Opportunities will emerge for those prepared to look closely...
The words “don’t waste a crisis” are currently being used by politicians and business leaders ad nauseum. But there is a nugget of wisdom in this term, which can apply to any industry or sector, including auto parts.
I have been involved in providing delivery transport solutions for many aftermarket autoparts firms over several decades, and while I have never seen a challenge like this, memories of previous crises including the 1990s recession have taught me some businesses will recover faster than others.
The companies which attempt to learn from the current crisis and look hard for opportunities to control costs and introduce efficiency gains will find the “green shoots” sprout more readily during recovery.
Now is the right time to analyse:
In business, flexibility equals “survivability.” Even better, flexibility creates opportunities to grow. A flexible business is already more adaptable and better able to enjoy the spoils when times are good and minimise damage when times turn tough.
Not all areas of business lend themselves to flexibility, but logistics and parcel delivery is one high-cost area which many businesses could make more flexible by analysing their delivery fleet make-up.
Now is a great time to take liabilities off the balance sheet and introduce more flexible options for the logistics solution. A flexible business enjoys more control, and the ability to recover faster. Being flexible also creates opportunities for growth by allowing parts companies to trial new delivery runs cost-effectively.
Customer expectations are rising, and not even a pandemic will alter this trend. Communication, accuracy and reliability of service will only become more critical.
It is not all about speed. A quick turnaround is sometimes essential, but research shows communication and accuracy are highly valued. Be wary of any action which compromises customer service – having said that, the current crisis shows customers may tolerate reduced service levels, provided they feel well-informed and looked after. Communication is key.
The first step to improving efficiency is knowing the exact costs of doing business. For example, parcel delivery is an important and expensive business activity and knowing the exact delivery costs for your parts delivery provides clarity on potential for efficiency gains.
Efficiency is also helped by understanding value. For example, it may be tempting to find someone who can do a delivery for a few dollars cheaper, but what if it takes two hours longer? If the supplier does not have the systems or experience to improve your business, it is a false economy.
We are seeing improvements in digitalisation all the time, whether it is the ability to track items in transit or communicate directly with customers. Digitalisation not only makes you more efficient by helping with communication across the supply chain, it is also a potential customer service booster as customers love being accurately informed about their deliveries.
At a minimum, parts companies should consider digital tracking, communication to keep customers up-to-date, and proof of delivery systems.
Sometimes you need to be creative to solve a problem, but achieving this requires experienced operators who are able to treat your company’s challenges as if they were their own. For example, Ontime recently facilitated a conversation between two different companies to pool some of their delivery resources. They were each located on either side of a major capital city, and we found they could share some of the costs by teaming up on certain delivery runs. This created an instant and profound efficiency gain.