Companies should cultivate an intuition for boundaries and possibilities in an industry like the automotive market, where innovation is continually felt. To put it another way, they can build their windmills when the time comes.
Industry 4.0, the fourth industrial revolution, blends information technology and operations technology to construct a supply chain-driven landscape. The automotive industry and its aftermarket are both affected by this trend. It improves visibility, speed, and productivity by making meaningful information accessible in real-time, reshaping how business is conducted with consumers, suppliers, and intermediary stakeholders.
Overview Of Automotive Aftermarket Supply Chain
The automotive aftermarket is the automotive industry's secondary market. Vehicle parts, machinery, and accessories are manufactured, distributed, retailed, installed, and remanufactured in this industry. T1, T2, and T3 as well as original equipment manufacturers (OEMs), as well as retailers and end-customers, make up the supply chain.
- Tier 3 suppliers include raw or near-raw materials such as metal, plastic, or rubber that are used to outfit the exteriors and interiors of vehicles. Subcontracting is the most common method of supplying all stages.
- Tier 2 suppliers are firms that make sub-components or provide Tier 1 suppliers with parts and components.
- They are always specialists in their field and are well-connected to major Tier 1 suppliers' supply chains.
- Tier 1 suppliers are those that supply OEMs with parts or components directly rather than through intermediaries. These manufacturers are deeply embedded in the OEM supply chain and serve a variety of OEMs.
There are two categories of supplier models in the automotive aftermarket:
- IAM (Independent Aftermarket) – Parts are manufactured/marketed by a corporation other than the automaker in the separate aftermarket. The components can be mass-produced in large quantities and customized to suit the needs of a variety of vehicles, not just one make or model. They are similar to OEM parts and are comparatively cheaper.
- OEM network – Components are manufactured/marketed directly by the automaker, not by a third party, in the OEM network. As a result of the fact that these parts are tailored to a specific make and model, they are more costly than items obtained from the independent aftermarket. To service the entire network, most OEMs use a three-tier distribution network that includes an entry warehouse, a central warehouse, and small regional distribution centers. Furthermore, some small-scale OEMs use 2-tier or direct distribution networks.
Challenges In Aftermarket Planning And Distribution
Even as the landscape of the automotive aftermarket changes with the emergence of new growth opportunities, there are key challenges in planning and distribution that must be addressed:
Role Of IT In The Automotive Aftermarket Supply Chain
The role of IT in the automotive aftermarket has changed over time. IT's original purpose was to assist with business transactions. Later, it evolved into an enabler that used specialized tools to facilitate preparation, execution, and collaboration.
Now, IT has become a strategic driver by enabling digitization and implementing new technologies that accelerate transactions, increase operational efficiency and improve decision-making.
As a result, IT will play a crucial role in resolving the aforementioned issues. Players may use sophisticated IT to:
- Improve demand, inventory, and procurement planning with specialized tools and techniques.
- Improve warehouse operations by incorporating cutting-edge technology such as robotics, RFID, and augmented reality.
- Create a shared forum for all stakeholders, allowing them to collaborate more effectively.
- Provide a common platform for all stakeholders, thereby enhancing collaboration and data transparency.
- Reduce response times to improve the customer experience.
- Improve decision-making with real-time data and user-friendly trends and reports
- Integrate data from different sources to increase accuracy and speed
- Leverage the above strategies to minimize total costs and improve efficiencies by empowering companies to move from regional to global solutions by implementing best practices
Digitization In The Automotive Aftermarket
Digitization has the potential to significantly change the supply chain in the industry. There will be new ways to connect with consumers, collaborate with suppliers, and communicate with data as original equipment manufacturers (OEMs) continue to expand from business-to-business through their dealerships to a business-to-consumer model. Business strategies will be altered as vehicles become more linked. The increasingly connected vehicle will alter business strategies from selling a product to providing a customer experience-centric value proposition.
Big data and analytics for demand sensing/reliability prediction
Big data refers to an organization's vast amounts of structured and unstructured data. Many of the activities and methodologies used to evaluate vast amounts of big data in order to better understand the internal and external environment for better decision-making are referred to as data analytics.
While big data analytics can improve end-to-end supply chain operations from inventory forecasting to pricing, it also necessitates cohesive integration across various functions and teams throughout the value chain so that the data generated by these functions and teams can be analyzed for accurate demand forecasting.
