| -- End Ad Box ---> | | | | the bottom line? |
| There is an increasing disconnect between the | | | | As an example, let's say the company is a |
| way many of us live, work and communicate on | | | | manufacturer. It saves 1% through accurate data, |
| a day-to-day basis and the way business is | | | | according to the white paper, and an additional |
| conducted. | | | | 5% by getting its information to the market in a |
| Without proper product tracking and inventory | | | | timely manner, according to Mr. Silverii's estimates. |
| procedures, even a computerized counter | | | | If the company's sales are as little as $5 million |
| operation may not alert the counter person that a | | | | per year, its savings through data clean-up is |
| product is on his store's shelves. The loss in sales | | | | $300,000 each and every year. It might cost all |
| resulting from bad data and lag time in delivery of | | | | of that gain in the first year and, of course, the |
| that data to the parts counter has been | | | | costs are front-loaded, but think of the benefits |
| estimated at $6.7 billion each year. | | | | of being able to send a data file to anyone in |
| It may be surprising to the techno-hip-those who | | | | seconds and sending updates within minutes of |
| carry Blackberries and cell phones and use | | | | having a new product released. If our $300,000 |
| broadband connections in the office and at | | | | figure turns out to be reasonably accurate, the |
| home-that many businesses today are still sending | | | | company's next project is to estimate the cost |
| and receiving order information via fax and | | | | of cleaning up its data. |
| telephone. A typical order process might consist | | | | Let's look at some of the issues that might affect |
| of someone faxing a purchase order to a | | | | that cost. Fortunately, when Dana and O'Reilly |
| manufacturer or WD and receiving a fax back (if | | | | went through this process recently, they published |
| the buyer is lucky) to confirm the order and | | | | a white paper that outlines the tasks and pitfalls in |
| shipping date. If things aren't quite right with bar | | | | data clean-up. The 94-page document is called the |
| codes, part numbers, quantities or packaging, this | | | | "Technology Enhanced Standards-Based Trading |
| electronic conversation devolves into a game of | | | | Report," which is freely available for download at |
| phone tag to address the discrepancies. Sound | | | | (If you are still awake when you have finished |
| familiar? | | | | reading it, you are an obvious candidate for PIES |
| Once the discrepancies are handled, the supplier or | | | | compliance.) |
| manufacturer enters the information by hand into | | | | Here are a few points to be considered in the |
| the ordering system software. The order is then | | | | data-cleanup process, which may impact a |
| packed and shipped. The problem is that the | | | | company's decision. The first two are quotes |
| wasted time it takes to deal with discrepancies in | | | | from the TEST Report. |
| the ordering process (not to mention data-entry | | | | -"Central among the findings of the TEST team |
| errors) costs the business's a staggering amount | | | | was that cultural issues, not technological issues, |
| of money. | | | | were the greatest impediments to effective |
| In a white paper authored by the Automotive | | | | implementation of standards-based trading. It |
| Aftermarket Industry Associ-ation (AAIA), | | | | seemed that more time had to be spent selling |
| Aftermarket Council on Electronic Commerce | | | | the idea of adopting standards than on the actual |
| (ACEC) and Profile Systems (now Comergent), | | | | compliance with them." |
| called "The Cost of Unsynchronized Product and | | | | -"Probably the most obvious finding of the TEST |
| Pricing Data," annual losses to the industry were | | | | group is the amount of redundant functions that |
| estimated to be $1.7 billion per year. This | | | | exist between the manufacturer and the reseller |
| represents a loss of 1% of sales for the average | | | | in the area of data management. Reduction or |
| manufacturer and .75% for the average reseller, | | | | elimination of those redundancies will lead to |
| according to the report. | | | | substantial savings. Additionally, enhancements to |
| The Data Audit Certification (DAC) program is | | | | existing programs and significant new opportunities |
| designed to test a product database for | | | | are facilitated by the existence of accurate and |
| compliance with the Product Information | | | | synchronized product data. These include category |
| Exchange Standards (PIES). Current DAC | | | | management, collaborative forecasting, Internet |
| participants include Dana, Arvin, ASC, Cardone, | | | | parts ordering and automated replenishment." |
| Global Accessories, Melling and NGK. Information | | | | -The TEST Report also points out that the data |
