The latest supply chain management idea that has hit the automotive aftermarket is called "POS" (pay-on-scan.) With this system, the retailer pays the supplier for the product when the retailer sells the product. After a quick read, this certainly sounds like a win-lose situation. However, after doing some research, I think this latest request by AutoZone bears some serious consideration.
Current suppliers: One of your major customers, if not your largest customer, has told you what he wants. Granted, he still wants things like quality and good pricing, but he has specifically pointed out pay-on-scan as something that he really wants and presumably needs at this time.
I think that you owe it to your company to discuss, explore and brainstorm with this customer about what you and he can do to make this a win-win situation. You probably wont get everything you want, and he wont get everything he wants, but you will both be better off than if you just throw up your hands and say it cant be done.
Dont forget your competitor now knows what your major customer wants, and he might find a way to give the customer what he wants and make money at the same time. A serious request by your major customer cant be ignored.
Potential supplier: What a great opportunity one of the really large potential customers in the market has told you the most important thing that he wants from his supplier. Its time to figure out how you can meet his needs. One of the first things that you will need to do is to learn exactly what this customer wants and needs, and develop a way you can make this a win-win situation for your company and your new customer. Remember, you wont have some of the problems that the current supplier has. For example, you wont have to deal with the current inventory situation. And bear in mind that this new customer will provide incremental business for your company.
So often when I hear comments about pay-on-scan or other supply chain management ideas all I hear is, "I cant do it," and, "You must do it, or I will change suppliers."
If companies are really going to make these ideas into win-win situations instead of win-lose or lose-lose situations, we need to use our minds and our communication skills to change how we do business. These ideas can then become win-win situations.
When we just stand there and say it cant be done, we are saying that we wont look at how we do business today or be willing to change to make our businesses more successful.
Kress is a senior-level executive with broad industry experience in the domestic and international aftermarket.
Pay on Scan: Show Some Backbone!
When will the manufacturers get enough backbone and just say no to AutoZone? It seems that if they give in to demands for POS, the result will be a nightmare! If they have to produce products, ship them, wait until theyre sold and then wait 90 days to be paid, theyre heading for financial ruin.
The manufacturers sell many of the same products to program distribution groups, independent WDs and jobbers. Are they so naive to think others wont demand the same? If they give in on POS to AutoZone, you can bet that as a NAPA jobber, Ill be demanding to know why Genuine Parts Co. isnt getting the same deal.
Are the manufacturers ready for that? With the number of suppliers shrinking, dont they realize that if AutoZone threatens not to buy from them, its not the end of the world? Who else will they be able to buy from after their unreasonable demands have driven even more manufacturers into financial ruin?
The time has come for the boards of directors of major manufacturers to look long and hard at their companys bottom line, and realize that giving in to the demand for POS from AutoZone will just be bad business.
NAPA Auto Parts
For the complete background on AutoZones proposed Pay-on-Scan system, see last months article, Pay on Scan Poses Hurdles for Suppliers in last months issue.