‘The most successful players will be those who strongly invest in the creation of added value key issues. Investment and rationalisation are the way to greater efficiency.’
"Price will no longer be the deciding factor for business within the Independent Aftermarket (IAM) - Lowering prices every year is no longer a viable option," says Robert. “Customers want more – they want stronger partners; partners who can offer ‘added value’. My view is that as we move further into 2010, and beyond, the key drivers for the IAM will be Supply Chain Management and the ability to supply technological and technical information."
He continued: "In a few years, without these major tools the (IAM) will no longer have access to the business it needs. Globalisation, consolidation and the strong development of new technologies have had a dramatic impact on the western European market."
"However, there are real opportunities for those who invest in their business development – those who ‘create added value’," Robert added.
Over the last decade the IAM has had the competitive advantage over the Original Equipment Spare (OES) market - in part due to lower labour costs. BUT the IAM doesn’t have the same power as the OES channel to challenge the technological evolution. The ever-maturing western European market accelerates the battle for market share and competition between the channels gets stronger every year.
OES is looking at ways to capture the customer during this period of strong migration to the IAM – issuing longer warranties is one example.
In an ever changing market, distributors need to ‘create added value’ for the whole distribution and repair chain.
Key factors providing added value to the IAM
- Distribution companies are subject to increasingly complicated constraints. The quality of their Supply Chain management is a key element to their success. The transfer of production to the East and the increasing complexity of part numbers necessitate higher stock levels and more sophisticated forecasting systems
- Distributors have to integrate their supply chain model into that of the component supplier’s supply chain. In order to obtain a more efficient logistical system, equipment suppliers and distributors must work in strong partnership. They must use shared tools in terms of forecasting in order to preserve the distribution and repair markets. And this means investing in inventory management. Increasingly, distributors choose the component suppliers providing the widest product portfolios as partners.
The second major factor to success is the ability to acquire technical information.
The phrase ‘technical information’ is a very wide term. It can be broken down into:
- Diagnostic systems
- Complex databases
- Technological ability
- In-depth training
"You need access to the information in order to face new technology," said Robert.
"Installers will increasingly look for networks able to sustain them in providing these very complex and onerous tools. The combination of perfect control of the supply chain, the ability to supply technical information together with the historical advantage of the IAM - lower labour costs - strong customer relationships and a local service, will give this market the advantage."
"Within the next ten years, car dealer networks will continue to shrink, vehicle shelf life will be extended from the current eight years up to 12 or even 15 years.
"This period, which is challenging for car manufacturers, is a period of opportunity for the IAM - which, if the correct investments are made, is in a good position." concludes Robert.