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Embracing changing Aftermarket

From | January 18,2007

Present auto parts delivery system is inefficient and involved too many levels, which caused many problems and will be changed in near future. Some Auto industry observers pointed out that the aftermarket would shrink because the quality of auto parts became better and better and very few consumers would change parts or repair their vehicles in person. But automobile will break down always and no manufacture can produce non-break-down vehicles in anticipated future. So parts are needed nobody doubted this point.

In the past, the supply chain of Auto parts involved several levels of wholesale/detailers (WD) for that the information of demand and supply was con not communicated effectively between parts manufacturers and end-users, so detailers were needed and necessary. The manufacturers were responsible for the production of parts and distribute them to detailers. And detailer’s responsibility was to collect as much demand data as possible and provided service to customers. So we can say that the duties of them were clear and either side was very important in whole process. They shared the benefit together and of course contributed to the higher part price. To maintain the availability of parts, each level of detailers stocked parts in forecast quantity which often exaggerated in favor of them. When balancing, these unsold parts would be returned to manufactures and damaged the interesting of manufactures.

What did obstacle the manufacture communicating consumers directly? It is demand-and-supply information and technological barrier. E-commerce provides a perfect solution in the future and likely change the situation of aftermarket.

A professional and special website can provide the information about auto parts supply and installers and consumers can search the web as well as training and installation instructions directly, which eliminates the technological barrier and information barrier partly. This is just the first step. The delivery of parts can be sent by professional carrier, which can provide professional service fast and with comparative low cost, or the manufactures can establish their delivery service to consumers, which is not practicable because it was denied by manufactures before and I put forwarded to this point only if auto part manufacturers have a far much more profit after the situation changed. To establish a network of delivery is a heavy burden for anyone so cooperation with professional carrier is a wise option.

And also the manufactures have a reasonable possibility of cooperation among them because they can extend the coverage of their products and reduce the cost of distribution. So we now can imagine that in the future the consumers can find all information in virtual malls not like present point-to-point sales.

What are the obstacles of promoting E-commerce? There must be presently and we have to face and solve them then the aftermarket can have a new face and clime up a new level.

The first problem I think is whether the manufactures are willing to share their individual information of customers with others. It is estimated that at least 40% orders was obtained through their unique channel accounting for 25% of order value. It is beneficial for all if they can share with each other openly and completely.

But not everyone can realize this point. Any false information and insincere cooperation would damage this cause; weaken the confidence and belief of such cooperation.

The second problem may come from established aftermarket leaders, who feel threatened by the ability of technology to remove market barriers. The present leaders have large market volume and not happy to change the market because of the potential risk.

Even the potential market leaders who adopted E-commerce model are facing many issues like how to organize its distribution chain effectively and efficiently. Initial network is rather complex and unwell-designed and show little advantaged compared with old model. The key to reduce the distribution cost is shorten the supply chain and communicate as direct as possible and deliver parts as quickly as possible. At the same time the stock of inventory in manufactures and detailers should be proper. How to optimize the system newly established and well-organize packing, delivering system is a never ending topic. 

In tomorrow’s aftermarket, proper parts stock and complete range of products and perfect service represented with flexibility, speed and reliability will become increasingly important. The new technology is just a means providing an efficient way communicating manufacturers and consumers and will help foster standardized business practices, information system, and inter-enterprise push/pull systems. How to survive aftermarket after this transformation? Old player and new comer have to face and satisfy consumers’ demand with better service and lower price. This rule won’t change anytime.

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