As the automotive industry continues its recovery from the 2008 recession and vehicles on the road continue to age, the aftermarket will face increased challenges in the year ahead, not the least of which is globalization.
Globalization, coupled with rapid technological innovations, translates into the need for virtually every company involved in some facet of the automotive aftermarket to be able to sell in different states and/or countries and operate in multiple regulatory environments.
Take, for example, the North American market. At present, nearly three-quarters of automotive parts are manufactured in the United States for assembled components produced in North America. An increasing amount of that North American production, however, is shifting to Mexico, where many suppliers are either planning to bring production facilities or have already set up operations to take advantage of low labor costs and the close proximity to the U.S. market. Mexico’s growing attractiveness is also being driven by political and economic issues in South America, which have combined to make that region a less attractive business location.
These same kinds of dynamics are being replicated around the world, generating a level of business complexity that represents a particular challenge for automotive parts wholesalers and retailers attempting to successfully manage and standardize business processes.
Despite their best efforts to standardize all processes, many process owners recognize that their so-called “standard” processes don’t actually meet the requirements of the various teams who are expected to use them. And let’s face it: If these processes can’t be applied, they may as well not exist. As Steve Stanton, Managing Director of FCB Partners, correctly observes: “Ninety percent of the organizations I know have failed at standardization.”
The automotive aftermarket has tended to respond to the challenges posed by process standardization in one of three ways. Some parts wholesalers and retailers have created standardized processes at a high-level only. These, unfortunately, are not really useful to anyone and are soon disregarded. Others in the aftermarket have developed mega-processes which provide for every possible variation. These too have proven to be useless, as their complexity stalls agility and ultimately fails to engage workers. Still others allow variant processes to be owned, managed and changed independently, which initially creates administrative headaches and ultimately leads to process management chaos.