It's no secret that the automotive aftermarket has traditionally lagged behind other vertical industries in technology adoption. But the gap between the aftermarket and other sectors (like consumer packaged goods or general retail) is closing, and that process may very well accelerate in the coming years.
There are three major reasons why this is happening. First, there has been a concerted effort within the industry to adopt data standards (PIES, ACES), and technology has naturally followed that process. Product data management under the best of conditions can be hard; doing so without some sort of software tool is impractical.
Second, the cost of deployment of most types of technology is dropping. Mobile computers, scanners, printers, point-of-sale stations and other hardware are cheaper now than ever before. New software options, like hosted solutions or cloud-based systems, have reduced the cost and complexity of deploying and updating applications.
Third, use of technology in the day-to-day lives of consumers, distributors and suppliers has become so pervasive that it has inevitably begun to seep into their business processes. The explosion of smartphones and tablets, along with e-commerce, is forcing a top-to-bottom restructuring of the way companies do business with each other and with their customers.
So which technologies are set to have the biggest impact on the aftermarket this year? Below are some of the major trends that will likely affect your IT strategy moving forward:
Mobility: Smartphones have quickly become the predominate way in which most people access the Internet, and the popularity of the "mobile app" delivery model has not been lost on aftermarket companies.
There are two ways that mobility has immediately affected the aftermarket. First, customers (whether they are B2B or B2C) are accessing the web via phones and tablets, which means suppliers, retailers, and distributors have to make sure their web content can be easily viewed on these devices. That means either designing a dedicated mobile website, or optimizing an existing website for mobile viewing.
Second, companies across the aftermarket are developing mobile apps for everything from accessing catalog content and repair instructions, to selecting a repair shop or comparison shopping for parts.
"It truly begins with suppliers recognizing that mobile-enabled, rich catalog and product content is the minimum necessary to be relevant and competitive in the future," says Scott Luckett, CIO at the Automotive Aftermarket Industry Association (AAIA).
This push for mobility intersects another trend: the need for rich digital content. It's no longer enough to simply have product and application data available. Customers want to see photos, videos, links to installation instructions, and other types of content. And the more content there is, the more likely you are to sell a given part.
"The bar keeps moving, and today's content requirements didn't even exist a few years ago," Luckett says. "All of the things you have to say about a product used to have fit on a 6-inch by 9-inch screen. Now it needs to fit on a 7-inch tablet or a 3-inch screen. You have to author the content in a flexible, responsive way to meet the needs of customers who are accessing it through a growing variety of devices."
Cloud Computing: It seems like everyone has their own definition of what "the cloud" is these days, and the term is being liberally applied to just about anything that doesn't sit on your corporate servers – whether that's a hosted software application, software as a service (SaaS) solutions, or actual cloud storage and application hosting services.
However you define it, expect to see more cloud-based offerings in the aftermarket as companies look for ways to reduce their IT costs and support requirements, while increasing application flexibility and easing software upgrades. According to a study from Cisco, cloud spending by small and medium-sized businesses will reach $16 billion in 2015, up from under $5 billion in 2010. Gartner Inc. estimates the SaaS and cloud-based application services market will grow from $13.5 billion in 2011 to $32.8 billion in 2016 (that's a compound annual growth rate of nearly 20 percent).
E-tailing: More and more business in the aftermarket is conducted online. There will be increased online competition from generalist retailers and e-tailers, distributors with online catalogs, and even suppliers.
"That's one of the big questions," says Chris Gardner, vice president of programs and member services at the Automotive Aftermarket Suppliers Association (AASA). "How will suppliers approach e-tailing in the future? For a distributor, do you launch an e-tailing strategy offensively to deal with that, or do you take another approach?"
That increased competition has the potential to erode prices and margins, and complicates the customer/distributor/supplier relationship. "There are still a lot of questions about service, returns, warranties, and who will be standing behind the parts that are available on all of these websites," Gardner says.
Telematics: Nearly every vehicle manufacturer now offers some sort of remote telematics offering. The aftermarket is still defining the business case for its own telematics offerings, but there are a variety of solutions on the market for consumers to choose from. Delphi showcased its own telematics solution at the most recent AAPEX, and other products are emerging. The key to success will be developing standards that both OEMs and aftermarket companies can follow, to ensure a level playing field.
"There are a number of products now available to retrofit the 100 million OBDII-equipped vehicles on the road today that don't have telematics from the factory," Luckett says. "We as an industry need to participate in the design of a standardized software interface to the vehicle. In our view, the industry and all its stakeholders need to present a unified face to the car companies about what we can do to help their brand. If we consolidate around one initiative, we have a better chance of getting a single, standardized interface."
Warehouse Automation: While there has been tremendous focus in the aftermarket on product data management and standards adoption, basic warehouse management, bar coding, and other point-of-execution technologies have remained in the shadows. That may change.
"I wonder if the expansion of e-tailing and some of these other trends will drive more adoption," Gardner asks. "If e-tailing has the potential to drive down pricing, the distributors will have to gain some margin back somewhere. Maybe technologies that automate the warehouse are an area where you can do that?"
The cost of deploying wireless LANs, mobile computers, and WMS solutions has dropped, in part because of cheaper hardware and hosted software offerings. Now that adoption of industry data standards has increased there may be a subsequent increase in interest in providing better visibility into where those physical products actually are.
Big Data: This isn't just an aftermarket trend. "Big Data" has been a top technology story for the past year, across the IT world. Storing and processing large amounts of data, combined with complex event processing (CEP) solutions, can be used to better enable forecasting and planning.
"This brings us back to the same challenges with inventory management and SKU proliferation, and addresses the problems we have with managing the massive amounts of parts out there in the industry," Gardner says. "Big Data, which involves collection and aggregation and business intelligence, will help us plan production better and manage inventory better."
A few companies have already rolled out these types of tools. Goodyear Engineered Products has its DataDrive Market Intelligence System to help account managers evaluate sales trends, and Delphi has a similar tool called the Intelligent SKU Management solution. Some program groups have developed their own internal tools as well.
That doesn't necessarily mean that there won't still be excess inventory. "That doesn't change the fact that you still have four parts stores on a corner, and they all want to have the inventory to meet the needs of any job that pops up," Gardner says. "But we can better use data to create better replacement rates, and have a better understanding of here that inventory needs to be."
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