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The evolution of aftermarket distribution

LAS VEGAS, Nev. – “It’s not your Father’s Aftermarket” was the main theme at the Heavy Duty Aftermarket Dialogue held earlier this week in Las Vegas.

A panel comprised of people in a variety of positions in the aftermarket industry explained what they have experienced through the years and looked at the past, present and future of distribution and the industry as a whole.

The panel consisted of Amy Kartch, director, vehicle group, global aftermarket, Eaton; Bill Kozek, president, truck and parts, Navistar; Bill Long, president and COO, Automotive Aftermarket Suppliers Association; and Steve Riordan, chairman and CEO, TruckPro. The discussion was moderated by transportation journalist Denise Rondini, who helped kick off conversation.

To get started, Rondini asked what each panelist thought was the most significant change in the last decade in distribution, and unsurprisingly consolidation and technology became the recurring themes going forward.

“I think from my standpoint, there’s two big issues,” began Kozek. “One of them is consolidation, in the dealer network and not only at Navistar but in the industry. It’s really the consolidation of the dealer network from the standpoint of, we used to be one- and two-strut stores. Today there are over 100 locations. And their footprint continues to grow. Also, in terms of consolidation is that our customers are consolidated. The big are getting bigger.”

He added that technology is changing the product end of things.

“Products are more complex,” he said. “Now, when something happens the truck shuts down. In the past you could limp in, today you don’t have that luxury. Also, from the distribution network, all of the operating systems are a lot more complex which means you’ve got to have some intense infrastructure, like people, systems, facilities that you may not have seen 10 or 15 years ago.”

Riordan spoke to the aftermarket distribution side of consolidation saying, “When you look at the aftermarket space there’s a couple thousand distributors and within that group, the top two, three, four, or five represent less than 10% of the total. While there’s been a tremendous amount of consolidation, it’s still fragmented.”

He agreed with Kozek that technology has also changed the game, as distributors now have to find way to differentiate themselves from the big OEs, who are getting stronger.

Kartch added that from a supplier standpoint, one of the emerging trends she has seen in the last decade is that customers are becoming savvier.

“Our customers want more information on products, and want to know what they can expect in terms of life-cycle,” she said. “And that helps (improve) how we communicate and how to share that with our customers.”

With all panelists agreeing that consolidation was one of the major changes in distribution in the last 10 years, the question was posed as to whether this was a good or bad trend.

“I can’t say it’s a good or bad thing, but it’s going to happen,” said Kozek. “It’s inevitable. It does bring up some big challenges for us, because you now have a big network that almost has a certain degree of leverage over the OE and that doesn’t feel very good. But from the other standpoint, these public corporations are a lot more sophisticated, but at the end of the day downtime for our customers is the enemy. So, there’s positives and negatives but I will say there will be more and more consolidation.”

Both Long and Kartch agreed with Kozek, but added that consolidation has made suppliers and distributors better and smarter about the way they do business.

“I would say consolidation has made us be more focused on understanding our markets and our segments,” said Kartch. “I think we’ve done more to really expand what our strategy is and be more proactive in determining what types of programs or products that these segments that are emerging from consolidation really lend themselves to.”

One of the more obvious changes in distribution is the evolution of more complex trucks that can affect the market and the way parts and products are distributed.

Kozek discussed how diagnostic technology on trucks has changed the game.

“The trucks today they are so much more complex,” he said. “There are over 400 sensors or reasons that a check engine (light) can come on. What the distributors do is figure out okay what does that code mean? How do I fix it? Do I have the right parts and if I don’t have the right parts can I get the truck to the next place where the right part is? (Diagnostics systems) will continue to grow. A lot of drivers see the check engine light go on and they pull over at the side of the road because we’ve conditioned them to do that but they don’t need to.”

Riordan said from an aftermarket parts distributor perspective, “We’re not seeing a huge change, though, (the emergence of new technology and complex trucks) is requiring a different kind of training for our service and sales people to handle the new parts – especially with the alternative fuel vehicles. It’s not quite a trend yet for us.”

Kartch added that new, more complicated vehicles will force everyone in the industry to become more educated on each and every truck.

“With the advances in technology, it will require everyone in the chain to have more information about the truck, how it’s performing, what went wrong, what will go wrong and then how do you move back into those systems to make sure the product is available and where it’s going to be so the truck doesn’t spend unnecessary time being down?” she said.


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