Bailey Overman is senior analyst for the Automotive Aftermarket Suppliers Association (AASA), which recently released its annual AASA Supplier Benchmarking Survey report.
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Having joined the AASA staff in 2012, Overman’s primary responsibilities include analyzing industry trends impacting aftermarket suppliers and authoring the association’s key surveys and reports, which include the benchmarking report, AASA Barometer, AASA Replacement Rates, AASA Automotive Aftermarket Status Report and more. A frequent presenter at AASA conferences and events, Overman also serves as group executive for AASA Emerging Leaders.
She recently answered a series of questions about the latest edition of the benchmarking survey:
Q: What is the background of the report?
A: The AASA Supplier Benchmarking Survey is the annual benchmarking survey available exclusively to AASA aftermarket supplier members. It was initiated in 2010 at the request of the AASA Marketing Executives Council (MEC) to cover key performance indicators strictly for aftermarket suppliers that are not currently tracked or whose aggregated results are not available elsewhere, such as:
- warranty returns;
- order metrics (fill rate, turnaround, shipping);
- operations and marketing; and
- key financial metrics such as pricing and gross margins.
The AASA Annual Supplier Benchmarking Survey is a vital tool in members’ business and strategic planning. The association recently released a high-level overview of the report, “How Do You Measure Up?” which is available online to the industry here.
Only participants receive the full, 150 pages of the analysis, which includes segmented results by company size and product category.
AASA supplier members cite the report as crucial to their business planning. It continues to be a key reason many suppliers join AASA since this information is not available anywhere else. We encourage members to take advantage of this opportunity to participate in this key supplier metric survey each year.
Q: Which methodologies are applied to formulating the report?
A: The AASA Annual Supplier Benchmarking Survey is sent to senior executives and key representatives at all AASA supplier member companies. It covers previous-year data (calendar or fiscal year, depending on the respondent’s company policies). Respondents’ answers are based on actual data, if available, or best estimates. Most questions are multiple choice, so numbers used in the report represent the midpoint of a selected multiple-choice answer.
It is important to note that this and all AASA member surveys are anonymous and answers are kept strictly confidential. Only aggregated results are reported. Individual responses are not released and are destroyed after results are compiled.
Q: How has the industry been doing regarding fill rates and order turnaround?
A: High fill rates are a key focus among aftermarket suppliers with a majority of respondents indicating a fill rate of more than 94 percent. Average fill rate by unit volume has increased from 2013, now at to an average of 95 percent, the typical channel partner requirement.
A similar trend was seen in fill rates by dollar value and fill rates by line item. The averages of both these metrics dropped below the typical supplier standard of 95 percent in 2013 but rebounded to 95 percent averages this year.
The average order turnaround for 2014 has changed very little since 2012, remaining steady at 3.2 days for most aftermarket suppliers.
Q: What are some of the trends relating to overnight shipping?
A: Over the last two years, a majority of respondents indicated that overnight shipping has increased. Currently, overnight shipping averages 2.2 percent of business for suppliers. Although this still remains a small portion of aftermarket supplier business, it is an important trend to watch.
Q: Is e-tailing continuing as a robust channel?
A: The majority of suppliers participating in the survey report they sell very little direct in the e-tailing channel. On average, only a small portion of aftermarket revenue is from selling direct through the e-tailing channel. Not surprisingly, “General Maintenance Parts” has the largest penetration of e-tailing while “Engine” has the smallest.
Although a majority of the respondents indicate that e-tailing direct sales has remained relatively stable from 2013, the rise in the mean indicates that some suppliers are pursuing this alternative channel. Supplier respondents estimate e-tailing sales have increased nearly 50 percent since 2012 with almost a quarter of respondents selling more than 10 percent of their products online by channel partners.
Q: How is the industry addressing the issue of warranty returns?
A: For many aftermarket supplier companies, warranty returns continue to be a pain point – as it is throughout the aftermarket supply chain. Almost a quarter of the survey respondents indicate warranty returns of 3 percent or more. The average percent of warranty returns for suppliers has increased since 2012.
When asked to estimate the percentage of their “warranty” or “off invoice” credits that were related to actual quality issues, the majority of respondents indicated that 99 percent of warranty returns are not related to an actual quality issue.
Q: What are some of the trends regarding payment terms?
A: One of the key trends tracked in the survey is payment terms with customers. Payment terms with retailers have traditionally increased but for the first time since tracking, they declined slightly for suppliers. Similar declines were seen with OES and WDs. International terms remained steady.
Q: Is in-house manufacturing increasing in volume?
A: The AASA Annual Supplier Benchmarking Survey over the past two years shows the trend of “re-shoring” by manufacturers. Nearly 70 percent of survey participants indicated that their manufacturing was performed in-house during 2014. Manufacturing products in the U.S. has increased since 2013 with more than half of supplier’s products being manufactured domestically.
Additionally, manufacturing products in Mexico has increased in the past year. On average, more than half of suppliers’ products are manufactured in North America. Survey respondents reported that 18 percent of products were manufactured in Mexico compared to 16 percent in the 2013.
Q: How are industry participants utilizing their marketing budgets?
A: Marketing budgets showed a slight decrease from the previous year for many supplier respondents. On average, marketing spend as a percent of aftermarket revenue was 3 percent for respondents in 2014.
Marketing spend devoted to both advertising and trade fairs increased from 2013. On average, nearly 20 percent of marketing spend is devoted to this segment. Despite customer-specific marketing decreasing this year, supplier respondents indicated they spend the most on average on that segment at nearly 23 percent.
Q: What cataloging trends are being reported?
A: In previous years we included the cataloging benchmarks in the AASA Technology Council IT Spend and Trends Survey, but forth going we decided to house this information in the benchmarking survey. On average, nearly 70 percent of customers are requesting vehicle application data in the ACES format while 60 percent of customers request data in the PIES format. These trends were similar from what has been traditionally by the AASA Technology Council.
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