Vendor Newsmaker Q&A: Daniel Schildge

Please explain CRP's involvement with manufacturer's North American Free Trade Agreement (NAFTA) marketing plans and how this can boost sales.

We are very involved with our manufacturers' NAFTA marketing plans on a strategic level. We know the market and they know their products and strengths. We meet with them regularly and discuss the best ways to take their products and strengths and make them successful in this market. A lot of time is spent discussing how we are going to work together to sell their products in North America — that is step one. Step two is in product development. We have an excellent product development team here at CRP. We do not typically design products, but we take what our manufacturers make and figure out how to successfully sell it. In some cases, we do work with suppliers to develop new products.

A good example of this is ContiTech. About 11 years ago, we started working with ContiTech to buy tooling to extend their line of timing belts. Over time, we teamed up to develop a complete program of timing belts for the North American market. Then, we worked with them to develop timing belt kits that also included tensioners and idlers. We've since taken that idea to the next generation with our ContiTech ProSeries kits by adding water pumps to the mix. We've done this together with our suppliers and tied this in with our marketing plans.

One of the things we take control of are the logistics and operations. Our suppliers are generally set up to ship in bulk. We'll break down these bulk packages and individually package the product as required, label them, put in kits, basically do everything it takes to sell the product.

We also conduct a lot of ‘push and pull’ marketing. We've been focused quite a bit on technicians for the past few years, because it really comes down to the installer who decides what brand name to buy. The installer is the person who has the brand preference.

The final marketing service we provide is the sales component. We have a very large sales team here at CRP. It is an experienced team, and it does some things that are fairly unique. We help our distributors to train their sales team on our products, and help them figure out how to better sell our products.

What are the biggest challenges CRP faces working with international clients and how does the company overcome them?

The biggest challenge we face working with international clients is that European companies generally underestimate what it takes to be successful in the NAFTA market. The common conception is, 'Wow, North America is such an enormous market, I just have to get a small piece of that business and I am going to be happy.' But they don't realize how difficult that is. Yes, North America is a huge market, but it is also well-served and very competitive with a lot of excellent suppliers. You really have to know what you are doing to play here. It is better for us and our suppliers if we can educate them early on about the North American market and work with them collaboratively to show them how to advance their sales.

One of the things we find that it takes to be successful in this market is a complete program. Most European auto parts manufacturers do not have a complete program for the U.S. market, or even a complete program for the European cars in the U.S. market. That is always a challenge.

We find cataloging a challenge, as it is a lot different in Europe than it is in the U.S., so we take that on. Without a catalog you are not going to succeed in North America. You have to have EDI in this country, and it is a different format than used in Europe. That is another common challenge our suppliers have.

Another challenge is marketing and sales support. The expectations of customers in the U.S. are very high in terms of the marketing and sales support that they expect to get. They'll distribute our products, but they expect us to teach them how to sell the products and also provide the necessary collateral material. We make certain to deliver all of this. We have several employees whose sole job is to call on installers with our customers’ sales teams and help them sell our products more effectively.

We are very focused on high-quality products. We are in the premium segment of the aftermarket. There will always be someone with a lower price point. So it is up to us to teach our distributors how to convince the installers that our products are worth more.

Because there are so many good companies in the U.S., the service level requirement are immense. They are significantly different than what our suppliers are typically accustomed to. Our customers expect rapid, accurate orders. They want a high fill rate. This is a challenge for a European supplier, so we take on that burden for them. Packaging and labeling in the U.S. is very different than it is in Europe, and that tends to be a challenge as well. The payment terms and return policies are also difficult. So we educate them and try to help them understand.

Another real challenge is the long product lead times. We average about 10 weeks from order to delivery with our European supplier base. Since these are OE suppliers, we also experience a crunch when they are at capacity supplying the auto makers. To handle these challenges, we have a very well-trained purchasing department that manages about 12,000 different part numbers, and that takes a lot of technology and a lot of effort. We also maintain a lot of inventory. That is what it takes to exceed our customers' expectations. When they order from us, they expect it to be shipped right away with a high order fill and in an accurate manner.

What are CRP's main focuses in regard to customer service?