Telematics and the Internet of Things for Enhanced Reliability and Agility
Telematics uses sensors that measure activities and events in a vehicle and transmits this data to a remote server through wireless communications. Telematics makes use of a variety of technology, including GPS navigation, traffic statistics, infotainment, and emergency response.
It also uses vehicle diagnostics and dealer service contacts, which is especially useful for the automotive aftermarket. IoT refers to a network of physical objects, such as computers, vehicles, and buildings, that are equipped with sensors and communicate with one another through software and Internet connectivity.
When used in conjunction with IoT technologies, aftermarket telematics systems can track vehicle health, recognize the need for preventive maintenance, submit remote vehicle diagnostic reports when anything goes wrong, and even schedule service appointments. Vehicle ‘repairs' could be possible in the future, as technology progresses, through remote downloads.
Smart warehousing with RFID and IoT for greater transparency and productivity
A smart warehouse employs a variety of integrated warehousing technologies, such as RFID, IoT, drones, virtual reality, and others, to create an environment in which products are automatically received, marked, sorted, arranged, and pulled for shipment. This increases warehouse productivity and efficiency minimizes the number of human workers and decreases errors.
RFID is a cutting-edge inventory management system. Goods and packages entering warehouses are given a digital tag, which replaces paper labels with sensors and antennas. The data is then transferred to or between digital tags using radio waves, while the product information is recorded using an automated scanning device.
Using blockchain to reduce counterfeit parts and target recalls
A blockchain network consists of a digital, decentralized, and distributed ledger that allows members of the network to store, exchange, and preserve information. The distributed ledger keeps track of digital transactions between network members, such as the exchange of assets or data. Participants in the network commonly govern and agree on the updates to the records in the ledger. Every record in the distributed ledger has a timestamp and a unique cryptographic signature, making the ledger an auditable, immutable history of all transactions in the network.
The Automotive reseller Business
We have taken a detailed look into the automotive aftermarket supply chain and the impact that digitization can yield. It is time to focus on another aspect that has been booming on the sidelines. The reseller business model in the automotive industry has provided an opportunity for OEMs and distributors to work together and increase sales. While this setup provides OEMs greater control over their products and eliminates mediators in the supply chain, it also provides distributors a chance to work closely with OEM’s, and retailers, allowing them to source products easily.
What is a reseller?
A business that buys services or products to resell rather than consume. This is often applied to an affiliate marketer in eCommerce. Since they resell products to end-users, retailers are called resellers. Since they resell the products they buy to retailers, wholesalers are also known as resellers.
A reseller will purchase products for resale and benefit, while a retailer will purchase goods from a producer and then resell them to his customer at a higher price. The reselling chain would see a price increase from the producer to the supplier and finally to the customer, with each link in the chain profiting from the resale of the products. resellers might simply mark up the goods they resell, or they could add value through combining related products or repackaging.
A reseller typically wears a retailer's shoes. A reseller is typically a registered business structure or a person who buys and sells products and services for the purpose of generating revenue per sale transaction.
This is much of a sales mechanism in the retail chain, where merchants move in to sell products directly to customers from wholesalers. resellers must change commodity prices in order to allow significant profit margins on each product sold.
Resellers' sale prices are normally close to the manufacturer's suggested retail price. Since wholesalers often offer goods sourced from retailers, they are, by definition, resellers. Manufacturers can also be considered as resellers since they sell their products to wholesalers who in turn sell them to retailers.
Through repackaging their goods, partnering with fast carrier firms, and structuring a rational pricing strategy, some resellers add unrivaled value to their products, all of which contribute to increased sales.
In any case, each counterpart's ultimate objective is to produce a fair amount of profit for each transaction. What's more interesting is that the reselling business model isn't restricted to storefronts. There are a staggering number of online retailers competing for a piece of the pie in a variety of niche items.
Why is the reseller Business Structure booming?
It's simple to get started
When starting a company, it's critical to set aside some funds for the startup costs.
A large budget can be unrealistically out of control for newcomers. They may use the reselling model to soften the blow. This method is used by an infinite number of retailers.
Some of the winning strategies include selling on social media sites, distribution networks, and marketplaces.
If you want to sell items online, you don't have to keep any inventory on hand. You just need to think about where you'll sell them. The best thing is that online retailers will list their items on marketplaces like Amazon, eBay, and Etsy. The difficult part is locating niche items.
