Automotive Aftermarket Industry Association reports $1.7 billion in costs for suppliers and distributors
Bethesda, MD — August 8, 2003 — Data errors on basic product information costs $1.7 billion annually for aftermarket suppliers and distributors, the Automotive Aftermarket Industry Association (AAIA) Electronic Commerce Committee reported this week at the Aftermarket eForum in Chicago. The primary finding is a result of the committee's Product Information Case Study.
The study demonstrated that there is a wide degree of variance between the trading partners' item data, causing significant financial and supply chain problems in the industry. According to data submitted for comparison by leading industry manufacturers and resellers who participated in the study, 51 percent of the items submitted by manufacturers had no recognizable equivalent in their trading partners' submitted files.
"No aftermarket retailer or distributor would consider opening the doors for business without a full and complete electronic catalog application database," observed Ed Heon, founder and chief technology officer of Profile Systems, who assisted with the study. "Yet it is common to open for business with absolutely no electronic product information on hand for over 50 percent of the [stock keeping units] available from suppliers."
Scott Luckett, vice president, Information Technology at AAIA, announced the findings at the eForum, added, "The study makes a strong case for industry-wide implementation of the Product Information Exchange Standard (PIES)," said Luckett. "The results confirm what we suspected for a while, and we're pleased that decision makers in the industry will finally have the quantifiable evidence they need to make informed decisions about investing in item data cleansing and synchronization."
The study involved six pairs of trading partners and involved product lines that each pair had in common. The trading partners' data was matched on part number, UPC code, reseller pricing, product descriptions, unit of measure and minimum order quantity. Manufacturers and their resellers participated in the study, including Dana Automotive Brake Parts and Clevite Engine Parts, Delphi, Federal Mogul, Gates Corp., Global Accessories, Advance Auto Parts, CARQUEST, CSK, NAPA, O'Reilly and Reliable.
Results from similar studies in multiple industries support the study findings, including a recent report by the Industry Data Exchange Association (IDEA) and the National Electrical Manufacturers Association (NEMA), concluding that product and pricing inaccuracies are costing manufacturers and distributors 1 percent and 3Ú4 percent of sales, respectively.
In a study for the Grocery industry released late last year, A.T. Kearney announced that 30 percent of items in retailer item files were in error, and that the consumer packaged goods (CPG) industry alone is losing $40 billion in sales every year due to poor product information.
Profile Systems, a provider of product data and supply chain management solutions, performed the study and analyzed the data. Heon, of Profile Systems, added: "Poor product and pricing information is costing supply chains literally millions of dollars. We are gratified to witness an increased awareness and momentum toward the understanding that sound product information is the foundation for efficient supply chain and business processes."
The full case study is available for download at the Aftermarket Council on Electronic Commerce "Web site".