What is the gap between China and the US auto parts supply chain?It is often said that the Chinese automotive aftermarket is similar to the US model, and many aftermarket practitioners are also keen to travel to the United States to visit and learn from the field, and even to learn from the experience and models of some US markets.
In the past two years, we have visited and reported related companies in the US market, and also analyzed the status of the US market and the characteristics of related companies through articles such as financial report interpretation and overseas cases.
Due to the continuous increase in capital in recent years, the auto parts supply chain has become one of the most concerned areas. In the US market, the four major listed auto parts chains are familiar. The comparison between China and the US market in this field is a topic worth exploring, which will help to understand the current situation of the industry.
We compares the differences and gaps between China and the US auto parts supply chain from several levels, such as warehouse logistics, system data, procurement and supply chain, private brand, and employee quality.
1 Warehouse logistics system
As we all know, the four major auto parts chains in the United States are national chains, occupying nearly 40% of the US market share.
One of the reasons behind such a high market share is that it has established a more extensive and complete warehousing and logistics system, especially the number of outlets in front warehouses, which are spread throughout the United States.
Comparing the warehousing and logistics system of the auto parts supply chain in the Chinese and American markets, we can find that there is a certain gap between the two sides.
First, the offline system in the US market is more complete. Taking AutoZone as an example, its offline network system is divided into 4 levels, which are central warehouse, mega hub, hub, and satellite store. Among them, mega hub is the store system that AutoZone has developed vigorously in the past two years. It is also the largest store with the most complete stocks. Most importantly, it also assumes the function of radiating stores to make the entire system more flexible.
In addition, such as O'Reilly has set up a super front warehouse in addition to the front warehouse, the function is similar to the mega hub.
Compared with the United States, the domestic mainstream auto parts supply chain's warehousing and logistics system is roughly divided into three levels: central warehouse, provincial warehouse and front warehouse. Sold to repair stores. There is still room for improvement in the flexibility of goods transfer in this process.
The second is the number of front warehouse outlets. AutoZone has grown to 6411 auto parts stores in 2019, growing at an average annual rate of 200. As of the end of 2018, there were nearly 6000 NAPAs, more than 5,000 O'Reillys, and nearly 5,000 Advance Auto Parts. The total number of outlets exceeds 20,000.
In contrast, there are several leading auto parts supply chain companies in China. There are more than 900 stores directly operated by Xinkangzhong. Nearly 1,000 auto service franchise service stations. The data of three heads and six arms shows that there are 1,800 contracted service providers at the end of 2019. There is still a certain distance compared to the Big Four in the United States.
The third is the stocking rate. Taking AutoZone as an example, the SKU reaches more than 200,000, and its central warehouse stocking rate is as high as 98%, and the satellite warehouse stocking rate is as high as 60% -70%. It can store 70,000-10,000 different SKUs in a mega hub. This is also one of the reasons for its realization of front stores and back warehouses, and at the same time complete retail and transfer. Like NAPA, its SKU is higher, more than 500,000.
In the Chinese market, as far as wearing parts are concerned, their SKUs have not reached the level of the US market, and the stocking rate and the ability to adjust goods also need to be improved.
Fourth is the delivery time. Because of the higher network density, the delivery time in the US market is more stringent and, of course, faster. Common accessories can be delivered to customers within 45 minutes. The Chinese market currently may take more than 2 hours.
In addition, during the study tour of AC Motors in the United States in 2019, a relatively representative incident occurred. When visiting a maintenance store, it happened that an O'Reilly employee sent a small screw-like accessory to the store, so that We were very surprised: such small accessories are worthy of being delivered by the employees themselves. The manager told us that O'Reilly can deliver the accessories they need in about 15 minutes by calling.
2 Data and systems
At the data level, China is the IWC market, with more brands and models than the US market. The data can be described as chaos, and there is no uniformity in the upstream and downstream of the industrial chain. The reason behind it is more from historical evolution.
It is understood that the US market data is divided into two categories, one is model data, and the other is parts data. Model data is based on Association ACES (Application Catalogue Exchange Standard) and component data is based on PIES (Product Information Exchange Standard).
Of course, the US market did not form a unified national data standard from the beginning. During this period, the Automotive Aftermarket Industry Association continued to promote legislation in Congress to allow OEMs and government agencies to open up relevant data.
The model data of the Chinese market is controlled by the OEM and government departments, and the parts data is also controlled by the OEMs. All of them are relatively closed, resulting in a lack of a unified language on the market. Although a number of data companies have appeared, they have not been described well. Collaboration and interaction.
