To view a PDF of this year’s Top Program Groups list, click here.

Data Driven

Each year, Counterman magazine reviews the current state of the program groups and the stresses and strains affecting the automotive aftermarket. For this story, we go straight to the sources: the heads of program groups that are the lifeblood of aftermarket distribution.

By Mark Phillips

Data is on the brain in 2011.

For the program groups, there’s an intense effort focused on data warehousing. It’s all about finding out exactly which vehicles are being worked on in bays to maximize and streamline inventories.

Data warehousing helps more than just the program groups. There’s a benefit to parts manufacturers as well: It helps them know which parts they may be overproducing or underproducing. And data warehousing can help assist in coping with one of the most pervasive and
unrelenting problems facing the aftermarket: parts proliferation.

“Parts proliferation is on-going and continual challenge for us. Back in the old days, you had a certain number of parts and they fit all kinds of models,” said Mike Lambert, president of the Network. “Now, it’s much more difficult to have the right parts out in the field, that’s why you have warehouses. Even the retailers struggle with having all the right parts and that’s why they have to align with more traditional guys who have some of those bigger inventories.”

“Data warehousing is a tool many of us are using. It helps predict the parts we’re going to carry, the parts that are going to break, it will help us reduce our returns to the manufacturers,” Lambert said. “It then, in turn, will help the manufacturers produce because we’re feeding them that information. It will help them model what they need to produce so they’re not overproducing. It’s going to save us money because it’s a better prediction tool, because we’re looking not just at our own little world,  but we’re looking at a much larger world because we’re tapping into my members around the country.”

Dan Freeman, president of Automotive Parts Associates Inc., said his group’s data warehouse project has been in development for the past year and a half. Rather than be comprised of data regarding vehicles owned in a particular area, Freeman explained, the data warehouse contains information about vehicles that technicians are working on in real-time. “It gives information about the actual parts being hung on vehicles, and is a more accurate portrayal of what’s happening in the bays and what the parts stores need to have for inventory,” he said.

“Federated has a number of initiatives in this area and there is a lot of member involvement,” said Rusty Bishop, CEO of Federated Auto Parts. “We are making improvements in ‘back room’ costs through integrated information with suppliers, lower EDI costs, three-way matching and other such cost savings, and we are also working to improve scanning systems and processes.”


Data warehousing is a living, breathing entity, Freeman said. “We think that really is going to be a huge future for the groups who are involved in it,” he said. “The reason we developed the program is our members never felt like they had enough return privileges on obsolete parts or parts that aren’t selling.”

APA’s members have been able to tailor their inventories to what’s really being sold at the repair shop level. It’s helping to reduce unnecessary inventory and gives customers what they need without having to look elsewhere. “You have a lot of people buying inventory from manufacturers and six months later, they’re returning a big portion of it because they really don’t know what’s selling,” Freeman said. “With our program, we really know what is selling at the installer level.”

APA also is able to share their data with key vendors they’re able to tailor their inventory to what our members are really selling, Freeman said. “That’s really the type of information you want and we’re able to capture that,” he said. “It’s new and we have more members who want to get on board. It’s been a great program and everyone is really excited about it.”

Freeman said APA went live with its data warehouse shortly after AAPEX in 2010. “We have about 30 percent of our members up and on it right now,” he said. “It’s quickly picking up pretty good traction.”

Bill Maggs, president of National Pronto Association, said his group initially used its database internally to track product line movement, inventories and sales. “We also use it for managing our national account business and being able to report back to national accounts what their folks have purchased and giving them reports they’re able to mine and use to help them manage their business,” Maggs said.

“Everybody says their market is unique. I don’t know that everybody’s market is unique,” Maggs said. “We’re all competing and we all have lots of competitors. O’Reilly is in a lot of markets, AutoZone is there; Advance is there. A guy from New York says he’s in a unique market, the guy from Cleveland says he’s in a unique market, and the guy from Houston says the same thing, they’re unique in the way they operate. They’re all having to compete. Maybe the way they go to the marketplace is a little different and that’s what makes them a little unique.”

One of the strongest values of belonging to a group is the ability to learn from fellow members and share information, according to Maggs. “To be able to able to see that in the data warehouse and have a dashboard, they’ll go to it every day because it’ll have information they want to see. The data warehouse is going to allow us to compare like styles of business with like styles of business. Those who are traditional who do both two-step and three-step, those who are only two-step and those who maybe have some line specialization will be able to do some snapshot of those things.”

Pronto also is testing what data the vendors want to see and what the group can do to help manufacturers become more efficient with their inventories, Maggs said. “Category management is probably a word that wasn’t even used 10 years ago and now it’s everywhere,” he said. “We’re still developing that piece of it.”

Though Pronto’s data warehouse pulls data from inventory and sales data of members, there’s room for additional data, Maggs said. That includes purchase order and invoice data from the technician level.

According to Bishop, Federated is taking a holistic view of parts. “We have had some major efforts under way to increase speed and efficiency, and we are using the Internet to store and communicate data across the membership, including inventory and availability,” he said. “There is a lot of work being done on forecasting sales of new items and identifying the end of a part’s life, along with using data to analyze future needs and inventory requirements. In terms of data utilization and management, our industry is still in the early stages of what can be accomplished, and at Federated, we are excited about the opportunities that exist.”

It can be easy to get overwhelmed by the amount of data. “There are just some things you need to have and it’s easy to tell. And then, there are other things you can make really complicated and you spend a lot of time on, but you wouldn’t get the return on investment,” Maggs said. “We’re allowing our members and vendors to help us determine what is it that we want. We’ve only got a limited amount of time to analyze information; how can we automate the analytics so we just give you what you need right now instead of making you go hunt and peck?”

With some data warehouse tools, there’s an ability to look beyond one’s own program group. “We can see how parts are moving among other program groups, blindly,” Lambert said. “That’s going to help us all manage our inventories and hopefully save us some money so we can worry about the margin compression.”

To view a PDF of this year’s Top Program Groups list, click here.