I will confess that I was dragged to my first e-Forum just short of kicking and screaming by two associates, who assured me that it would not be a monumental waste of my time.
As a “real business person” I had had enough interaction with “IT types” to know that they lived in a separate reality and spoke a different language. And the concept of attending one of their “laptop love-ins” was more than I thought I could withstand.
But, the aftermarket eForum was entertaining, educational and thought provoking. I got a big picture perspective on how technology was impacting the aftermarket and I was in a much better position to assess my company’s needs related to technology. But I was by no means a convert, and my skepticism of technology remained high.
I had witnessed hardware and software peddlers who told me how “seamless” some implementation was going to be, only to find more seams than at a Calvin Klein fashion show. But I also realized that whatever those issues were, I had to get over them.
So, after nearly 14 hours of Aftermarket eForum education, I figured I was armed with a knowledge and insight into the world of technology and headed back to my office ready to retool Dayco for the technology age.
That “retooling of Dayco’s technology” occurred because of the group of fabulously talented individuals that I have the pleasure of working with every day. Their patience with me and my misconceptions and prejudices were boundless. With their help, I have encapsulated what we learned into eight essential elements of technology adoption in an aftermarket company.
1. Technology strategy cannot be delegated to the IT department
When I started in this business, the IT department was called EDP, for electronic data processing. Since that time they have been DP for data processing, MIS for management information systems, IS for information systems and IT for information technology. I think the evolutionary name changes are symptomatic of the evolving and changing role of the “IT” function in business.
Just like the names that have been used to identify the discipline, the function has undergone significant and rapid change. IT has knitted itself into every aspect and discipline of the business fabric today. Manufacturing cannot function without technology support to reduce cost and improve processes. Logistics must depend on technology to better manage the time, quantity and place demands of inventory. And increasingly, sales and marketing are learning of the role that technology plays in their area.
Technology has become so crucial to every aspect of a company’s business operations and such a consumer of financial resources that top management must understand and deal with it. There was a time when decisions could be abdicated to the IT department, but by my estimation, those days are long gone.
Abdicating such decisions to techies is like putting the biggest car nut on your staff in charge of specing your fleet vehicles. Sure he’s knowledgeable on the subject, but he is making decisions on his understanding of the product, not on his understanding of your business needs. You are more likely to end up with a fleet of really cool cars as opposed to something practical and sensible. The reality is that instituting a specific solution is not a technology decision; it is a business decision.
Hence, every technology decision must be analyzed and considered for its alignment with the overall strategic objectives to make your business better. They must make operational and financial sense, be acceptable to customers and associates alike, and in some way make things better.
2. Data matters
Data is literally the “fuel” for supply chain technology applications. Everyone in the aftermarket must come to realize the importance of full, rich and accurate data as a precursor to starting the supply chain technology journey. It is a point that I don’t believe can be over stated or over emphasized.
Imagine what life would be like if every appliance manufacturer insisted that if you wanted to use their appliance, you had to source electricity that was generated to their spec. GE insists on 110 volts at 60 cycles, while Whirlpool thinks 220 volts at 60 cycles is the better idea, and every other manufacturer does the same, each justifying why theirs is the best way. Imagine the mess.
Well, in a manner of speaking, that is what we have been living with in the automotive aftermarket for many years: A variety of applications (appliances) each of which requires its own unique sort of data (electricity). And if you try to run one appliance with the other’s electricity, it spits blue smoke. Not a good situation.
Fortunately, our industry associations have had the foresight to institute data standards. They are essential in addressing the expanding threat of the OEM to the replacement parts business. The AAIA Catalog Enhanced Standard (ACES) and the Product Information Exchange Standards (PIES) are critical weapons in defending ourselves from that threat since they will allow us all to build appliances and run them on a common form of electricity.
Standardized data helps us sell more. It means that new applications get to point of sale quicker. It means we have the expanded technical information to select the right part the first time. It means we have the graphical data like photos, diagrams and images to help the consumer select which part or accessory is right for his or her taste. All of that results in reduced returns.
