Automotive OEMs and aftermarket parts suppliers are facing disruptions from new technologies and e-commerce. In this QAD Precision Report we look at how OEMs and aftermarket suppliers meet these challenges.
How OEMs and Aftermarket Parts Suppliers Can Manage the Challenges of E-Commerce
Automotive original equipment manufacturers and aftermarket parts suppliers face with two seemingly opposing trends. First is the increasing adoption of new technologies, including but not limited to, electric vehicles. As the electric vehicle (EV) market continues to grow, companies will need to react to shifting aftermarket requirements. Connected EVs, for example, could leverage predictive intelligence to flag maintenance issues or the need for replacement parts before a problem arises.
At the same time, people are holding on to their vehicles for longer. In the US, the average age of cars and light trucks rose again this year to 11.8 years. In 2002, it was 9.2 years. That’s good news if you are in the business of supplying the parts needed to keep vehicles roadworthy.
What both of these trends have in common however is the influence of e-commerce.
Traditional Industries in an E-Commerce World
E-commerce shortens the distance between customer and suppliers. However, e-commerce also connects customers with a company’s competitors.
The impact of e-commerce on traditional parts distribution has already been felt. There has been a proliferation of online marketplaces selling new and used auto parts. As a result, automotive aftermarket suppliers have had to rethink their digital services.
E-commerce has not just changed how we shop, but our expectations too. This means that OEMs and aftermarket suppliers need to act like retailers and ensure efficient customer service, including prompt delivery of online orders. Companies have responded to these expectations by increasing the number of express shipments that they send. This can be a challenge for businesses that relied mainly on large freight shipments.
While some car owners will always choose original parts, and be prepared to wait for them, many will opt for generics if the price and delivery options make this a more compelling offer.
These challenges have led many transportation and logistics managers, as well IT teams, at OEM manufacturers to search for solutions to simplify their shipping operations.
Some companies opt to cobble together a solution to manage their shipping needs by customizing their existing ERP or transportation management solutions. However, maintaining these kinds of ad hoc solutions can be expensive as well as inefficient. That’s why finding a solution that meets all these needs should be a high priority.
OEMs and aftermarket parts suppliers are not just sending more express and parcel shipments — they are sending them to an increasing number of places too. The automotive industry has become increasingly global in nature. Over the last decade, car sales in the BRIC countries grew from 30 percent to 60 percent of the global automotive profits.
For OEMs and aftermarket parts suppliers, the trend toward globalization means that a shipment of parts may be bound for anyplace in the world. This impacts which carrier you use and where you use them. You might choose one of the large global carriers to ship parcels globally, or you might be using a smaller, regionally based carrier that serves more specialized markets. A mix of global, regional and local carriers gives companies more delivery options, with different services, lanes, and capabilities.
Having said that, with so many carriers to choose from across the globe, manually researching and selecting carriers or building a custom solution that can do it for you is costly and labor intensive.
More Shipment Variability – Size and Speed
The automotive aftermarket is worth approximately €800 billion per year. A 2018 report by McKinsey & Company forecasts that the auto aftermarket will grow 3 percent annually to be worth around €1.2 trillion by 2030. This presents a significant opportunity. This growth is giving rise to another challenge: the increasing variability in the nature of shipments.
In the past, OEMs and aftermarket suppliers mainly sent large shipments of parts to distributors. Distributors, in turn handled, the logistics of moving those parts to where they were needed. But today, as vehicles stay on the road longer, repair parts are becoming a more significant part of your business. That means a higher volume of shipments, more paperwork, and more pressure to keep costs down.
You still need to send large freight shipments to distributors and dealers in major markets. But today OEMs and aftermarket suppliers also need to send smaller numbers of parts (or hundreds of them) to repair shops, fleet managers and individual customers who could be located anywhere in the world.
These types of shipments are also time sensitive, since they are most likely required to repair a vehicle that’s already broken down and waiting for parts to arrive. This is especially true in a Vehicle-off-Road situation: if that vehicle is revenue-generating, every minute counts. The urgency and need for speed inherent therefore means that express parcel shipments are going to be an increasingly important part of your shipping business.
How QAD Precision Can Help
QAD Precision works with the world’s largest OEMs and aftermarket parts suppliers, including two of the Top 5 manufacturers of heavy-duty trucks. With one platform for global trade and transportation, QAD Precision helps OEMs and aftermarket suppliers to streamline and simplify all both domestic and international shipping.
QAD Precision Transportation Execution is a global, multi-carrier transportation execution solution to manage inbound and outbound shipments across every region of the world. With QAD Precision you seamlessly integrate into a worldwide multi carrier network. This gives you the power of choice while still maintaining uniform shipping procedures across your enterprise. Our solution helps you to reduce costs and optimize delivery regardless of where your package is going. Furthermore, our multi carrier functionality is available for any mode of shipment, including parcel, courier, LTL, TL and Freight. As a result, QAD Precision gives you the long-range perspective you need to successfully consolidate shipments and plan for future optimizations, all while controlling shipping costs.
QAD Precision Global Trade Management allows you to simplify export processes, automate documentation and manage the risks associated with cross-border trade. This includes screening trading partners and streamlining paperwork. Our multilingual, multi currency, multi date solution means that you will always have the right documentation, prepared in the correct format and language to simplify your global trade operations.
About QAD Precision – Trusted Global Trade and Transportation Execution
QAD Precision (Precision Software), a division of QAD Inc., provides industry-leading global trade management, transportation execution and multi carrier shipping software solutions from a single, integrated platform. Preeminent industry leaders in every region of the world rely on QAD Precision’s global support centers to leverage thousands of carriers and manage millions of shipping transactions every day. Our open architecture easily integrates with Enterprise Resource Planning, Warehouse Management Systems and legacy solutions. An ISO-certified company, QAD Precision assists companies to minimize shipping costs, optimize first mile and last mile deliveries, automate free trade agreement compliance, avoid customs delays and mitigate the risks associated with dynamic trading environments to maximize their competitive advantage. QAD Precision’s customers span multiple industries including banking and finance, life sciences, high technology, retail, industrial, automotive, higher education and public sector as well as logistics providers. For more information about QAD Precision, visit www.qadprecision.com.
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