Parts distribution: Q&A with Federated’s Pavey
In this Q&A, Federated Auto Parts President Larry Pavey shares what his company is doing to improve parts availability.
MTD also asked independent tire dealers what they expect from their parts suppliers. For their answers, see "The qualities of a good auto parts supplier" in the June issue of Modern Tire Dealer.
MTD: Dealers sometimes ask why distributors do not have parts when needed. Can you address that?
Many distributors today carry in excess of 200,000 different parts. With the average age of vehicles at historic highs plus the proliferation of name plates and models, it is very difficult to always have every single part in stock. Margin pressures from low priced competitors that focus on fast movers also make offering a full line more challenging. We are dedicated to providing complete coverage in all categories to help our professional service providers exceed their customer expectations. While it isn’t always possible, compared to other industries, the automotive aftermarket gives the fastest repair service and best overall value for consumers.
MTD: Is there a better way to keep track of car parts?
At Federated we are working on integrating systems and inventory visibility through the channel from the manufacturer to the professional service provider. This will allow inventory to be deployed strategically with the ability to identify quickly where a part is needed, making it available as quickly as possible. This VIC (virtual inventory cloud) will help track on-hand inventory and demand throughout the entire transaction chain and provide faster availability answers for all participants.
MTD: How can Federated help dealers control the huge inventory of parts they must carry?
Federated has a host of tools designed to help manage and control inventory, including a well-trained sales team, factory assistance, data warehouse information, I-Pro inventory modeling, VIO data and a number of other programs and aids for improved inventory management. I believe our distributors are definitely in a position to help with inventory control.
MTD: Is there anything a dealer can do to help a distributor supply needed parts?
A great question and, while we try to spend a great deal of time listening to customers, it can never be enough. Today, distributors are working with so many different types of service providers including independent shops, car dealers, national chains, tire shops, department stores, fleets, municipalities and a host of others, making it difficult to provide programs to meet the needs of all. However, our goal is to understand each customer’s needs and work hard to find ways to create added value to our relationships. We are dedicated to continuous improvement and finding ways to provide the best service possible.
MTD: Are there ways to better manage parts?
There is no question that there are better ways to manage parts and we are always looking for ways to improve. Our new I-Pro inventory tool combines multiple demand histories, merging national, regional and local demand with vehicle population information by region, local area or zip code. Then, the data can be combined with replacement rates, catalog hits and so on to better predict which parts will be needed and where. We also are working with multiple stocking models, branch warehouses, hub stores and other deployment techniques, and we are utilizing tools that allow for visibility across a broader spectrum to identify where the closest inventory is located.
MTD: What inefficiencies/shortcomings are there in the distribution system and what is being doing to correct them?
Historically, the lack of systems integration had resulted in a lack of information that could be used to better communicate demand, needs and availability. Today, there are improved processes to share information and develop better data, systems, processes and capabilities. There are many areas that
have seen significant improvement and are continuing to evolve, including enhanced accuracy in electronic data, catalog information, return reduction, planned obsolescence, perpetual updates, inventory sharing and other areas that can offer added value and reduced cost, a major area of focus for Federated going forward.
MTD: Can a distributor help a dealer use information systems better?
Absolutely, distributors can help in many ways. While each individual system is different, there are many tools available to integrate information including streamlining quotations, ordering, technical support, catalogs, diagnostic information, customer billing and much more. Federated distributors can provide integrated systems, supplying all of the above with everything required in a variety of delivery options. By working together, there are many ways that distributors can collaborate with their customers and we are constantly working to improve the support of integrating system capabilities.
MTD: What is Federated doing to improve parts fulfillment, cycle time, information systems, and reduce costs?
Federated distributors are investing in systems and processes to improve availability for our most important customers, professional service providers. There is a focus on speed and accuracy in everything we do from delivery service, information and responses to integrated systems that provide data seamlessly at the lowest possible cost. We are investing in new facilities designed for faster order processing, better stocking capabilities and bar code equipment that allows for paperless processing. We are integrating with our suppliers and collaborating with our customers to deliver useful, timely and more complete information.
Federated, like many distribution organizations, works to help its customers and suppliers reduce cost. This is done through enhanced processes, information and execution methods. For example, communicating a catalog discrepancy, identifying a high warranty item, forecasting the need for a new item, or providing a service bulletin or technical information can all provide value and cost reduction that may be difficult to measure.That’s why we offer a shop profitability analysis and training designed to help quantify and measure improvement opportunities and potential. In short, day in and day out, we do everything we can to improve everything we do.