When the data is not unified, the system cannot work well. There are many third-party systems in the Chinese market. Xinkangzhong has also developed its own system F6, but from the market feedback, the system utilization rate is relatively low, and the procurement of parts is more traditional. Phones, WeChat groups, and QQ groups are still used. Mainly, resulting in low efficiency.
In any case, an efficient and orderly market requires a uniform set of standards, which is the basis for everything. Judging from the US market experience, this road is not smooth and may take a long time.
3 Procurement and supply chain
It can be seen from the annual reports of major auto parts chains that they attach great importance to procurement and supply chains, and have established a system for this.
In terms of procurement, there are three obvious trends.
The first is diversified procurement. In FY 2019, one supplier contributed nearly 12% of AutoZone's purchases, and other suppliers' purchase share did not exceed 10%, which could prevent one supplier from having too much voice.
The second is to seize mainstream suppliers. Although the auto parts chain will not make a supplier overweight, it will select a batch of mainstream suppliers. Taking NAPA as an example, in 2018 NAPA had more than 100 suppliers, but 49% of purchases were provided by 10 major suppliers.
The third is product selection and replacement. Take the auto parts distributor The Network as an example. They have buyers around the world looking for suitable suppliers. After finding the target, it will be reported to the headquarters, and 50 shareholders will vote. If the pass rate exceeds 66%, the product line will pass. Their supplier change frequency is very high.
In terms of supply chain, the US market has divided the products from the four major auto parts chains to dealer alliances into three levels, which are good / better / best, so as to give customers more choice.
In addition, as the system and data are more complete, high-frequency transfers and replenishment between warehouses at all levels can be achieved.
For example, AutoZone has been researching the front warehouse model, store inventory levels, and product strategies. Secondary stores receive 3 or more product deliveries from the distribution center each week. As the mega hub continues to expand, AutoZone hopes that most auto parts stores can enjoy same-day delivery or even more than one day delivery.
The above system is the experience and processes accumulated over decades. At present, the auto parts supply chain companies in the Chinese market cannot be fully realized. Of course, it depends on the improvement of infrastructure and the need to have a large enough body to win a greater voice. .
4 Private brand share
When AC Auto interviewed Zhao Jianmin, the executive partner of Auto Parts Cats in 2019, he heard a point of view: the auto parts supply chain platform should develop its own brand, which is the future trend.
The reason behind this is that the overall price of the auto parts market is becoming more transparent, especially for international brands. The mode of relying on product supply to make the difference is getting narrower and narrower, and private brands can bring greater profits.
At present, many supply chain platforms in China are moving in this direction, but their share is limited, and they are still dominated by international and domestic brands. And the US market seems to be moving forward.
It is understood that more than 50% of AutoZone's accessories sales in fiscal year 2019 came from its own brands. AutoZone has established cooperative relationships with many factories around the world, which helped AutoZone OEM. At present AutoZone has established a series of brands such as AutoZone, Duralast, Duralast Max, Duralast Gold, Duralast Platinum, Duralast ProPower, Duralast GT, Valucraft, SureBilt, ProElite and TruGrade.
In the future, if China's auto parts supply chain companies want to go faster and further, the development of private brands is the only way.
5 Staff quality
The success of any business model needs to fall to the executive level of the staff, and the quality of the staff may bring about essential differences.
The quality of employees mainly includes two levels, one is the technical level, and the other is the service level.
At the technical level, the first is that the US market places great emphasis on employee training and is mandatory at the legislative level. AutoZone offers multiple forms of on-the-job training programs, including annual sales conferences held in distribution centers, store training sales skills and product knowledge, computer-based sales and technical training, and training provided by dealers and third parties. Managers at all levels also receive financial training.
The second is the high penetration rate of cars in the US market. Almost every employee owns his own vehicle and has a natural advantage in car familiarity. These factors make employees more technically capable and provide customers with more valuable advice.
At the service level, customer satisfaction is at the core of every company's emphasis, emphasis, and assessment. Taking AutoZone as an example, they very much encourage employees to go out of the store and contact customers, whether it is next to the DIY customer's vehicle or in the maintenance store. The above-mentioned O'Reilly is a typical case.
Of course, I have to mention that the wage level of American blue-collar workers is not comparable to that of China.
Therefore, the difference in the personnel level of the Chinese market is obvious, and the improvement of personnel quality is of course closely related to the capacity of the enterprise. Only by making the company bigger and stronger can it provide employees with better training and treatment, and the quality of personnel will naturally increase.
We can see the gap and also the goals and directions of future development. It is believed that the Chinese automotive aftermarket is moving in a better direction. In the field of auto parts supply chain, there will also be giant companies and even listed companies.
Add: Room 204, Building 4, No. 8 Qiyun Road, Huangpu District, Guangzhou (510000), China.