The No. 1 thing for us is high-quality products. We will not take shortcuts on quality. That is what CRP is all about. The on-time delivery, the high fill rate, the accurate shipments, those are requirements. If you want to do business in this market, you have to do that. Quality is more of a discretionary decision. Certain companies focus on high quality, while others might focus on price or value. We made the decision a long time ago that our focus is on high-quality products. Along with the high-quality and delivery pieces, we like to think of ourselves as ‘high touch’ with our customers. Our people know our customers well because they have been working with them for a long time. We want to be close with our customers.

A few years ago, we did a whole rebranding effort for CRP. We surveyed customers and asked, 'What does CRP mean to you?' The result was pretty resounding: Quality, service and trust. This is very pleasing to us because that is what we think we are all about. It is high-quality products, exceptional service and we've been doing it this way for 60 years. We've built trust.

Within the customer service realm, infrastructure is very important. We have four shipping points in North America — one in Canada, one in Mexico, and two in the U.S.. These include Fremont, CA, and our new headquarters here in Cranbury, NJ. A few years ago, we recognized that we had outgrown our facility in Carteret, NJ., which we had occupied for 45 years. We built a brand-new 108,000 square-foot building in 2009, right in the middle of the financial crisis. It is a state-of-the-art facility. With 36-foot-clear ceilings, it tripled our storage capacity. We went from four shipping docks to 14. We've really found we can much more efficiently and effectively service our customers.

We got our certificate of occupancy here in late April 2009 and we started moving product in. A week later, we were shipping our largest OES customer out of this facility. This particular customer provides a great example of the changes we've made in our operations over the last ten years. We used to ship them huge monthly orders. Basically our entire warehouse staff would work on these orders for 1-2 weeks. It was an operational disaster. We would still serve the customer very well, but it was hard on us. Then the customer pushed us to switch to weekly shipments so they could trim their inventory and we could smooth out our operations. As we improved the processes, it got to the point that two pickers would take two days to pick the weekly shipments. Now, in this new building, with the way we set up our products and operation, it only takes one day to pick those orders, which are going to seven distribution centers around NAFTA. That tells you something about our commitment to customer service. It is a very good program that has been set up specifically to deliver high-quality service to our customers.

What are some of the new products currently being offered by CRP?

ContiTech timing belt kits are a very successful product line for us. The newest product is the Pro Series Kits. We developed these kits as a result of what we learned from talking with technicians. When the more quality-minded installers change a timing belt, they usually change the tensioners and the idler. So the techs asked, 'Why don't you put these in a kit?' So we developed a great kit program, which included the timing belt, the tensioners, and the idler. We also got feedback on adding a water pump for applications on interference engines, where the timing belt also drives the water pump. And that developed into our Pro Series kit that has been out for about two years.

Another area where we have great new products is technical fluids. The technical fluids in the car are rapidly shifting from being generic to application specific. Modern engines have much tighter tolerances and run much hotter. Car makers' efforts to get better gas mileage and more power out of a smaller engine has made a huge change in the technical fluids that go into those vehicles. Now you need to put the right antifreeze and approved motor oil into a car. That has helped us grow our Pentosin business, because they are very focused on application-specific, high quality fluids. One recent product launch for Pentosin is antifreeze for Asian vehicles, which have different requirements than American and European vehicles. We launched our first one in the past few months and have quite a bit of success. There is a demand for it because if you put the wrong antifreeze in a vehicle, you end up with a very expensive repair. Another recent launch is transmission fluid for the new double clutch transmissions. Pentosin is a global leader for transmission fluids, particularly for double clutch transmissions. This is another area where the old, generic ATF will not work in the modern cars.

Our third new development category is our Rein Automotive brand, which we are developing into a comprehensive undercar parts program. We are sourcing this brand from a variety of OE quality manufacturers in order to get the right mix of products we need for a broad program. Right now our focus is on a high-quality branded undercar program for European cars. It includes engine mounts, suspension parts, steering parts, wheel bearing kits, and axle boot kits. We are working to make this a better package for our warehouse distributor customers so that they can successfully sell it. We also work closely with the installer community at training seminars where we can talk to them about our products and educate them about what is different with our products. We want show them why is it worth their while to use our products.

