Friday, October 29, 2010

Questions on Dealers’ Ability to Wholesale M&R Parts

We are just finishing the QC process on the latest North American Dealer Parts Manager Survey. This QC process takes a week or so and encompasses things like deleting survey records for parts managers who did not appropriately complete the survey (and other things like checking math for questions that sum to 100%).

I always ask for a quick peek. This week my quick peek was to look into what dealers had to say about mechanical wholesale. The responses surfaced a lot of questions and caused me to re-think some things. We need, our industry needs, answers to some questions.

This blog is all about pictures, so, if you can’t see the graphics, go to our homepage and click onto the blog.

What do you think?

Note: In the charts below each data point represents a unique OEM, with all OEMs organized into natural groups (“Types”). These groups are disguised to ensure anonymity is maintained.

Thursday, October 21, 2010

Together, We Are Smarter!

Thomas Neumann

“The learning of one man does not subtract from the learning of another, as if there were a limited quantity to be divided into exclusive holdings…That which one man gains by discovery is a gain of other men. And these multiple gains become invested capital…” (John Wesley Powell, 1886)

I recently happened to leaf through some NASPC materials from 2001: this was the first conference where we took a look beyond the warehouse to capture supply chain performance rather than “in-the-box performance.” It made me realize that what we take for granted today – this all-encompassing view of the aftersales business, the volumes of research, data, information and knowledge right at our fingertips – was not always there, and made me reflect how we are continuously evolving.

So, let’s take a short tour through Carlisle’s history, focusing on some key milestones of our benchmarking and research activities:
  • 1993: started NASPC (North American Service Parts Conference) as a venue to benchmark parts warehouse performance
  • 2001: expanded our view to encompass the entire supply chain
  • 2002: held first EAC (European Aftermarket Conference) as a sister conference to NASPC
  • 2002: conducted the first North American Automotive Parts Manager Satisfaction Survey to complement metrics with the “Voice of the Customer”
  • 2004: launched the North American Automotive Service Manager Satisfaction Survey
  • 2005: piloted South American Service Parts Conference
  • 2005: piloted first European Parts Manager Survey – for both Automotive and CE/ Ag OEMs
  • 2008: established NASOF (North American Service Operations Forum) to capture and compare key service metrics
  • 2011: expect to launch Carlisle first East Asian Parts Supply Chain Benchmarking
Now, this list – as long as it is - is by no means complete. Many of our clients participate in our mini-benchmarks, which are devoted to specific issues. We conduct end-customer surveys, for our conferences and at clients’ request, that are focused on the hot topics of today, such as service retention, telematics, reman, and the “Digital Customer”. Our Parts and Service Manager Surveys cover the heavy equipment industries in North America and Europe.

In sum, in less than 20 years, our view has expanded from US automotive warehouse productivity benchmarking to an aftersales perspective that covers different industries, functions, and geographies.

We are now observing some of our clients taking the next step, a step towards an aftersales business that is – if not managed – then at least measured on a global basis. In response to client requests, we are preparing for our first Asian Supply Chain benchmarking and are continuing our benchmarking efforts in South America, with the explicit goal to measure performance by a set of globally uniform standards and metrics.

As I’m writing this, we are also conducting a Parts Manager Satisfaction Survey in 15 countries on five continents – with further expansion being planned. Together with our North American survey, covering the US and Canada, this leaves Antarctica as the single continent we do not cover with our research products at the moment – although we do have snowmobile manufacturers among our clients, so I guess it’s only a question of time.

The web-based survey is built around the same template with the same questions in all 15 countries, from Paris to Pretoria and Sao Paulo to Sydney. This template, in turn, is very similar to the template we use in North America. What was surprising to me was that it fit like a glove everywhere, requiring only limited adaptation to simultaneously fit what are considered “emerging markets”, such as Russia, or mature markets, such as Western European markets.

