industry, we venture into the philosophy of collaboration. It’s a single word solution to an extremely complex problem for everybody in the automotive aftermarket, from manufacturer CEO to warehouse manager. Although that word has been spoken from prominent voices throughout the years, the reality is that there are still major hurdles that need to be dealt with before the industry can begin to chart a course to success via collaboration. We spoke with some industry executives to give us insight on how we may be able to arrive at that point.

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For this edition of Ask The Industry, we venture into the philosophy of collaboration. It’s a single word solution to an extremely complex problem for everybody in the automotive aftermarket, from manufacturer CEO to warehouse manager.

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Although that word has been spoken from prominent voices throughout the years, the reality is that there are still major hurdles that need to be dealt with before the industry can begin to chart a course to success via collaboration. We spoke with some industry executives to give us insight on how we may be able to arrive at that point. *****************************************************************************

There are a series of challenges facing the industry today (cataloging, pricing, inventory management, repair information, etc.). Some people suggest industry-wide collaboration would be key to alleviate them. Would you agree with this statement? If so, in what specific ways could collaboration work to help resolve these (and other) issues? If not, what are the alternative solutions?

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Bill Hanvey – Vice President-Marketing, Motormite/Dorman
Each channel of the automotive aftermarket is continually facing new challenges every day. Distributors are overwhelmed by SKU proliferation, manufacturers are constantly trying to manage increasingly complex product data, and independent service providers just want the appropriate training and information so they can do a professional repair. Collaboration is important to solving these and other “opportunities” faced by the automotive aftermarket. What many people don’t know (or have taken advantage of) is that there are many industry associations, including the AAIA, that foster and promote such collaboration.

The Automotive Aftermarket Industry Association (AAIA) offers all channels the opportunity to collaborate not only on the aforementioned issues, but also on countless others as well. AAIA committees such as Technology Standards and Solutions, Education, Store Operations, Government Affairs and Category Management address the issues facing the aftermarket today and give all of us a voice in our ultimate direction.

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The venue for collaboration already exists and is available to the industry. We must ask ourselves whether we are serious about collaboration, or would we rather just talk about it. AAIA participation involves time away from our daily routine but the payback in making our industry dynamic and healthy is well worth it. Ultimately, the best solution is involvement.

Tim Lee – Chief Executive Officer, Certified Automotive
Industry-wide collaboration is the key to cultivating future long-term relationships both with our suppliers and our customers. So, do I agree that collaboration can be an important solution? You bet.

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The most obvious endeavor is to work with all segments of the distribution network to control new merchandise returns. At Aftermarket Auto Parts Alliance, we have spent huge sums of money developing a data warehouse – largely underwritten by our manufacturers. The data is compiled in a single electronic location by mining sales data and on-hand information from thousands of jobbers and virtually all of our warehouse members. While it is certainly interesting to know what sells where and in what quantities, the real value lies in using the data to better manage both the major asset of inventory but also the contingent liability of WDs and manufacturers to repatriate slow or non-moving SKUs from the jobber location. If a manufacturer could look into the data warehouse and find out just how many of part number “X” are in the field and in the WD’s locations, he could make a more educated decision regarding running the parts for manufacture. Perhaps the best strategy for managing slow moving inventory is to anticipate eventual returns of parts which have outlived their shelf lives. Why wait until the manufacturer has to take thousands of a part number back on annual stock adjustment, when the manufacturer could have begun managing this particular contingent liability months or even years in advance?

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Industry collaboration is probably best evidenced by AAIA’s investment of time and money into the PIES and ACES programs. Both are intended to manage aftermarket data for the benefit of all. AAIA, like most of us, realizes that we need a strong and responsible aftermarket to project and present both to the motoring public, as well as the elected officials who are the sentries of the public interest.

Certainly in the area of repair information, industry-wide collaboration is needed. When the car companies have been dragged to task for providing OE seat belts, eliminating gas tank collision risk, and hosts of other safety related improvements, which they would not provide without legislation, why would the motoring public and the aftermarket at large, decide that now is the time to accept their words of good intention? While collaboration with the car companies is essential, they display a dark history when asked to do things voluntarily. Would we be driving fuel-efficient cars today if we had to rely on the goodwill and ecology-mindedness of the automakers? I suspect not.

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Therefore, we need good old fashioned legislative assurance that the car companies’ intentions are more than simple lip service to the industry. If the track records of the car companies were not in question, we could easily rely on the equally old-fashioned handshake. A prudent level of legislative assurance is absolutely essential for our independent technicians to be able to provide the industry with simple “choice.”

In the end, there are no alternative solutions to cooperation and collaboration. A strong service provider supports a strong jobber, who supports a strong warehouse distributor, who supports a strong manufacturer. It isn’t rocket science. It’s just the common sense needed to survive in a highly competitive, carnivorous and changing automotive aftermarket.

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Scott Luckett – Vice President-Technology Standards and Solutions, Automotive Aftermarket Industry Association
Collaboration across the industry is absolutely essential and there is no better example than in the area of information technology. Over the past 25 years, we have seen the kind of industry that evolves when business technology is developed in a vacuum without regard to how it will “play” with business partners. Proprietary data formats and private methods of communications were favored because they required less time and effort to develop than building industry standards. But long cycle times for data distribution and high costs of communication were the result.

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But, thanks to a small number of visionaries in the aftermarket a new collaborative model has emerged. Suppliers, retailers and technology providers have rallied around aftermarket industry standards and recognized that requiring data in multiple, proprietary, formats adds no value. And technology solutions that don’t talk to each through standard protocols other are not real solutions.

By setting aside private agendas, the aftermarket has reach agreement on standards such as ACES, PIES and IPO. Now, AAIA, together with MEMA and SEMA have agreed to collaborate on a study of the industry requirements for a more efficient model for the distribution and synchronization of product attribute and catalog application data based upon the standards. The fact that today, it takes more time for full accurate information about a product to reach the point-of-sale than it does to engineer and manufacturer the product itself must change. Collaboration on a massive scale is required and I am encouraged by the early efforts in this regard. The next 25 years should be characterized by near-real time distribution of free-flowing data and greater interoperability of systems – all at lower cost to the supply chain.

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Summary by Michael Freeze managing editor, aftermarketNews.com:
Collaboration, as described in the Merriam-Webster Dictionary, is the ability to work jointly with others or together especially in an intellectual endeavor; or to cooperate with an agency or instrumentality with which one is not immediately connected. In its Latin derivate it means to labor together.

There is a reason we posed the question in this particular fashion, specifically asking if one agrees or disagrees with collaboration. Anybody should wholeheartedly agree that this is a good idea, but for some reason, it’s a troubling concern and has been for quite a bit of time.

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But as Bill Hanvey pointed out, the talk is there, but the laboring together is where the focus seems to be lost. From the modest example of having 10 SKUs for a single serpentine belt to trying to find a wiring diagram for a Porsche on a OEM Website, the distributor and technician and everyone in-between can all benefit, for the sake of their profession, to be on the same page.

All who were interviewed seemed to agree that collaboration on the association level is making the most strides, most notably the efforts of the Automotive Aftermarket Industry Association (AAIA). Another underlining theme in this discussion is technology. The use of this has brought together cataloging programs to work to achieve continuous improvement in area distribution, just for starters.

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In closing, the Merriam Webster’s definition of collaboration is only half the battle when it comes to the aftermarket. With the Aftermarket eForum, that’s going to be in full swing tomorrow, hopefully the industry can conquer the other half.

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