Truck Parts and Service | Heavy Duty Trucking, Aftermarket, Service Info
Issue link: https://read.dmtmag.com/i/93351
Guest Column It's About Local, Details And Asking How Did We Get Here? have been announced by the time you see this). Multiple stores, group leader, local market monster, extremely profi table, a believer in brands who never voluntarily cuts a price. It was interesting to talk with him C By Bill Wade Wade & Partners onsolidation is about to claim another really smart independent distributor — a real prize (it probably will about the process behind his decision to sell. Sure, the purchase money is good, but I couldn't help but feel that his perspective on the independent side of heavy-duty truck parts and service as an industry wasn't just as important. It revolved around fi ve 'Nos' that he identifi ed as corrupting the growth pros- pects for operators like him: • Th ere are no unserved product, ser- vice or geographical markets; • Th ere is no trust between suppliers and distributors; • Th ere is no discipline in suppliers' market channel decisions; • Th ere are no secrets; therefore, • Th ere is no bottom to rebates or pric- ing. We talked about the corrosive forces ture industries have a strategic sameness that is causing them to compete on price and erode profi tability. Most lines have multiple outlets and extremely inconsis- tent price/rebate/special deal policies. More than ever, the independent • A lack of understanding by all em- ployees that margin percentage does not equal margin dollars, which is evidenced by the growing pressure to downsell and get the business on price. It is true that most businesses in ma- rently gripping the management team." Instead of trying harder to beat last year's numbers, we have to ask ourselves basic questions like: • If we are doing the best we know how, what don't we know? Are we answer- ing phantom price pressures due to incomplete competitive knowledge? • Where is our organization's comfort heavy-duty parts and service provider needs to reinvent its total, local value- off ering for its best customers within each • What are successful, new models from other industries that we can use as lenses for re-examining our business and creating "new frontier question frontier? Exactly what is the depth of understanding of all employees? Independent parts and service providers need to reinvent themselves. product category — one line at a time Why sell a little bit of something to maps"? What (like Grainger's new mo- everyone? Sell everything that is neces- sary for a best value-bundle to only the customers who are or can be profi table, and who preferably have an above average growth future. To reinvent a distributor or service of private labels, over-distribution and the 'race to the bottom' caused by overseas product being accepted and pushed by many other independents. Two possibilities arose as the roots of this 'how did we get here' scenario: • A national marketing focus used in a business that is inherently local. shop value off ering, a company will have to expand its collective, top of mind understanding of what it has been doing historically and what it might do diff er- ently in the future. Distribution guru Bruce Merrifi eld • How should we gently identify, unpack and overhaul our old mental models to then blend their best, still viable parts with new thinking? If we don't address the questions bile app program) is being pioneered in similar businesses? summarized the challenge best: "Big gains in value, growth and profi tability in a ma- ture industry must start with big collective change in the mental models that are cur- above, then won't our existing culture continue to rule? Won't we then become increasingly outdated and be destined to continue asking, "How did our business get this way?" For further insight on causes and results of industry consolidation, see: 'Some Th oughts on the Next Wave in Heavy Duty Distributor Consolidation' in the articles section at www. wade-partners.com . ■ Bill Wade, partner in Wade & Partners, is author of Aſt ermarket Innovations. He can be reached at www.wade-partners.com. Th e views expressed in the Guest Editorial are those of the author and do not necessarily refl ect the opinions, beliefs and viewpoints of Truck Parts & Service magazine. 4 TRUCK PARTS & SERVICE | October 2012