Observations and Experience

Observations and Experience
The growth in SKUs has added additional complexity to the industry. (Photo: Huw Evans)

Happy New Year!

Another fast-paced year is behind us and a new year full of opportunity and challenges is in front of us for 2018.

Although we will talk about many aspects of our industry over the coming months, one element of the dialogue we will share is the mandate and objective for this industry that has never changed—the superlative service we need to ultimately provide to the consumer to ensure they are getting the right product; obtaining the service for their vehicle quickly; and having that service provided with not only performance and longevity as a result, but ultimately with their total safety in mind.

The aftermarket is vital

Although our industry may never be considered glamorous by any stretch of the imagination, the fact is, the automotive aftermarket is one of the most vital industries we have that has an enormous impact on our economy. The number of people employed by the aftermarket in 2017 was over 405,000! For those that are considering a career in the aftermarket, realize that this industry is probably the second or third largest employer in the country after the government and, I believe, the pharmaceutical channel. That statement might not be 100 percent accurate, but it would be a very close estimation.

The other aspect of this industry to consider is the multitude of roles and responsibilities that our industry can offer. Vehicles are complex. They entail an enormous number of parts that require a multitude of mechanical, electrical, hydraulic, and computer-driven expertise in order to maintain the integrity of the vehicle; in other words, to keep everything running smoothly!

SKU challenges

The other moving piece of the puzzle is that a multitude of the products supplied to the aftermarket come from sources around the globe. Fifteen to twenty years ago, much of the aftermarket requirements were made in North America. That meant short lead times for manufacturing and a shorter distance to travel for delivery requirements. An additional challenge is simply that the magnitude of SKUs to support the vehicle population has grown a lot faster than the size of warehousing space to contain all those SKUs. All those factors combine to create an enormous need for planning and logistics departments to expand and become vital links throughout the entire supply chain. No matter how many SKUs are required, how long it takes to make those parts, or how long it takes to deliver those parts, the ASP needs to provide their customers with the right parts, in the right place, and at the right time–one more aspect of the business that hasn’t changed.

I mentioned the word ‘global’ in my comments above, and that word not only describes the manufacturing landscape, it also illustrates how the number of competitors in any given product category have grown dramatically. More competitors generate new challenges for every part of the supply chain including lead time, quality, compliance, and price. At the same time, regardless of which industry you choose to settle in, the one aspect of each company, regardless of size, is that they can only operate efficiently if they are profitable.

So… we have a lot to talk about during the next few months, and I look forward to sharing some of my observations and experience with you. All the best for a very successful 2018!

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