A Q&A with W. Michael Brown, president of Olympus Imported Auto Parts (Alexandria, Va.)
What has been the most challenging external factor to your business operations?
Two things: The cost of a barrel of crude oil, and the need of independent repair facilities for efficient access to information from the OE dealers for the purpose of properly diagnosing auto repairs.
This has been quite a struggle for a while now and the climate is not too bad right now. Most of the information my customers need is accessible although somewhat costly, and at times is quite a labyrinth locating the information. I believe the main reason why the information has been available is due largely of the threat of the "Right To Repair" legislation against the OEs. It stands to reason that absent this threat, it is in the OE's best interest to conceal this information so they can keep the lion's share of service repair business for themselves. I applaud AAIA (the Automotive Aftermarket Industry Association) and others who have been keeping the pressure on these guys and the aftermarket healthy and consumers happy.
The next rising storm for us in the aftermarket is the question of how to effectively deal with the telematics issue.
How have fuel prices affected the way your distribute parts?
For now, we have not altered our distribution patterns at all. Our delivery is a big competitive advantage for us, our customers appreciate it and we will not place limitations on it. It does obviously adversely impact our overhead as it would for anyone in distribution. We will tolerate it for a while and hopefully, like all commodities, it's cyclical in nature and will soon return to a sensible level, $70 a barrel, or so, hopefully. Ultimately, it is a regular part of our cost of doing business that will eventually determine the pricing level of our products.
Has the increase in parts quality and the purported decrease in deferred maintenance forced you to alter your business strategy? Why or why not?
Not really. It is actually easier now to be "first to market," which for us has always been an important strategic consideration. It is still surprises me, though, the amount requests we get for very late model service parts. Don't really understand exactly why, but we'll take it.
The one major product category that has been affected is exhaust. The stainless steel systems incorporated on cars today are lasting significantly longer. However, with the sales of exhaust pipes and mufflers diminishing, there has been a dramatic rise in our sales of catalytic converters. Exhaust companies, like our supplier Bosal, have recognized this and are effectively retooling to accommodate the substantial, yet much more complicated, opportunities with converters.
In what product categories have you seen the most innovation?
Emission controls and engine management. Fuel is now monitored from the gas cap throughout the whole system until it exits out of the exhaust pipe. Also, to a lesser degree the evolution from wheel bearings to hub assemblies.
How would you describe your ideal wholesale customer?
Our best customers are those who consider us a valuable and mutually beneficial business partner. This customer does not sell his service on price, but on quality parts and service by getting the job done right the first time. He typically treats his customers as we do. That is, over time, he has established personal relationships resulting in a loyal following and a lot of repeat business and great word-of-mouth marketing.
Having said all of that, our best customer is actually anyone who wrenches on an imported car and is willing to pay us for the parts.
Being that you deal in imported parts, do you work with any local dealerships for parts procurement?
Because of our relationships with many so OE manufacturers, we have had the opportunity to supply some local dealerships with service parts. Mostly, though, the OE dealers have their own channels of parts distribution and like to use their own stuff.
We do source from dealers: service chemicals, for example, model specific antifreeze and some other functional fluids. Largely though, we would rather compete with them than either supply to or buy from them.
How has the consolidation of distribution affected your business?
From a purchasing standpoint, there has been a demonstrable difference from what it was. In simpler times, a dozen suppliers were enough to source and fill nearly all of our product lines. Now, we use more than 55 different companies to source all of the lines that our customers need.
On the other side of the coin, consolidation has greatly enhanced our business to our customers. Much of our competition is stores within very large companies: very structured and regimented with the decision-makers very far from the actual customers. This model simply highlights for our customers the striking difference in responsive customer service. We are still a small enough company to quickly adjust to the marketplace and make decisions that equal good customer service, and we're only getting better.
How important a role does technology play in your operations?
Our company's view on technology is taken directly from the book by Jim Collins, "Good To Great." He characterizes technology as an accelerator, not the creator, of momentum in a business.
If you are not successfully selling parts today, there is no technology out there that will get it done for you. It is important to us, but it is not what defines us. We are a driven, highly customer service centric company and have established ourselves as such for decades. Technology for us is a tool we use to accelerate our growth, most recently in two significant ways. Last fall we launched our "OOC" Olympus Online Catalog, a complete interactive, online catalog at www.forparts.com. This tool has enabled our wholesale customers who are more comfortable with online ordering to place orders for delivery with us 24/7. It has also, for the benefit of our counterpeople, coalesced all of our product offerings in one place. This technology has also expanded our market area from regional to worldwide. We have developed customers in places like Australia, England, Finland, Belgium and Japan.
The other way we've used technology is in our delivery fleet tracking system. This software has generated groups of intensive data or "metrics" in geographical areas, to track performance levels versus assets used within that area. With this we are able to measure vehicles' production and can specifically target our vehicles to the most profitable areas.
How important is brand to your customers?
Extremely! Most of our customers are very quality conscious and, like all repair facilities, the key is to get the job right the first time — no comebacks. Some will not install a part if they don't know where it comes from. We believe our success stems from carrying the finest parts available. We purchase as much as we possibly can from the OE manufacturers. Many of our customers, particularly our import specialist repair facilities, understand the importance of keeping that new car quality and "feel." That's why we are resolute in sourcing primarily from OEMs and OES warehouses. Price may get you in the door, but quality is what maintains long-term relationships and that's what we're all about.