Remember point one: Technology strategy cannot be delegated to IT? In much the same way, the process of becoming compliant is not just an IT issue. As the president, there is the temptation to approach the IT guy and bark out the order “we will be PIES compliant by the third quarter.”
3. There is no quick fix
Years ago data was something that was strictly an internal issue. In simpler times, we researched OE microfiche, identified new parts, captured dimensional and technical information about the parts, assigned our own part numbers, put them in a catalog and sent them to market. After that, we kept track of sales histories and forecast how many more to build.
Gradually, our data needs grew more complex, particularly as the vehicles we made parts for got more complex. But also, as technology got more complex and with it the ability to manage and analyze more data became more sophisticated, our data needs got proportionally more complex. What parts fit which vehicle started to depend on what systems or accessories a vehicle might be equipped with. External data sources could tell us how many of which types of vehicles were in operation and merging that data with our sales histories could improve our ability to forecast.
Pretty soon the amounts and types of data we were capturing and maintaining was burgeoning. This entire process evolved, both what data was being captured and who was making decisions about where and how to keep it. There was no master plan…and arguably, no real need for that — at least at that point in time.
Then something happened that changed everything. We started sharing our data with external partners. It started in the 1990s with the creation of the first eCat provider who required application and price information. Then along came others, who, by the way, wanted their data in a slightly different arrangement. Then individual resellers started their own eCats and wanted more than application and price information. We kept returning to that same cobbled collection of data that had evolved over years — with all its different processes and owners — all the time wondering why we were struggling so mightily with addressing the data needs of our customers.
This, I confess, is what happened at Dayco, and speaking with my peers who are aware and willing to be candid, is what has happened at most every other aftermarket company. We didn’t value data, because we didn’t understand its role and value…And we ended up with a decentralized, cobbled collection of data.
It occurred to me that becoming compliant with industry data standards was the best way out of the woods. By adopting the newly created standard we could use it as an arbitrator of sorts to resolve our internal incongruities.
It is sufficient to say that bringing your data into compliance with the industry standards is not a walk in the park. It takes time and commitment and more than one person.
4. It takes a team
People told me there were two ways to go about “data normalization.” You can outsource it by hiring an outside service to deliver the product turnkey or put together a team internally to do it. After studying both with my people, we became convinced that neither one was right for us.
There are turnkey services that will come in and collect data files from different systems and from different departments, and in a few weeks bring back a PIES compliant data set. The problem we saw with that was we weren’t fixing anything. We could get the end product, but we weren’t creating the ability to replicate the process again.
Conversely, there were those on our IT team who argued that we needed to build everything ourselves internally, including creating the software to manage our data. Well, if you recall earlier I said I was technoskeptical, you might imagine how I reacted to that idea. I could see that the process of just sorting through our own data mess was daunting enough, and the very idea of building our own software utility at the same time only seemed to make matters worse.
So, we purchased a PIES compliant data utility and worked with our supplier to populate it with data collected throughout our enterprise. Forming an internal team and partnering with a vendor with a proven stable application and one who had the experience of guiding others through the process, ultimately proved for us to be the successful solution.
As the team went to work, we immediately began discovering problems all over the place. There were “data silos” with conflicting ways of capturing and stating the same facts and, not surprisingly, everyone thought their way was the best. We had multiple points of entry for the same data resulting in conflicts galore. We discovered that several parties had the ability to change data at any time on a personal whim. In short, we had no formalized process and no discipline when it came to managing our data.
We used the PIES standard to settle disputes between departments — it became the arbitrator. It wasn’t an issue that engineering was keeping their data incorrectly and product management had it right; some greater entity had made the determination and that helped us break down data barriers within our own company.
What resulted was a systemic problem-solving process that forced us to look at both the data we were keeping, how and where we were keeping it and who was best qualified to make any judgment calls. So, we not only fixed the data, but at the same time we fixed the processes we used to manage the data. And that has improved the quality and reliability of our data internally.
