The auto parts distribution business exceeds the 1 billion euros in annual sales. Over 50% of sales are generated by the top 10 distributing companies, with the remainder being shared among other industry players.
The development of companies in this sector depends on how they integrate in their strategy a number of factors such as:
- Improving customer experience through the quality and diversification of parts and accessories portfolio
- Diversification and structure of customer portfolio
- The usage of modern technologies with a very significant impact on the development and growth of the competitive advantage
We followed the market trends and talked to a few companies in the industry in an attempt to identify some of the main challenges they face.
High volume of parts
Distributors have constantly thousands of items in stock or in transit, from consumables, auto parts, wheels, tires, electrics to accessories, which they have to track on brands, models, sizes, batches, manufacturers, DOT and warranty in some cases, such as consumables or tires.
DOT and expiration date
The parts must be tracked according to the DOT or validity period. In this case, we mainly talk about consumables (oils, lubricants, liquids) and tires. In the case of tires, the DOT contains information about the tire manufacturer, country of origin and date of manufacture.
"The new European rules force us to track the DOT and so we have to keep a very clear record of our products and comply with the FIFO method for the date of manufacture. If we do not first sell older DOT products, we risk not being able to sell them, and this generates financial losses”, said Tiberiu Anghel, General Manager of Handlopex Romania.
The FIFO method
The FIFO method that car parts and accessories distributors use, means that the output of batches of products is made on the basis of the validity or expiry criteria. Batch tracking also ensures traceability of products. By closely following the warranty terms of marketed products, distributors can easily avoid the expiration of consumables, and hence the loss of money.
The errors occurred in the set of transport documents
In the absence of a software solution to ensure delivery of delivery-specific documents (invoice, delivery note), situations may arise where some of the documents have mistakes or are lost and there is a risk that the shipment will go with the wrong documents. This entails the risk of fines and / or mistakes for LTL shipments in terms of incorrect weight and volumetric capacity.
Taking or placing orders correctly
When using the email or telephone to take or place customer and vendor orders, it is almost inevitable that no errors occur and a wrong figure for quantity or product code will cause a series of serial errors: bills for smaller quantities Or greater than required, non-compliant products, lost shipping, and, very importantly, customer satisfaction.
For all of the above-mentioned cases, our recommendation is to use an ERP system with functionalities dedicated to auto parts and accessories distributors to make life easier for distributors and ensure their development and competitive advantage through:
- Correct and complete management of parts and deadlines
- Multiple Discharge Methods (FIFO, FEFO, LIFO, LEFO)
- EDI integration for automatic takeover and placement of client and vendor orders
- Integration with multiple online platforms for order picking
- An automatic calculation of supply needs, depending on how you work (on order or on forecast)
- Analysis and industry specific reports to help control their business, increase their market share, turnover and profitability