Wednesday, December 14, 2011

2011 Parts Manager Survey: Executive Summary

After the downs of ’09 and the ups of ’10, the industry hoped that 2011 would be a “back to basics” year. For some, that was the case. However, the earthquake/tsunami that hit Japan in March of this year had a devastating impact on the supply chain for a number of OEMs – especially the Japanese importers.

Even with these challenges, however, the Asian OEMs continue their strong performance in terms of satisfying their Parts Managers. For Overall Satisfaction, Asian brands represent five out of the top seven brands.

Before digging more deeply into the 2011 results, let’s look at performance over a longer time horizon. The chart below shows Overall Satisfaction for the past 8 years – both in terms of “Top Box” (% respondents selecting “Very Satisfied) and “Top 2 Box” (% respondents selecting “Very Satisfied” or “Somewhat Satisfied”). For each metric, it shows both industry average (the bars) and industry best-in-class (the lines). Note that these results are just for U.S. OEMs.

The results are quite interesting. What we see is that industry averages have been improving over time – Top Box has improved by about 13 points, while Top 2 Box has improved by about 8 points. However, best-in-class scores have been relatively flat. What’s the take-away here?

Generally speaking, the gap between the “best in class (BIC)” and “worst in class (WIC)” performance has been shrinking. By leveraging benchmark efforts, such as this survey, to identify BIC performance and then [more importantly] to get behind the numbers to understand the process/policies driving the results, the industry is collectively raising the bar for average OEM parts performance.

You’ll notice above that I used the terms BIC/WIC “performance”, not “OEMs”. That was a conscious decision, as no OEM has figured everything out yet. OEMs with stellar performance in one area do not necessarily do great in other areas. That’s the magic of collaborative benchmarking -- we can get behind the numbers (the “who’s”) to understand the “how’s”, thereby enabling us to pick and choose who to emulate and how.

By the way, why has the BIC score been relatively flat? Quite simply, it is difficult for the high performers to consistently maintain their performance. Supply issues, recalls, IT implementations…even earthquakes all can cause a “best-in-class” performer to stumble for a year. And as we have learned many times over, our customers are quick to judge, but slow to forgive. A one-year stumble in satisfaction may take three years or more to recover from.

So, getting back to our 2011 results -- let’s consider the other categories on the survey. The following chart shows the results for each
of the 19 sections on our survey. It indicates the industry high, low, and average score for the “Overall Satisfaction” question in each section.

There are two important takeaways from this chart. First, note that the industry average is typically much closer to the high than the low score. This means that 1) being “average” may not be that bad, and 2) if you have the low score, you probably need to make some dramatic improvements.

Second, notice that the “supply chain” issues – on the left hand side of the chart (order processing systems, delivery, ship condition, availability, etc.) all have high scores close to 100%. Conversely, the sales/marketing issues on the right hand side of the chart (marketing, wholesale, accessories, training, pricing) have much lower “best in class” scores. Clearly, the industry is doing a better job of meeting our customer’s expectations with respect to supply chain than with sales and marketing issues.

For most categories, the OEM with the biggest gain experienced improvements of 10-20 points – that’s quite a dramatic increase in satisfaction. So, what have some of these companies done to achieve these results? Let’s look at the top two:

In the case of the ship-direct improvement, it seems – no surprise – that it is all about availability. In 2011, this OEM (“OEM 1”) increased their direct-ship availability by over 4 points, from 93.6% to 97.7%.

How did they do this? First, they attacked this from an organizational approach. While they historically had personnel that “chased” parts, OEM 1 instituted a new group in 2011 – Material Flow Coordinators. These folks are tasked with working with suppliers from a strategic level – capacity planning, forecast utilization, collaboration, performance tracking, etc.

In addition, OEM 1 brought “accountability” to the world of ship-direct. While many OEMs have policies linking availability and on-time performance to future business (both service parts and production), most OEMs exclude ship-direct suppliers from this policy. OEM 1 was one such OEM that historically fell into this category.

However, starting in 2011, OEM 1 brought ship-direct suppliers under the umbrella of this program. Now, any ship-direct supplier whose availability drops below 97% is subject to losing future business – both for service parts and production.

The 20 point accessory improvement exhibited by OEM 2 was a result of a number of new initiatives. First, they implemented a proactive inventory stocking program for newer accessories. Rather than wait for certain demand signals, they set minimum stocking levels for the market to assure representation of stock on any current accessory.

Further, OEM 2 conducted a comprehensive new model year launch of their soft goods product line during the summer. Through this program, they had product available 2-3 months earlier than any launch over the past 10 years.

OEM 2 also began conducting one-on-one merchandising and marketing visits with their dealers to support accessory sales. So far this year, they have already visited about a third of their dealers to discuss how to better sell accessories.

Finally, last year we examined the top drivers of satisfaction for each OEM. We conducted the same analysis this year and found a number of similarities, but some changes as well:
  • Availability continues to be a primary driver for most OEMs. In fact, it seems to have increased in importance.
  • Collision Wholesale support is starting to creep up as a more important driver of satisfaction. Note that Mechanical Wholesale support doesn’t even make the list.
  • Phone support – especially technical phone support – seems to be dropping somewhat in importance. It’s not that this is suddenly not important. Instead, it seems that many OEMs have been focusing and improving their performance in this area.
  • Pricing dropped precipitously in terms of importance. History shows us that as we improve performance to our dealers, their focus on pricing declines.

For more information on Carlisle’s surveys, please contact Harry Hollenberg at

Note: Spare Thoughts will be on a two week break after this post and we will resume our weekly posts in January 2012.  We wish you and your family a happy and safe holiday season. 

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