This is a clear sign that the differences – at least as far as the core processes of the service parts business are concerned – between “emerging” and “mature” markets are rapidly disappearing. Dealers/distributors in emerging markets are starting to demand the same level of service and support as those in mature markets. Similarly, one can safely assume that the supply chain metrics that we’ve developed and tracked in North America and Europe over the past 20 years will also fit the benchmarking requirements in East Asia and South America very well.

So, “globalization” goes hand in hand with “homogenization.” While local and regional differences will remain, things are becoming more similar and more comparable around the globe. The mere fact that we were able to conduct a web-based survey around the globe is a clear example for this trend: people need to have internet access to participate – and they do have internet access, everywhere. Internet access was simply a given, not something that anyone thought about.

As a result, as things become more similar and more comparable, it makes sense to measure them with the same yardstick and common methodologies. Everywhere.

The potential benefits are huge:
  • Making a good idea pay off … globally: if you can achieve savings of $X M in the US through implementing one good idea, how much will it be on a global scale?
  • Creating new opportunities for learning: I’m convinced there are things one can learn from what is a happening in emerging markets, simply because they carry less historical baggage.
  • Fostering a spirit of improvement … and competition: no one wants to be “worst in class”, be it in comparison with industry peers or other entities within the same enterprise.
Last, but not least, (and possibly most importantly): Overcoming regional silos and forging a global organization. When it comes to benchmarking, we viscerally look to the outside and typically compare ourselves to our industry peers. Looking at our collaborative benchmarking conferences and the history of our industry’s improvements over the past 20 years, this has proven to be a pretty good idea. But with benchmarking on a global scale, we can now also compare ourselves looking to the “inside,” looking at the same metrics across countries and regions within our organizations. While our spoken languages are all different, common metrics can serve as the language and the basis on which everyone can communicate and exchange ideas. Everywhere.

We are genuinely looking forward to taking the next steps toward a global aftersales business together with our clients – if you are interested in any of our new global initiatives, please contact Sarah Outslay (East Asia and South America Supply Chain Benchmarking; or Thomas Neumann (Global Parts Manager Survey;

Friday, October 15, 2010

Future Shock – Our Evolving Digital Customers

Our digital customers exhibit the following behaviors:

  1. They are young and rely on the internet to research service choices.
  2. They are not as dealer-centric as middle aged and older customers.
  3. They’re cynical and are suspicious of perceived upselling.
  4. They are loyal only to the best, and their mothers.
  5. They will go online to tell friends, acquaintances and strangers about a bad experience.
  6. They drive older vehicles now, but will be buying and driving newer vehicles as they age.
  7. They don’t turn wrenches and, therefore, aren’t as knowledgeable about how their vehicle works and which parts and services are necessary.
And our digital customers are particular about information:
  1. They have higher standards for credible information.
  2. They associate credibility with transparency and independence.
  3. They associate credibility with quality, but will tolerate low quality if nothing better is available. This is especially true if they are first adopters.
  4. They are difficult to satisfy, but will flock to the best imperfect alternative that is available.
  5. They are connected to everybody else and like it that way.
  6. They migrate to newer and better ways of being connected.
Bottom Line: Our whole customer base will exhibit these behaviors within ten years.

Thursday, October 7, 2010

Why I Love Quicklane at My Dealer … And, Why You Should Love It, Too

The Digital Summit is next week in Cleveland. Our Digital Owner survey is in and we had around 9,000 survey submissions – we did most of our analysis on 3,000 participants who were Owner Center savvy and/or internet savvy. One thing we focused on was repurchase intent: vehicle and service repurchase intent. A key theory we’ve had for quite awhile has been that the first point of customer defection is routine oil and filter replacement. If a dealer cannot do this quickly, efficiently, and cheaply, then customers will stray. And, once they stray, well, they keep straying. This chart contrasts vehicle and service repurchase intent vs. quicklane service usage. Looks like our theory is true. This is just the tip of the iceberg.

Bottom line: Dealers need to be in the business of fast, efficient, and cost effective routine maintenance service. Heavy Truck is even moving beyond this and embracing these criteria for common repairs.