Issue: Sep 2006


Pricedex CEO's 'Top 10 Roadblocks' to Industry Gaining Full Advantage of Product Information Managem



Solution 'Blur,' Fear of Change, Misinformation Top the List

by Charles Faulkner

For an industry founded on manufacturing enough replacement parts each year to keep millions of vehicles on North American roads running smoothly, one would think that any IT system that could manage those parts throughout the selling chain more profitably and effectively -- and smoothly -- would be immediately embraced.

And, when most new car dealers are moving aggressively into service and repair segments -- that traditionally were the bread and butter of the independent automotive aftermarket because they have better parts information systems and can respond faster with good information -- the aftermarket would be moving aggressively to combat this threat to their business.

But this isn't happening. The aftermarket is moving much too slowly, and if it continues to move at this pace, some, or even much, of the market share it loses to OEM dealers will never be recovered, says Terry O'Reilly, president and CEO of Pricedex Software, Inc.

"In spite of the many proven business management and competitive advantages that standardized data and a comprehensive product information management (PIM) solution can bring to automotive parts manufacturers, relatively few aftermarket companies have actually tackled their internal data management issues. And it certainly isn't because they don't have them," he says.

"There are very few technology solutions available today that can bring such a rapid and significant ROI and competitive advantage to an aftermarket manufacturer or reseller as quickly as a good PIM solution can."

According to the Automotive Aftermarket Industry Association (AAIA), suppliers and resellers are losing billions of dollars each year due to the cost of errors and lost productivity, both of which are attributable to incomplete or mismatched parts data. One automotive chain blames bad data for about 50 percent of the new parts returns they experience. And poor parts data within the independent aftermarket supply chain is another reason that OEM dealers are stealing market share from the independent service dealer and winning more business -- they simply can respond faster with good information.

"Given this poor performance, and the fact that today's technology is very user -- and buyer -- friendly, it is difficult to understand what's taking so long for the aftermarket to adopt data standards and to implement a PIM solution. These solutions no longer have to be 'mega projects' to be effective," says O'Reilly.

So what is preventing the rapid adoption of data standards and PIM solutions by aftermarket manufacturers? According to O'Reilly, there are a number of issues:

1. The 'Blur' of standards and technology. There's a lot of discussion about the need for clean, standardized data through ACES and PIES compliance, but few understand where or how they're going to get the data. Looking internally, an executive sees only a plethora of disparate legacy systems and point solutions and the task looks overwhelming.

2. Misinformation. Few industry executives are aware that solutions exist today that are easy to implement, will bridge all their legacy systems and deliver what is needed -- without having to resort to expensive custom solutions. They're still thinking in terms of expensive custom legacy systems, rather than today's desktop solutions.

3. The "My business is different" syndrome. Everyone thinks their business is uniquely complicated so they're waiting for a solution that will never come.

4. Fear of continually evolving industry standards. Some executives believe aftermarket standards are still evolving, so they choose to wait. But with today's technology, they don't have to; a good PIM solution is designed to be flexible to accommodate virtually any standard and format now and as they evolve going forward.

5. Capital for IT is hard to come by. Capital to purchase tooling, for instance, is easier to get than for IT enhancements. Further, IT managers are used to important solutions costing a lot of money. Today's PIM solutions are, indeed, important, but need no longer be expensive, and their ROI is significant and rapid.

6. PIM acquisition involves many departments. Because PIM impacts pricing, product information, cataloging, parts -- and IT -- the evaluation and decision making process involves many people who do not normally work with each other. However, as these groups have begun working together, companies have realized new benefits.

7. Boardrooms are far removed from most IT decisions. Unless an IT project runs into millions of dollars, they seldom get board attention. However, the rapid, substantial and continuing ROI of a PIM solution should be of interest to every Board (and all shareholders).

8. Solution confusion: Some managers confuse a PIM solution with a transaction system or even a PDM solution. It is neither. ERP/MRP systems are transactional systems and simply do not adequately address the additional commerce-level data needed to support the marketing, sales and reporting functions as a good PIM system is designed to do.

9. Resistance to change: It's human nature -- most organizations resist change -- especially those that have been "burned" by re-engineering. However, the implementation of a PIM solution requires no re-engineering and once people see how easy they are to use and the benefits received, they readily embrace and very much enjoy using the technology.

10. Incomplete, stopgap solutions: Some companies purchase point solutions and think they're acquiring a comprehensive PIM solution. A full PIM solution involves product, part, pricing, and catalog management, as well as data synchronization capability, which is what aftermarket manufacturers -- large and small -- really need. If a solution lacks any of these elements, the purchaser will likely be disappointed.

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