Technology Newsmaker Q&A Joe Swaim

Joe Swaim spoke to Aftermarket Business World about the supply chain technology needs of small and mid-sized distributors.

How are the needs of small/mid sized different than larger businesses when it comes to supply chain technology?

They often don't have the toolsets, technical support, and IT staff of the larger companies. Everyone wears a variety of hats, so a buyer/planner might also be involved in sales and forecasting.

We often see employees from larger companies being hired at smaller companies, and when they get there they find they don't have access to the same toolsets they did before. Slowly but sure we're seeing the mid-market enterprise solutions that put those pieces in place.

What are some unique supply chain challenges in the automotive aftermarket?

In the mid-tier especially, we see companies getting the job done by working a lot of hours and weekends, using Excel spreadsheets, and manually connecting everything together. Things fall through the cracks that way. They need a fully integrated solution. Even if they have an ERP system in place, they are doing a lot of things on Excel spreadsheets. They usually have older, cobbled-together systems.

There's an education process that goes on with those companies, because some of the companies that need the tools the most have a difficult time letting go of what they have because they know it works. As they come around and start adapting to it, then it gets easier. Everyone is singing off the same sheet of music.

What are the benefits of moving to an integrated, automated solution?

If you think about a company in the aftermarket that has 20,000 SKUs, and maybe three warehouses, that's 60,000 item locations you have to review. Without the proper tools, you have to review each one of those and hit the ones they know are the most vulnerable. The best turns they can have are 12, if they are creating one replenishment order per month. Then you throw in the complexity of dealing with multiple vendors and who has the best price, and all of that is in someone's head. One wrong purchase, and they have inventory for two years, or they've got a shortage.

Having dynamic planning tools helps adjust the inventory based on seasonal conditions and other parameters. We try to tie planning to market conditions, not the product. The tool changes the safety stock levels. An item may go to non-stock. You can turn it around in a weeks' time, but you don't carry inventory on it because you don't have the space or money to carry it when it's not moving. You can set rules in place, which frees up more time to deal with other products.

What are some important trends that will affect supply chain/warehouse management systems deployments moving forward? New technologies or new supply chain pressures?

There are companies that are looking for tools to help with opportunistic purchases. We have some tools we're developing, and some in place, so that if you are looking at an item you can buy cheap right now, you can make a speculative purchase and shape demand. You buy two year's worth of something like windshield wiper blades, and you can either hold it and in the future demand will go up or supply will drop so you can optimize your profit, or you can drop the price and shape demand.

Everyone is looking for that magic number. What can I buy and at what price so that I'm not risking holding it forever?

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