| on the program is available at Pies/Pies_DAC.asp. | | | | necessary to comply with the 82 minimum PIES |
| In addition, there is another multi-billion-dollar loss | | | | fields necessary for compliance may live on |
| related to the time lag in data reaching the parts | | | | different servers in different geographical |
| counter. Marlen Silverii from Arvin Meritor made a | | | | locations, even running different operating |
| presentation at an industry forum last year in | | | | systems. Think in terms of packaging information |
| which he quantified the dollar value of the problem | | | | (size, shape, weight) residing on servers at your |
| on the strut business. Silverii pegged annual | | | | packaging contractor, product specifications |
| industry-wide lost sales resulting from just a | | | | residing on servers in the engineering department |
| six-month lag in data to be $33 million at retail. If | | | | and product information related to sales residing |
| you assume that struts account for as much as | | | | on servers in marketing. All of this data needs to |
| 5% of total retail aftermarket sales, you project | | | | be located, updated and normalized, and |
| more than $5 billion in lost sales annually, directly | | | | connections have to be built between the various |
| attributable to slow distribution of catalog data. | | | | servers and the PIES database for ongoing |
| Bob Moore of Bob Moore and Partners, a top | | | | updates. The TEST Report calls this "a formidable |
| industry analyst, tells the story of trying to buy | | | | task." |
| an oil filter for his 2004 Mini Cooper at the local | | | | In July 2004, The Alliance, O'Reilly, Advance, CSK |
| parts counter. The counterman told him that | | | | and Autozone sent out letters encouraging their |
| there was no application data for his 2004 in the | | | | suppliers to become PIES compliant and DAC |
| computer. Bob then called his friends at a major | | | | certified. Here is an excerpt from that letter: "...we |
| filter manufacturer and discovered that the part | | | | want to join our suppliers in initiatives that drive |
| number for the 2003 car was the same as the | | | | down our respective costs of doing business. We |
| part number for the 2004, and he also discovered | | | | want to eliminate the barrier that bad product |
| that the part for his car was on the shelf at the | | | | data poses and make progress towards a goal of |
| parts store that he visited. The part was on the | | | | end-to-end product data synchronization in the |
| shelf, but it couldn't be sold due to lag time in data | | | | aftermarket. |
| delivery. | | | | "Because the data for the products we sell begins |
| As we all know, when either the mechanic or the | | | | with you, we ask that the first steps towards |
| consumer visits the parts counter and the part is | | | | cleansing and certifying your data be made by |
| not available, the dealer is the next stop and | | | | you. AAIA has announced an industry service |
| perhaps the first stop on the next occasion. The | | | | called Data Audit and Certification (DAC). This |
| dealer has accurate data, and the correct parts | | | | service will allow you to identify any deficiencies in |
| are often in stock. | | | | your product information, correct them and earn |
| In the performance and accessories side of the | | | | an annual certification status for PIES. |
| aftermarket, we have another factor that | | | | "(We are) convinced that suppliers who are PIES |
| compounds the potential loss. According to SEMA | | | | Certified will experience fewer errors on |
| research reports, new truck buyers, for example, | | | | processing PO's, will enjoy faster time-to-market |
| accessorize their vehicles within three months of | | | | for new product introductions and will experience |
| purchase and spend an average of $1,500 on | | | | lower returns due to errors in order and shipping |
| those accessories. Consumers who don't find the | | | | quantities." |
| accessories they want might wander down the | | | | Dana and O'Reilly published a white paper that |
| street and spend that money on a new Palm Pilot, | | | | outlines the tasks and pitfalls in data clean-up. The |
| barbecue or set of golf clubs, and that | | | | 94-page document, "Technology Enhanced |
| performance or accessory sale may be lost to | | | | Standards-Based Trading Report," is available for |
| the aftermarket forever. | | | | download at |
| Thus, we have an industry loss of somewhere in | | | | Here is one more quote from Mike Williams at |
| the neighborhood of $6.7 billion each year due to | | | | O'Reilly, who led his company in preparing to |
| two issues: bad data and lag time in delivery of | | | | receive data from Dana in the TEST program: "If |
| that data to the parts counter. | | | | a manufacturer is not currently doing business |
| What To Do and How | | | | with O'Reilly, that manufacturer will have a distinct |
