Industry Round Table, Part IIBy Walter Berry
Article Date: 08-01-2005
Copyright(C) 2005 Associated Equipment Distributors. All Rights Reserved.
Your input is essential to the future of our association.
Last month, I wrote about our Industry Round Table meeting. I reviewed three topics: the economic recovery, profitability/margins, and technology. This month I would like to review the topics of channel-to-market, product support, and workforce development.
Regarding channel-to-market, I believe it's a fair statement that manufacturers are very supportive of the "traditional" dealer and that dealers are the preferred channel to get product to market. As rental demand has grown, dealers have become more actively involved in rental. And with AED's help, we are learning to better manage our rental fleets and operate our rental departments independent of our sales departments.It's also true that the national rental chains play a significant role in meeting the demand for rental equipment.
The lines continue to blur as dealers expand their rental presence and as the national chains increase the amount of warranty and light service work they perform, as well as the amount of parts inventory they carry. I think 10 or more years ago when rental really started to grow, many of us felt threatened by this emerging market because we didn't understand it very well. We now see it as a significant opportunity that can contribute to the bottom line.
Another trend that affects the channel-to-market is e-commerce. Much like rental, I think many of us felt threatened in the late 90's if our companies didn't have full Internet capabilities, let alone fancy websites. As we have learned more, we see e-commerce as an opportunity that can have a significant positive impact on our business.
The Round Table's consensus is that there is still untapped potential in product support. One of our problems is measuring the overall market size. We have good information regarding new equipment market share because manufacturers know exactly how many units they produced.
With a little work, we can get our new equipment market share by county for many of our product classes. But when it comes to aftermarket, we can only guess. It's difficult to manage areas that are not being measured well. It was agreed that manufacturers and dealers should continue to work together in an attempt to generate the information required to address these issues. Other discussion points under this topic included the use of extended warranties and flat-rate or task-based pricing.
Of course you cannot talk about product support without bringing up workforce development. Our current need for technicians is significant and given the potential to grow our product support business, the real need is even greater. Fortunately, AED and The AED Foundation have been focusing on this issue for some time. Workforce development entails more than just addressing the need for technicians, it also includes training and developing our current workforce and better understanding the financials and other metrics that affect our businesses. If we better understand the business we are in and what makes us money and what does not, we will feel less threatened as new trends come along.
Evaluating what is currently affecting us and anticipating new trends so we can understand the threats and opportunities, gives important direction to our trade association. And that is the purpose of the Industry Round Table. I hope you can see how these discussion groups influence the direction of AED and the services we provide.
To those who have participated in this and other Round Tables: Your input is essential to the future of our association and I thank you.
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