When these channels are in sync, a reseller will bulk import all of the best-selling products. To keep the inventory in order, the distribution channel automatically updates stock levels and variations.
If you want to resell items at an outlet, on the other hand, you'll almost certainly need to stock your shelves. In that case, inbound stock levels are needed to make sales.
Less financial commitments
You don't want money to be a stumbling block in your plans to start a business. Reselling goods online doesn't require you to set up any upfront costs if you have a responsive drop shipping plan in place.
When opposed to the costs of opening a physical store, you'll find that this is a drop in the bucket. The risk margins for retailers looking to resell products are much less than that of other business models. A manufacturer, for that matter, would perhaps have to opt for crowdfunding to scale the business.
A reseller can adjust the profit margins
You don't have to stick to the manufacturer's suggested retail price while you're reselling. You can set your own prices on both distribution platforms and online marketplaces.
Wholesalers buy vast amounts of products from suppliers. As a result, it's very likely that you'll be able to get the products at a discount. While this may be true, wholesalers, on the other hand, sell goods to retailers at prices that have a generous markup potential.
Order fulfillment is completed quickly and efficiently
To give you an example, online retailers will take advantage of Amazon's FBA (Fulfillment by Amazon) infrastructure. The scheme, which has over 90 million participants, offers advanced shipping solutions that are not only cost-effective but also broad in scope.
Even if it costs money to get hold of the fulfillment services; warehousing, picking, packing, refunds, returns, and so on, a reseller can push these pertinent costs to the selling price.
Since most of these platforms integrate with carrier companies such as FedEx, DHL, and USPS, resellers can easily deliver all orders across the globe.
How Do resellers Market Their Products?
To attract the right consumer base, it takes more than simply listing items on an eCommerce website.
Resellers must use social selling platforms to increase sales forecasts for their online stores. Users will track shoppable Instagram posts using a sales channel like Shopify. In addition to this marketing channel, Facebook allows you to create a shop section on your profile.
Shopify store owners can choose to use Facebook as a sales platform in their store. Even better, resellers can choose to set an ad budget.
It's crucial to keep track of whether your advertisements are bringing in the desired results at all times. Google Analytics provides a dashboard that allows you to see all of the relevant data at a glance.
It's simple to see which online campaigns generate the most traffic and conversions this way.
Resellers can advertise their products through email marketing and affiliate programs as well. There are resources that can help you automate all of these activities and, as a result, increase conversions.
Search engine optimization can take up a lot of your time, but it can help a reseller generate a lot of website traffic. In a nutshell, these are only a few of the well-known marketing strategies employed by resellers.
A Digital reseller Platform
The reselling business model has marked a separate place for itself in the automotive industry. Since digital transformation is key to accentuating the relationship between distributors and resellers, a digital reseller platform becomes a necessity to implement a structure and serve as a medium for both pirates to work in tandem.
Brainvire has worked extensively with clients in the automotive and aftermarket industry. We have developed several modules and functions for reseller platforms that have assisted both distributors and resellers to work together in harmony.
Brainvire has ideated a digital reseller platform with multiple components covering all aspects of the reselling supply chain. The platform touches all points in the distributor-seller-customer journey and provides a single comprehensive dashboard for all selling activities.
Distributors or authorized partners of an Original Equipment Manufacturer Company/vendor who have approached the distributor for their product sales or have already signed an agreement for distribution shall require a system to manage all these agreements with vendors and further to which these distributors do not directly sell the products to the end customers they promote their sales through a strong channel of resellers which has to be tracked by the system. The complete website will have 7 modules each offering a distinct function.
1. Distributor frontend website
This will be a website where the distributor will be able to Showcase products pertaining to specific areas to a specific user based on geographical location. Although he will not be directly involved in selling to end customers, he will do so through retailers. In order to find such retailers, the website will have a section where prospective retailers/traders can register on the platform. It will be a comprehensive solution to overlook the entire supply chain based on vendor incubation packages through resellers. This well-designed website comprises a secure reseller registration request so that customers can inquire about products directly with the enlisted resellers. This marketplace can simplify the purchase process for customers as well as resellers. For vendors, different packages can be highlighted which showcases how the distributor can help in fostering Sales of the vendor Products.
