A Q&A with Paul Johnson, general director of the global independent aftermarket, GM Service and Parts Operations (SPO).
What was ACDelco's biggest accomplishment in '07?
We've had several, including expanding our U.S. distribution footprint expansion for the first time in five years; we added several new Warehouse Distributors (WDs) and expanded several more existing WDs' areas of primary responsibility, or territories. That said, I would have to say our biggest accomplishment in 2007 was overseas, in what we call the Global Independent Aftermarket, or GIAM.
We took a major step forward in our efforts to globalize our aftermarket activities by opening our Aftermarket Product Center (APC) in Shanghai, China. The APC procures aftermarket service parts from all over the world for GM's growing GIAM channel. It also supports the re-sourcing of select past model service parts for sale by car dealers. Products sourced for the IAM channel are primarily under the ACDelco brand for all makes and models of vehicles.
Essentially, launching the APC helps us pull requirements together and better leverage GM's considerable OE volume and access to suppliers around the world to potentially find better ACDelco products for our customers.
We also are growing around the world and we already do business in over 100 countries. We are seeing substantial overseas growth, including 20+ percent in our Latin America / Africa / Middle East region, 25% in our Asia Pacific region, and over 50 percent in Europe. We see this including developing more globally in the future and we think ACDelco will be well-positioned around the world to capitalize on that trend.
2. What will be the biggest change the company will undertake in '08?
At AAPEX 2007, we launched "ACDelco 360" which is our new way of representing ACDelco's mission to provide a full circle of support to our distributors and their customers. We believe when our customers win, we all win. Therefore, we continuously work to bring our customers increasing value and support by looking at our businesses from every possible angle.
ACDelco 360 is not a tagline that we're using in advertising or on a parts box. What ACDelco 360 does represent is a fresh approach to our marketing, as it does the other pillars of our business — think of it as another way to describe our value proposition: Product Offering, Distribution Network, Customer Programs, e-Business Tools, Training, Marketing, and Relationships.
At AAPEX, customers saw the ACDelco 360 logo integrated into signage and other meeting materials, and show attendees saw it at our AAPEX booth. In 2008, we will continue to leverage it with our distributors and their customers. They are the ones who best understand the issues of their local marketplaces and we'll continue to rely heavily on their input and expertise to build ways to lead — rather than follow — in the market.
3. Has counterfeiting posed any problems for ACDelco?
Like many other manufacturers / companies, ACDelco has been impacted by counterfeiting. Sales of counterfeit replacement auto parts and components cost the global auto industry over $12B a year, according to the Motor & Equipment Manufacturers Association (MEMA); $3B of that total is in the U.S.
Unfortunately, it seems this issue will continue to persist as global commerce increases. ACDelco is just one player in the industry that has been targeted; specifically we've experienced counterfeiting of our intellectual property (IP). Earlier this year, we settled enforcement actions in two separate U.S. cases against individuals for infringement of our trademarks and diagnostic and repair software. We brought about these actions as part of our ongoing effort to protect our valuable IP rights in our brands and copyrighted materials and to protect consumers from misleading selling practices.
4. How do customers view your brand proposition? Does brand value translate to as many customers as it used to? Why or why not?
As I touched upon a little earlier, we recently rolled out "ACDelco 360," our way of representing ACDelco's mission to provide a full circle of support to our distributors and their customers. The response from our U.S. and international Warehouse Distributors (WDs) has been overwhelmingly positive: ACDelco 360 is an easily recognizable cue — a simple phrase to describe the value we bring to the automotive aftermarket and the customers who align with us.
I also attribute their reaction to the fact we're working together with them more than ever, soliciting their input and leveraging best practices. As we continue to grow and expand, I think we'll reach additional end customers who will recognize the relevance of the ACDelco brand — and therefore turn to us for our quality products and related services.
5. How does technology play into the company's product development? Will technology figure into a more prominent role in the future?
ACDelco's pledge always has been to provide high-quality, reliable products to the aftermarket. We have excelled for almost 100 years in the automotive aftermarket because our reputation and heritage are built on assuring that every ACDelco part meets our demanding requirements and — more importantly — our customers' expectations.
Given constant changes in technology, we're dedicated to ensuring all of our products meet ACDelco performance requirements and expectations — indeed, technology plays a significant role in product development. We incorporate technology changes into our rigorous testing requirements to give our customers confidence — whether they're selling, buying, or installing our products.
As our industry evolves toward alternative fuel sources and multiple variations of hybrid technology, ACDelco will stay on the cutting edge of providing quality parts to the automotive aftermarket. We'll be there to meet — or exceed — our customers' needs every step of the way.
We also incorporate these technology changes into our technical training to best support our customers in the independent aftermarket. Indeed, technology will continue to play a prominent role into the future.
