3/14/2011-An effortless and growing way to combat an age-old problem
March 10, 2011
Filed under Archives
OK. I think we’re getting it.
I remember walking away from the parts counter with my lead technician, Dave Spencer. Dave had just asked Parts for rings for a Gold Wing that was torn apart in his bay, and Parts didn’t have them. Dave, a hard-working tech on flat rate, was incredulous. “How,” he asked, “could a parts department not have such a common item?” They were starting to fail, and we used them almost every day. To seal the cylinders and box up the engine would cost Dave more than an hour — and that was an hour where he would not see a single dollar.
So he was ticked. But, Dave was also a thoughtful man, and I had seen adversity bring out the best in him on the track, on the road and in the shop over the years that he had worked for me.
He paused, and I could see the thoughts gathering. As he pulled the rag from his pocket he said: “You know Hal, supply is not the problem. It’s distribution.” And with that, he turned away, entered his bay, and started to box up the job.
But the idea stayed with me. Supply is seldom the problem. The problem is distribution. We both knew that there were rings for Gold Wings all over the place. The problem was having them where they were needed, and having them there at the right time. Distribution was the problem.
And it wasn’t just with motorcycle parts. We talked a great deal about it in the weeks to come. Water, food, money, transportation, health care — all available in great supply to some, but scarce for others where they were desperately needed. It wasn’t supply. It was distribution. It was always, distribution.
But that was then. And this is now. Things have changed, and I think we’re finally getting it.
Within the past few years several external parts locators systems have become available through the Internet. The eBays, the Googles, and dealer websites all allow parts postings. In addition, at least one DMS provides an internal locator that syncs with the dealers’ inventory every night, provides current on-hands each morning, and shares that inventory with all other dealers on that DMS. Both aftermarket and OEM warehouse parts are now appearing within this locator system, and parts personnel can now check a thousand dealership inventories in one pass and on the run, without ever leaving the parts invoice screen.
I have access to stats for some of this. And what I see is astonishing. Roll back to January of last year with me, and let’s look at what we were doing.
In January of 2010, I found that parts personnel were using an in-DMS locator systems about once a day. The top chart shows that that one-use per day grew steadily, until now, in January of 2011, we see triple that amount, or 2.8 searches per day per dealership. Note that in December, the rate peaked at 3.0 per day and then dropped back to the 2.8.
And that’s not all. Look at the chart at left. Back in January of 2010, the average search was for a part that ran around $83. By Christmas time, that was up to $104, and then it backed off to a solid $102. This trend was a steady climb during the year, so it wasn’t just a fluky deal. I can’t explain it, but it is clear that with time, dealers are searching more often for more expensive parts.
Combining the two patterns together (more searches, higher value parts), we see in the bottom chart that the retail value of parts searched has grown from $2.3 million in January of 2010, to $9.9 million at Christmas, and $9.2 million this past January.
Let me say that again. One month ago, in January of 2011, 1,364 dealerships searched 89,963 times for $9,179,700 in parts on one locator system. Now, it is not possible to say how many of those parts were actually purchased from a stocking dealer. All we know is that a parts person wanted those parts bad enough to click a button that said, “search.”
Time for only one example: I talked with one dealer who had just sold a part through this locator. It was a $90 part that had sat on his shelf for 11 years. Yeah. 11 years. And with a posting, a search, a click and a phone call, it was gone.
So, it turns out that my tech Dave was right. Supply is not the problem. It’s distribution. Check your DMS. Check your web provider. Check your CRM, because parts locators are working. Most will let you look for free, but if you are not posting what you have, and doing so effortlessly, you are simply not in the game.
Locators are here. Use them. You will be amazed at how valuable your junk is to someone who is searching right now. Get it out there. Be a part of the new global distribution system. Because if you don’t, that junk will be yours forever. PSB
Hal Ethington has been associated with the powersports industry for more than 30 years. Ethington is a senior analyst at ADP Lightspeed. He can be reached at Hal_ethington@adp.com.