The vendors can request the distributor to become their authorized distributor for a particular product and particular geographical area. The vendors can then enter into different levels of partnerships which will determine the marketing and promotional plan formulated to sell their products. The same platform can be utilized by resellers/traders to raise a request for partnering with the distributor for fulfilling further Product sales to end customers for a specific product range. The website also has the option for customers to create a general inquiry for products. Customers will be able to search for resellers in their vicinity for purchasing products.
2. The distributor backend system
The backend system will be responsible for Automatic Lead assignment to the respective Salesperson. It will act as a CRM where each employee’s details will be entered to facilitate the management of employee skill set for the automatic lead assignment process. The distributor can set team-specific targets/goals and provide a dynamic scorecard based on Odoo’s actual data. He will be able to manage Sales Funnel on the product level to analyze and plan the procurement strategies considering the lead time of products.
Manage salesperson Commissions in the system by setting Commission rules. Set reseller targets and provide rebate structures to increase sales. The salesperson can claim Expenses incurred by them in reseller, an end customer visit, or any other activity. Set Attractive product/brand-specific incentive schemes for sales representatives of resellers as a strategy to increase sales. He can provide loyalty points as rewards for Incentive schemes if the targets are achieved and provide a feature to claim the rewards based on the loyalty points with each salesperson.
A claim request and approval provide a feature to redeem those points. Create Projects in the system for some big projects so that we can create tasks and assign those to respective people and take necessary actions internally like a task for technical to review, analyze and provide an estimate, a task for finance to verify the customer account based on purchasing potential, a task for a reseller to schedule activities to chase the lead, a task for a vendor to provide special pricing for bulk order is required, likewise. Manage hardware products, renewal-based products, subscription-based products, and service-based products in the system. The distributor can create events (for Trade shows, webinars, etc), manage its promotion and the registered users shall be converted to new leads. Manage credit limits for resellers and their approval flow.
The management of product inventories and a trigger for reordering rules to maintain safety stock in the warehouse. Create vendor-specific purchase orders and manage purchase agreements. Manage Shipping gateway and payment gateway integrations from one platform. Manage customer invoices and vendor bills. Manage Automatic Bank Reconciliation for Bank Feed. Manage distributor Headquarters and its sub-branches in the backend. Separate Chart of Accounts and a feature of Consolidation for generating financial consolidated account statements for HQ. Besides, the website also includes advanced features such as incentives for sales reps and rebates for resellers. The automated process offers a complete 360-degree view of the lead to rep process. It gives the client an upper hand to redirect salesforce objects in the right direction.
3. Mobile app for distributor backend
To ease accessibility, we developed a native mobile app for resellers that is identical to a website portal.
4. Vendor Portal
We can provide portal access to vendors so that they can keep track of their product sales. They can add their products, update the price list. They shall be able to check their Purchase orders, update Delivery schedules & share shipment details. All leads pertaining to the vendor shall be showcased. Vendor bills shall be shared on the portal.
Reseller Web Portal
Resellers shall get a web portal where we can share agreements, Contracts & they can digitally sign them & share them back to the distributor. Resellers can raise quotes for purchasing from the distributor. The distributor can assign leads to Reseller. Flash promo offers, rebate plans on the reseller portal are available. The platform showcases featured products which the reseller can further sign up to add to his sales portfolio. Resellers can share any lead from a web portal. Showcase the Reseller’s credit limit while the reseller is placing an order. Manage Credit note records issues by Distributor. Showcase the Sales report of the Reseller.
5. Mobile App for Resellers
A Native Mobile App for Resellers makes it easy for them to track their products, customer, and orders on the go. Resellers can utilize similar features which they can use on the web portal.
6. Universal Messaging Platform
We collaborated with reliable messaging platforms so that all parties can enable smooth communication. It has the option to initiate a Lead Specific Chat. We can add & remove people as and when required. Attachments can be shared. Each chat will have different stages like the Initial Inquiry stage, Potential Opportunity, Confirmed Order & Estimated scheduled delivery stage, Shipment tracking stage & Reviews & Rating stage. All parties can keep a record of all the lead-specific chats.
Overall, it is obvious to say that digitization plays a key role in enriching the distribution supply chain in the automotive aftermarket industry. The digital reseller platform is an all-encompassing marketplace for all stakeholders involved in the distribution chain.