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Is Your
Company
Up To
Speed?
2014 Annual
Supplier
Benchmarks
AASA Special Report
August 2014
Is Your Company Up To Speed? 2014 Annual Supplier Benchmarks
AASA Thought Leadership:
Is Your Company Up To Speed?
2014 Annual Supplier Benchmarks
What is the AASA Annual Supplier Benchmarking Survey? The AASA Annual Supplier Benchmarking Survey is the annual benchmarking survey available exclusively to AASA aftermarket supplier members. Full responses are strictly confidential and anonymous. A vital tool in members’ business and strategic planning, the AASA Annual Supplier Benchmarking Survey covers aftermarket supplier key performance indicators not currently tracked or available elsewhere, such as:
warranty returns,
order metrics (fill rate, turnaround, shipping), operations and marketing and
key financial metrics. The full analysis of AASA Annual Supplier Benchmarking Survey results includes significantly more data points and insights on the topics mentioned in this analysis and a number of subject areas and metrics not discussed here. The full report includes over 100 pages of analysis which many members cite as crucial for their business planning. Only participants receive the full AASA Annual Supplier Benchmarking Survey analysis which includes segmented results by company size and product category. AASA members are encouraged to take advantage of this tremendous opportunity to participate in this key supplier metric survey each year. If you are interested in receiving the full report, please contact Bailey Overman at [email protected] to make sure you receive an invitation to participate in May 2015.
The following report contains key high level take-aways from the full survey.
Is Your Company Up To Speed? 2014 Annual Supplier Benchmarks
Warranty Returns: A large issue for aftermarket suppliers
For many companies, warranty returns are becoming a larger issue with over a quarter of respondents indicating warranty returns of three percent or more. The average percent of warranty returns for suppliers has increased since 2012. Based on the feedback from respondents, the automotive aftermarket has roughly $3.9 billion dollars of parts warranty returns a year. Majority also indicated that 2.5% or less of returns are related to actual quality issues. If the industry could reduce warranty returns by half, the industry could save ~$2 billion which would go straight to the bottom line of suppliers and channel partners. If the industry could reduce returns to just quality issues, the industry would have $3.9 billion in additional profit.
Is Your Company Up To Speed? 2014 Annual Supplier Benchmarks
In 2013, the warranty task force was created to combat this issue. The warranty task force is a
collective effort of AASA and ASA to identify opportunities to reduce “preventable” warranty in the
aftermarket. The group is evaluating training, product awareness, and other initiatives that are
focused on all levels of the distribution chain in order to reduce the approximate $3.9 billion of waste
in the aftermarket.
Is Your Company Up To Speed? 2014 Annual Supplier Benchmarks
Fill Rates: Key Focus for Aftermarket Suppliers High fill rates are a key focus among aftermarket suppliers with majority of respondents indicating a fill rate of higher than 94%. Although after seeing three years of the average fill rate by unit volume increasing, there was a slight decline seen in 2013.
A similar trend was seen in both fill rate by dollar value and fill rate by line item. Both of these metrics’ average dropped below the 95% typical supplier standard. Has differentiation by high fill rates become less important to suppliers or were other factors affecting 2013 rates? Average order turnaround for 2013 remained steady at 3.2 days for aftermarket suppliers. There was little change seen from 2012 in order turnaround.
Is Your Company Up To Speed? 2014 Annual Supplier Benchmarks
e-Tailing: A growing niche market Majority of supplier respondents sell virtually nothing directly in the e-tailing channel. Surprisingly a third of respondents did have 1 percent or more sales that were direct to consumer. The average e-tailing direct business in 2013 remained relatively the same as the previous year. On average, 1 percent of aftermarket sales are sold direct through the e-tailing channel for suppliers.
Is Your Company Up To Speed? 2014 Annual Supplier Benchmarks
Although the responses vary on the estimate for the e-tailing sales by channel partners, majority of respondents estimated it was below 6 percent of sales. With an average over 5 percent, the e-tailing channel was estimated to have grown from 2012, although this still remains a niche market.
Is Your Company Up To Speed? 2014 Annual Supplier Benchmarks
Payment Terms Continue to Plague Suppliers In 2013, payment terms with retailers average about 200 days for respondents. A third of respondents indicated they had average terms of 291 days or greater. Payment terms with retailers has increased from the previous year. Payment terms with WDs/Distributors were much less than retailers with the majority of respondents indicating terms of 46 to 90 days. Terms with OES and international customers were low as well.
Marketing Spend on Digital Training Tools One of the new questions asked in the 2014 AASA Annual Supplier Benchmarking Survey was how much marketing spend suppliers are investing in digital training tools. On average, aftermarket suppliers reserved 7% of their marketing budget for digital support tools. AASA will be looking in 2015 to see how this number trends as digital support tools become more integral to the aftermarket’s success.
Is Your Company Up To Speed? 2014 Annual Supplier Benchmarks
AASA Pulse Participants Get Much More! This report spotlights only the high level trends for the 2014 AASA Annual Supplier Benchmarking report. Survey participants received detailed information on more subjects from the results: data on product, company size splits and much more. If your company was one of the few AASA members that didn’t take the 2014 AASA Annual Supplier Benchmarking this year, make sure you participate in 2015. Contact Bailey Overman to be added to the 2015 AASA Annual Supplier Benchmarking survey distribution list: [email protected]. Produced and edited by:
Curtis Draper, AASA vice president of industry analysis, planning and member services
Bailey L. W. Overman, AASA senior analyst of industry analysis
Krysta Messier, AASA junior analyst of industry analysis