We've leveraged the power of the personal computer to design more and more training elements that can be delivered directly to the technician, available either in the shop or at home on a 24 / 7 basis.
6. Do ACDelco's OEM ties help the company's aftermarket offerings? If so, which advantages does this connection offer?
Chris, you're correct: only ACDelco has the advantage of leveraging the expertise and resources of our parent company and OEM, General Motors. This heritage — combined with experience in engineering vehicles — allows us to leverage GM OEM offerings and provide a high-quality aftermarket portfolio for both domestics and imports.
This OE engineering center of expertise provides a direct feed of state-of-the-art information into ACDelco's broad offering of technical training. Constant updates keep us abreast of the myriad of emerging issues that confront the aftermarket industry daily.
Our GM connection also allows us to take advantage of our size and scale on a worldwide basis to further globalize our Warehouse Operations, Materials Management and Aftersales Engineering, all with a focus on the customer. Doing so allows us to potentially find better ACDelco product for our customers and provide the same high quality at a better price.
7. Any new acquisitions / new product launches slated for 2008?
ACDelco has been a global leader in marketing and distributing high-quality replacement parts for quite some time now. This year, we continued to add to our "All Makes / All Models" product lines to heighten our position in the automotive aftermarket — in fact, we increased our offerings by over 9,000 part numbers in just nine months (January – September 2007).
In 2008, we'll continue this growth. Without tipping our hat to the competition too much, we expect to focus on:
- Expanding our Air Conditioning product line
- Increasing our HD (Heavy Duty) coverage for Starters & Alternators
- Expanding our Fuel Pumps coverage
- Increasing our Suspension product offerings
- Expanding our Water Pumps coverage
8. How does the continued consolidation of distribution channels affect the way ACDelco does business?
As I touched upon earlier, we're actually focused on expanding our distribution, both domestically as well as internationally.
To make it easier than ever for our U.S. DDG — Dedicated Distribution Group — members (Warehouse Distributors) to business with us and grow our mutual business, we executed a new agreement with them effective January 1 of last year.
The simplified, more clear and concise agreement further encourages DDG members' participation in ACDelco marketing programs by providing incentives for sales – versus purchases – to the aftermarket. And, because it's for two years, versus the previous five-year one, the agreement provides us and ACDelco DDG members maximum flexibility in fast-changing global automotive aftermarket.
These new agreement helps ensure our customers — regardless if they are WDs, ISCs, or consumers — can find ACDelco in the marketplace. Why is this important? Perhaps Zig Ziglar said it best: "If people like you they'll listen to you. But if they trust you, they'll do business with you."
9. How have your training programs changed the way you do business?
I'm not sure if our training programs have changed the way ACDelco does business so much as the way ACDelco presents training has changed to ensure technicians can successfully compete in the market. ACDelco is proud to be an industry leader in aftermarket training for quite awhile now. That said, it's not sufficient to rest on our successes.
The delivery of timely and relevant technician training continues to be a challenge for the aftermarket. In addition to keeping technicians current with ever-emerging vehicle technologies, we needed a way to enable them to spend less time away from the shop. So, in 2006 we launched our "blended learning" approach to training, which supplements hands-on classroom instruction with Web-based courses.
Last year, we continued to enhance our training offerings, adding more classes, countries and languages, and offering access to a wider audience. I encourage your readers to visit www.acdelcotechconnect.com and click on the "ACDelco Boosts Training Offerings" link in the "What's New" column for a complete summary of our 2007 additions.
One in particular I'd like to highlight is that for the first time, ACDelco is offering our courses for a fee to Independent Service Centers (ISCs). While ACDelco training continues to be offered at no additional charge to ISCs that participate in ACDelco's Total Service Support program as well as to ACDelco Key Fleet members, now, non-participants / members can also purchase classes by visiting www.acdelcotechconnect.com for more information. Once they're aware of all that's available, they're sure to want join one of our programs.
10. How do you see your customer base changing in upcoming years?
As your subscribers likely have read about, or even experienced, there have been many mergers, acquisitions, and consolidations recently; those changes will likely continue as the aftermarket becomes even more "global," with more overseas companies doing business in the U.S., U.S. businesses expanding their global presence, and so on.
As discussed, locally, we're focused on working with our U.S. Dedicated Distribution Group — or DDG — network to grow our presence.
Globally, we're also focused on expanding our distribution footprints and better leveraging our existing operations to ultimately source the highest-quality products at the best prices to mutually benefit us and our customers. ACDelco conducts business in over 100 countries around the world and we've experienced annual double-digit growth in the outside of the U.S. (Asia-Pacific and European regions) since 2003. We'd like to continue this performance.