A team capable of resolving internal data territorial issues and establishing ongoing processes to keep the data from becoming corrupt once it is fixed is essential.
5. Teams need leaders
Prior to my eEnlightenment, I was only loosely aware of things like PIES, IPO, PARTnerShip Network and ACES. Because I wanted to be a good aftermarket citizen, I regularly voiced my company’s support for data standards and acted like I knew what I was talking about. I figured if our association leadership said the standards were important, then they were important. And I could satisfy my presidential ego knowing that the detail was someone else’s job.
Well, I was partly right. Knowing the details of PIES, IPO, PARTnerShip Network and ACES should be someone else’s job, but knowing what they represent and their strategic importance is my job. That meant getting outside of my IT comfort zone and doing my best to understand this new technology. As I said before, technology is so crucial to every aspect of an aftermarket company’s business operations today and the expense associated with it is so great that management must understand its strategic implications.
6. Not everybody is ready
I don’t say this to discourage or dissuade anyone from standardizing your data, just to prepare you for the reality. The fact is today, very few manufacturers have their data standardized and certified. And the reality is even fewer resellers are prepared to take it. Many have sent letters saying that they want PIES-compliant data and I believe they are serious when they say that, but they aren’t ready just yet.
That shouldn’t be an excuse for anyone to postpone the pressing and real need to comply with industry data standards. It’s coming and it will be here very soon, in fact, probably sooner than most manufacturers will be ready if they haven’t started working on the project in earnest. Even if the full complement of resellers is not ready today, the benefits of data standardization are significant to your internal operations.
There are many benefits we have observed in our internal operations since becoming data compliant, including:
Regular audit reports can highlight changes where data has deviated from the standard and provide the opportunity to correct problems proactively, before “corrupt” data gets in our systems.
By establishing a designated entry point for all PIES data fields and distributing standardized information from the source system to our systems, we assure that corrections only have to be made in one place.
Communication with customers has dramatically improved on everything from new part introductions to consistency of information on documents, such as invoices and packing slips, to more error-free communications with EDI.
Internal reports are more accurate and easier to understand. Ed Rammel, our VP of marketing, loves to tell the story that before data standardization we had service items in our line (things that were bought outside to complete a set and complement something we make) that our manufacturing brethren had described in our database as “an aftermarket pass thru.” Those are now called light duty pulleys!
We have better integrated our engineering systems and processes with our cataloging system and process by providing each with a common data language and reference point.
Common standards have brought our business disciplines together and gotten us on the same page as a company.
Our data is now aligned with the catalog management specs and all that NPD research is easier to interpret.
These are just some of the ways we are seeing quantum internal improvement just from the discipline of becoming PIES compliant. That said, there are still many more compelling reasons for resellers and suppliers to get their data synchronized.
I also said that it was not just customers that might not be ready, but internal people as well.
Companies today need a new breed of IT people who can work in more customer facing situations. IT can no longer function as a service bureau, simply sitting and waiting to be told what kind of a query to write to create the report that someone wants. They need to collaborate with customers to meet mutual vendor and reseller goals.
This transformation from service bureau to service differentiator brings the IT function into the strategic forefront with corporate functions like sales and marketing.
Conversely, staff in other areas need to be ready to embrace the IT function in the technology-enabled aftermarket. In some ways, this may be a bigger challenge than IT people adapting to customer facing responsibilities. It means sales, marketing and management types getting past our typical technophobia and understanding the role that good clean data plays in the implementation of technology. It means that product people might have to let go of the proprietary way they keep and store their data in favor of the industry standard. It means sales people need to understand enough about data and technology to listen to customer input and communicate back with the home office. But mostly it means having the patience to work collaboratively with trading partners and find the best mutual technology solution.