Please explain CRP's involvement with manufacturer's North American Free Trade Agreement (NAFTA) marketing plans and how this can boost sales.

We are very involved with our manufacturers' NAFTA marketing plans on a strategic level. We know the market and they know their products and strengths. We meet with them regularly and discuss the best ways to take their products and strengths and make them successful in this market. A lot of time is spent discussing how we are going to work together to sell their products in North America — that is step one. Step two is in product development. We have an excellent product development team here at CRP. We do not typically design products, but we take what our manufacturers make and figure out how to successfully sell it. In some cases, we do work with suppliers to develop new products.

A good example of this is ContiTech. About 11 years ago, we started working with ContiTech to buy tooling to extend their line of timing belts. Over time, we teamed up to develop a complete program of timing belts for the North American market. Then, we worked with them to develop timing belt kits that also included tensioners and idlers. We've since taken that idea to the next generation with our ContiTech ProSeries kits by adding water pumps to the mix. We've done this together with our suppliers and tied this in with our marketing plans.

One of the things we take control of are the logistics and operations. Our suppliers are generally set up to ship in bulk. We'll break down these bulk packages and individually package the product as required, label them, put in kits, basically do everything it takes to sell the product.

We also conduct a lot of ‘push and pull’ marketing. We've been focused quite a bit on technicians for the past few years, because it really comes down to the installer who decides what brand name to buy. The installer is the person who has the brand preference.

The final marketing service we provide is the sales component. We have a very large sales team here at CRP. It is an experienced team, and it does some things that are fairly unique. We help our distributors to train their sales team on our products, and help them figure out how to better sell our products.

What are the biggest challenges CRP faces working with international clients and how does the company overcome them?

The biggest challenge we face working with international clients is that European companies generally underestimate what it takes to be successful in the NAFTA market. The common conception is, 'Wow, North America is such an enormous market, I just have to get a small piece of that business and I am going to be happy.' But they don't realize how difficult that is. Yes, North America is a huge market, but it is also well-served and very competitive with a lot of excellent suppliers. You really have to know what you are doing to play here. It is better for us and our suppliers if we can educate them early on about the North American market and work with them collaboratively to show them how to advance their sales.

One of the things we find that it takes to be successful in this market is a complete program. Most European auto parts manufacturers do not have a complete program for the U.S. market, or even a complete program for the European cars in the U.S. market. That is always a challenge.

We find cataloging a challenge, as it is a lot different in Europe than it is in the U.S., so we take that on. Without a catalog you are not going to succeed in North America. You have to have EDI in this country, and it is a different format than used in Europe. That is another common challenge our suppliers have.

Another challenge is marketing and sales support. The expectations of customers in the U.S. are very high in terms of the marketing and sales support that they expect to get. They'll distribute our products, but they expect us to teach them how to sell the products and also provide the necessary collateral material. We make certain to deliver all of this. We have several employees whose sole job is to call on installers with our customers’ sales teams and help them sell our products more effectively.

We are very focused on high-quality products. We are in the premium segment of the aftermarket. There will always be someone with a lower price point. So it is up to us to teach our distributors how to convince the installers that our products are worth more.

Because there are so many good companies in the U.S., the service level requirement are immense. They are significantly different than what our suppliers are typically accustomed to. Our customers expect rapid, accurate orders. They want a high fill rate. This is a challenge for a European supplier, so we take on that burden for them. Packaging and labeling in the U.S. is very different than it is in Europe, and that tends to be a challenge as well. The payment terms and return policies are also difficult. So we educate them and try to help them understand.

Another real challenge is the long product lead times. We average about 10 weeks from order to delivery with our European supplier base. Since these are OE suppliers, we also experience a crunch when they are at capacity supplying the auto makers. To handle these challenges, we have a very well-trained purchasing department that manages about 12,000 different part numbers, and that takes a lot of technology and a lot of effort. We also maintain a lot of inventory. That is what it takes to exceed our customers' expectations. When they order from us, they expect it to be shipped right away with a high order fill and in an accurate manner.

What are CRP's main focuses in regard to customer service?