| In the early '90s, a group of industry participants | | | | market advantage with O'Reilly if their product |
| from AAIA, SEMA, the Motor and Equipment | | | | information is PIES compliant and DAC certified." |
| Manufacturers Association (MEMA), HDeXchange | | | | So, to be realistic, there is a problem...and an |
| (HDX), Profile Systems and a number of other | | | | opportunity. A company may spend what will |
| aftermarket trade associations and companies | | | | probably be some serious resources in the near |
| formed the ACEC. Its goal was to create industry | | | | term to increase its margins and increase its |
| standards for the description of automotive | | | | competitive advantage for the foreseeable future |
| aftermarket parts data and for vehicle description | | | | or wait until it is forced to do so by its trading |
| standards. The industry's top minds have been | | | | partners. |
| meeting ever since to hash out issues related to | | | | The good news is that companies don't have to |
| data standards and to ensure that these data | | | | go it alone. There are a number of sources of |
| standards are compatible with those of the OEMs | | | | support within the industry for assistance. Check |
| and other industries. The outcome of these | | | | out ACEConline.org for information related to the |
| meetings was the creation of the Product | | | | industry standards, PIES and ACES. Comergent |
| Information Exchange Standards (PIES) and the | | | | was responsible for assisting Dana with data |
| extension of the AAIA vehicle description tables | | | | sourcing and normalization for its PIES project. |
| into an accurate set of descriptions now known | | | | There are a number of other industry data |
| as the AAIA Catalog Enhanced Standard (ACES). | | | | mapping companies available to assist you with |
| ACES was launched in 2003 and is continually | | | | PIES-compliant data mapping. These companies |
| under industry review and enhancement. In | | | | include DCi, Quantum Data Services, JNP Soft, |
| addition, AAIA recently completed an agreement | | | | and GCommerce to name a few. Both SEMA and |
| with Comergent to create a Data Audit | | | | AAIA have information on their websites and will |
| Certification (DAC) program. This program is | | | | be hosting Webinars and seminars addressing |
| designed to test a product database for | | | | these issues. The University of the Aftermarket |
| compliance with the PIES standard. Current DAC | | | | is holding a two-day seminar on Industry |
| participants include Dana, Arvin, ASC, Cardone, | | | | Standards for Aftermarket Data. Those |
| Global Accessories, Melling and NGK. | | | | interested should sign up early for the March |
| Consumers who don't find the auto accessories | | | | session, which will be hosted by Denso on March |
| they want at their local speed shop or parts store | | | | 13 and 14 in Long Beach, CA. According to the |
| might wander down the street and spend that | | | | website at "This comprehensive program gives |
| money on computer gear, housewares or | | | | participants the training necessary to successfully |
| sporting goods, and that performance or | | | | implement AAIA's new enhanced e-CAT Standard |
| accessory sale may be lost to the aftermarket | | | | on Day One and PIES (Product Information |
| forever. | | | | Exchange Standard) on Day Two." |
| So all a business has to do is get its data straight | | | | Once manufacturers have their data in |
| and in PIES-compatible format, then take the next | | | | standardized format and that formatting is |
| step and have it certified as compliant. Simple, | | | | certified through DAC, there is the possibility of |
| right? You may be in for a surprise. The reason | | | | storing all of that data in a single Industry Data |
| we recommend the additional step of certification | | | | Warehouse where it can then be accessed by |
| is that it is really a way to find and fix errors that | | | | participants in the industry who have the approval |
| a company might otherwise miss. No one in the | | | | of the manufacturer for that access. The purpose |
| certification process so far has passed on the | | | | of this centralized data bank would be to provide |
| first run. | | | | an efficient model to make rich, standardized data |
| Let's look at how a company might take | | | | available to the broadest possible constituency of |
| advantage of these standards to increase its | | | | aftermarket practitioners at the lowest possible |
| profits. We can look at bad data as a cost (the | | | | cost. Is this an idea whose time has come? There |
| glass is half empty) or look at data cleansing as a | | | | are a number of industry leaders who think so. |
| way to increase profits (the glass is half full). Who | | | | Keep your ears to the ground on this one. |
| among us couldn't benefit from a 6% increase in | | | | |