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Revolutionizing supply chain management for auto parts

Revolutionizing provide chain control for auto portions

Walking into a typical auto parts retail location is almost like stepping back in time. These retailers, where mechanics and DIYers go to find a new battery, spark plugs, or brake pads, haven’t changed much, and frankly haven’t needed to…until now. We’ve seen a growing number of auto parts retailers and suppliers looking to advance their supply chain management capabilities at a rapid pace.

Old school vs new era of customer expectations

Imagine that a customer comes in or calls for a particular part. The store employee will check on a computer if the item is in stock, but inventory counts are often incorrect so they’ll also probably have to check in the back to make sure. If they’re out of a product, they’ll call a nearby store on a quest for that particular part. They may even need to flip through an old paper catalogue to locate where to order the part. They’ll call until they find it locally, but if they don’t have any luck, they’ll place a special order with a supplier, and the part will eventually be delivered. By the time the item is in hand, the customer may no longer need it or they found another way to purchase it.

Now, imagine if the auto parts industry had automated their inventory management, much like other retailers. When the customer comes in and asks for a particular part, the employee looks it up on their computer and has inventory details they can trust. The shelf location and bin number are clear, and the customer is able to make their purchase and leave. Or if the stock is out, they can use the computer to see full supply chain visibility, tell exactly who’s got it, where it’s located, the various prices, and whether it can be delivered or if the customer can just pick it up the next day.

This second scenario is what customers have come to expect from retail stores. They also expect to be able to place orders for parts and supplies online, and have them delivered to their house, business or garage.  Automotive DIYers and mechanics are searching for auto parts retailers who can make their lives easier, and the ones who can sell as a direct-to-purchaser.

Updating supply chain management

Some other industries have been able to make the switch. We saw this happening a couple years ago in industrial suppliers and contractor supply as stores like Grainger and Fastenal began automating their supply chains and providing customers with multiple shopping options. They started selling directly to contractors, bypassing the big box hardware stores, and using modern supply chain software to help with item management, automated ordering and even drop shipping.

Now we’re just starting to see automotive parts retailers manage their orders in the same way as the industrial distributors. The auto part supply chain can be converted to more streamlined, automated systems with greater agility and visibility. Eventually some will even start down the road to drop shipping.

Soon, we expect to see auto parts retailers add more capabilities, including online ordering that matches the likes of Amazon in product detail and images. With the aid of new item management solutions, consumers expect more robust information on a retailer’s website or app, rather than relying on in-store thick paper catalogs. Large retailers like NAPA, are even starting to put their warehouse inventory, as well as their non-stocked products, on the website. Hopefully within about the next 18 months, these retailers will offer online buying capabilities that enable customers to order directly online or on their device, and have the item(s) delivered to the place of their choosing.

Embracing change

The biggest hurdle to updating the auto parts supply chain is overcoming the ingrained traditional culture. Automotive suppliers have been doing business the same way for decades and are used to looking everything up in massive paper catalogs. A single catalog could be about 3,000 pages thick. Nevermind the convenience of being able to discover an item with a few keystrokes, can you imagine the savings in printing costs alone? And don’t forget the freshness of data as product information is constantly updated online, as opposed to quarterly or yearly printing of catalogs.

I think we’ll see some big changes over the next few years in this industry, and those auto parts retailers who want to remain competitive should really be making improvements now. If not, the door is wide open for a new competitor to disrupt the industry as we’ve seen in other retail segments.

The market is ripe for an automotive entrepreneurial startup to disrupt the market with its own online warehouse that aggregates product information from suppliers across the country who are already capable of sharing product and inventory information electronically. Amazon could even make some headway into this niche. The future remains to be seen, but I expect dramatic shifts in this industry in the next year.

If you would like to learn more about the advantages of EDI Here’s solutions for the auto parts supply industry, please visit our website. We have retail solutions as well as supplier solutions (and 3PL solutions!) to help make business easier. You can also contact EDI to request additional information.

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