7. If it doesn’t save money or gain efficiency, it’s not worth doing
The reason you should apply technology is not because we think technology is cool — we do it to be more efficient, more effective and more profitable. As I said earlier, technology investments are no different from every other business investment decision. They must be justified on the basis of the return they will yield.
Sometimes those benefits and savings are not obvious. In those instances, you need faith. That means faith in your people and faith in your own intuitive sense and analytical abilities. I can say in those sorts of situations, when analyzing an investment in technology, it is best to do it collaboratively. Involve your complete team. Involve the vendor. Get comfortable with everything, and more importantly, everyone.
And regarding finding efficiencies, I believe that we have reached a point in this mature aftermarket where our collective problems can’t be solved by staying within our own boundaries. Manufacturers must work with resellers; resellers need to work with manufacturers, and everybody needs the guys that throw away the boxes. Most of us run our companies efficiently. The inefficiency is in the gaps between us. It is not until we are willing to work collaboratively to address those collective inefficiencies that we can begin to bring greater profitability back to this business.
As I have become more technology and data aware, I have come to realize the redundancies and inefficiencies that exist all around us. We are rekeying, redoing, reweighing, remeasuring and re-entering more data than you can imagine. And redundancy is costing us all significantly. Any effort that attacks it and eliminates it is to the benefit of all.
8. Keep looking forward
The key in technology is what I call the “shampoo instructions” principal; you know how the instructions on the shampoo say: wash, rinse, repeat. Here the idea is innovate, adopt, repeat. You must constantly be looking forward and evaluating new technology and assessing its potential. That which makes sense, you need to adopt and move forward. Then get back to looking for the next, new thing.
A word of caution. I am not talking about adopting what’s new just because it’s new. Hopefully it’s been made clear that if it doesn’t save time or money, it’s not worth messing with. At Dayco, we don’t want to be pioneers; we just want to be early adopters.
With regard to data standards and their adoption, I can tell you that waiting is not an option. I have heard some of my peers say, “these standards are still a moving target. I plan on waiting until they are closer to finished before I implement.” At the risk of offending, that is foolhardy.
There is a wonderful old expression that is appropriate to undertaking the process of standardizing your data…It’s like planting a tree; the best time to plant one is 20 years ago, and the second best time is today.
So if those are the eight essential elements of technology adoption, what’s the point of the obvious effort required to get data compliant?
I sincerely believe that broader adoption of technology is good for the entire market. It positions this aftermarket to compete more effectively with external threats and it can gain efficiencies that result in lower costs and elimination of redundant functions. And those points I think loom large.
On the subject of external threats, the OE threat is real. A typical OE dealer can figure out that aggressively pursuing parts and service business is good for his bottom line. Many are making outside sales calls, doing more aggressive marketing and promotions, sharpening their pricing pencil and making deliveries, even hot shotting in some cases. And the technician community is sending more business their way.
Want evidence of this trend? Open a copy of any of the technician’s magazines and count the number of ads for OEs. A recent review I conducted out of sheer boredom waiting on a delayed flight revealed roughly equal pages of ad pages for OEMs and aftermarket parts providers.
And technology is our best foil against this threat. According to one industry research study, 86 percent of the time that an auto part is sold, it is looked up on a computerized electronic catalog. Our incomplete, unstandardized and unsynchronized data are resulting in errors in look-up that result in everything from lost sales to unnecessary returns.
That translates to the need for universal adoption and the use of industry standards. It’s only through the universal adoption of data standards that we can enable the widespread use of real cost-reducing technology like Internet Parts Ordering, automated replenishment, collaborative forecasting, reverse logistics and other solutions that function with standardized data.
If I could summarize the most significant insight gained in my eEducation it would be the stunningly simple, almost anti-climactic conclusion: data matters. The reason data matters is that it is impossible to automate anything between trading partners unless and until there is a state of “data grace” between trading partners. True harmony between data sets at both buyer and seller is the starting point for a litany of new and exciting cost-saving technologies. And that holds the potential to make everyone’s lot in life just a bit better.