The No. 1 thing for us is high-quality products. We will not take shortcuts on quality. That is what CRP is all about. The on-time delivery, the high fill rate, the accurate shipments, those are requirements. If you want to do business in this market, you have to do that. Quality is more of a discretionary decision. Certain companies focus on high quality, while others might focus on price or value. We made the decision a long time ago that our focus is on high-quality products. Along with the high-quality and delivery pieces, we like to think of ourselves as ‘high touch’ with our customers. Our people know our customers well because they have been working with them for a long time. We want to be close with our customers.

A few years ago, we did a whole rebranding effort for CRP. We surveyed customers and asked, 'What does CRP mean to you?' The result was pretty resounding: Quality, service and trust. This is very pleasing to us because that is what we think we are all about. It is high-quality products, exceptional service and we've been doing it this way for 60 years. We've built trust.

Within the customer service realm, infrastructure is very important. We have four shipping points in North America — one in Canada, one in Mexico, and two in the U.S.. These include Fremont, CA, and our new headquarters here in Cranbury, NJ. A few years ago, we recognized that we had outgrown our facility in Carteret, NJ., which we had occupied for 45 years. We built a brand-new 108,000 square-foot building in 2009, right in the middle of the financial crisis. It is a state-of-the-art facility. With 36-foot-clear ceilings, it tripled our storage capacity. We went from four shipping docks to 14. We've really found we can much more efficiently and effectively service our customers.

We got our certificate of occupancy here in late April 2009 and we started moving product in. A week later, we were shipping our largest OES customer out of this facility. This particular customer provides a great example of the changes we've made in our operations over the last ten years. We used to ship them huge monthly orders. Basically our entire warehouse staff would work on these orders for 1-2 weeks. It was an operational disaster. We would still serve the customer very well, but it was hard on us. Then the customer pushed us to switch to weekly shipments so they could trim their inventory and we could smooth out our operations. As we improved the processes, it got to the point that two pickers would take two days to pick the weekly shipments. Now, in this new building, with the way we set up our products and operation, it only takes one day to pick those orders, which are going to seven distribution centers around NAFTA. That tells you something about our commitment to customer service. It is a very good program that has been set up specifically to deliver high-quality service to our customers.

What are some of the new products currently being offered by CRP?

ContiTech timing belt kits are a very successful product line for us. The newest product is the Pro Series Kits. We developed these kits as a result of what we learned from talking with technicians. When the more quality-minded installers change a timing belt, they usually change the tensioners and the idler. So the techs asked, 'Why don't you put these in a kit?' So we developed a great kit program, which included the timing belt, the tensioners, and the idler. We also got feedback on adding a water pump for applications on interference engines, where the timing belt also drives the water pump. And that developed into our Pro Series kit that has been out for about two years.

Another area where we have great new products is technical fluids. The technical fluids in the car are rapidly shifting from being generic to application specific. Modern engines have much tighter tolerances and run much hotter. Car makers' efforts to get better gas mileage and more power out of a smaller engine has made a huge change in the technical fluids that go into those vehicles. Now you need to put the right antifreeze and approved motor oil into a car. That has helped us grow our Pentosin business, because they are very focused on application-specific, high quality fluids. One recent product launch for Pentosin is antifreeze for Asian vehicles, which have different requirements than American and European vehicles. We launched our first one in the past few months and have quite a bit of success. There is a demand for it because if you put the wrong antifreeze in a vehicle, you end up with a very expensive repair. Another recent launch is transmission fluid for the new double clutch transmissions. Pentosin is a global leader for transmission fluids, particularly for double clutch transmissions. This is another area where the old, generic ATF will not work in the modern cars.

Our third new development category is our Rein Automotive brand, which we are developing into a comprehensive undercar parts program. We are sourcing this brand from a variety of OE quality manufacturers in order to get the right mix of products we need for a broad program. Right now our focus is on a high-quality branded undercar program for European cars. It includes engine mounts, suspension parts, steering parts, wheel bearing kits, and axle boot kits. We are working to make this a better package for our warehouse distributor customers so that they can successfully sell it. We also work closely with the installer community at training seminars where we can talk to them about our products and educate them about what is different with our products. We want show them why is it worth their while to use our products.