EDUCATION

By Bob Moore
Illustrations By Colby Martin

A “Standardized” Approach to Business

Turns Out There’s More to Data Standardization Than Just Using Technology

Recently, I was looking at an issue of USA Today that listed (as only USA Today can) the top 25 “life-changing inventions” of the last 25 years. Not surprisingly, only six of them were not totally “technology dependent.” The top 10 included the likes of laptops, cell phones, debit cards, iPods, DVDs and caller ID (the fact that “salad in a bag” made number 10 on the list means the editors have some serious explaining to do). But the point is, technology continues to transform everything we do in our personal and business lives.

Everybody is aware of technology’s ability to lift the burden of brainless and/or redundant tasks from people and put more of those burdens on machines. Since machines are faster, never tire and perform with greater accuracy, investing in automation pays back in lower costs. Those savings may come in the form of head-count reduction, reduced errors and their associated costs, workers freed from mindless tasks and able to concentrate on more substantive work and many other things that result in improved profitability for the technology-enabled company. These are the obvious benefits of implementing technology.

But what more and more aftermarket people are discovering is an “unseen” secondary benefit to technology adoption. So what is the source for this positive side effect? Data standardization.

It may sound unimpressive, but ask manufacturers who have taken the time to get their data into industry-standard formats or distributors or retailers who have synchronized data with their suppliers, and the results they are experiencing are remarkably impressive every time. What more and more aftermarket businesses are finding is that the process of cleaning up their data is causing their company to perform better—even before the full implementation of any technology solutions.

To understand this phenomenon, it is important to appreciate the role that standardized data plays with computers.

Data is fuel to a computer, and if you put contaminated fuel into a computer system, it will sputter, spit and stall just like an engine. While computers can process a lot of data very quickly and accurately, they lack the ability to reason and interpret the way the amazing little computer we call a human brain can. And since data variations and formats are endless, even those variants that are obvious to our brains are not obvious to computers. Simple concepts, such as Chevrolet or Chevy, pounds or lbs., ½ inch or 0.5 inch tax a computer’s ability to “understand” data. That is why data standards have become so important for aftermarket trading partners who want their computers to interact with each other.

So you’re probably saying, okay, standardized data makes sense for the computers, but what are some of these secondary benefits that aftermarket companies are getting without actually implementing technology?

Ed Rammel, vice president of marketing for Dayco, said at a recent industry meeting that “…even if we never share our normalized data with a single customer, Dayco is a better company for having engaged in the process of becoming compliant.”

I must admit, I had to think about that one. How is it that a company gets better by simply becoming compliant with data standards? I asked him specifically about some of the benefits he has observed in the company’s internal operations since becoming data compliant.

“For starters, the exercise caused us to see that we needed to create some standard practices and processes for how we handle our data,” he said. “It’s really no different than the manufacturing process. If you do things differently every time or from one location to another, you end up with big problems.”

Rammel explained that different groups or departments often created dueling data files. “A simple example might be that engineering had a set of dimensions for the product itself and distribution had a different set of dimensions for the product package,” he said. “Both need to keep the data, but we need to know which one to send a customer so they can use it appropriately in their systems.”

Similarly, Rammel pointed out that a Canadian plant needed data in metric units and a U.S. plant needed the same data in English standard.

“Until you actually get into the process of cleaning up your data, you have no idea of the number of variations and the differences that exist inside your own company,” said Rammel. “Before we standardized our product descriptions, we had service items in our line—things that were purchased from outside vendors to complete a set of something we make—that the product manager had described in our data base as ‘pass-through items.’ We now call them what they are: pulleys.”

Ultimately, Dayco has drastically increased the accuracy of its data by establishing a single entry point for each data field and a strict policy of using the industry standardized format.

“Good processes make for good data,” said Rammel. “Now everything from sales reports to invoices is more accurate. When you fix the data at the source, you correct most of the errors with the output. Internal reports are more accurate and easier to understand.”

Kellie Colf of Eaton Detroit Spring echoed many of the same points made by Rammel: “Getting your data into standardized format may seem like a daunting task at first, but once done, it’s done. It eliminates the need to constantly massage and revise data loads for each individual customer.”

Colf made a couple of other key observations. “Communications are greatly improved through standardization,” she said. “It’s not just about getting the right data to customers for their catalogs. Having good data allows one to pursue eBusiness in all its forms, such as using Electronic Data Interchange (EDI) or electronic invoicing. Plus, accurate, reliable data allows both the manufacturer and their customers to make better decisions [about] when to add or drop parts from inventory and in determining stocking levels. The benefit is better sales with less returns and restocking costs.”

Overall, Colf’s point is that the more standardized data that is shared both up and down the supply chain, the better off everyone is.

That was a sentiment shared by Jon Wyly of Arrow Speed Warehouse. “I’ll give you a simple but dramatic example of how sharing standardized data with suppliers is a benefit,” said Wyly, “weights and measures.”

“The specialty-parts business has evolved significantly over the years,” Wyly said. “It used to be that the majority of the orders we shipped were big stock orders and a small fraction were special orders. Business realities have reversed that scenario. Doing business today requires that a distributor has the ability to tell his customer—whether that customer is a jobber, parts store or a website—the price of a part, including freight and when it will be delivered and to do so within a few seconds of the initial request. The only way that can be accomplished is to know what an order weighs and how big it will be before it’s packed.”

The technology involved to do that is not complicated at all, but it’s dependent on reliable and accurate weights and measures. With accurate data, software can quickly calculate the shipping weight and size and convert that to a shipping cost and a delivery time that enables the distributor to give customers the information they require.

“Before we started synchronizing data with our suppliers, we literally had to weigh and measure every order that went out the door,” Wyly said. “Today we can’t wait until the order is packed to calculate shipping expenses. We have to know in advance.”

Wyly believes that all of his suppliers have accurate weights and product dimensions in their systems; it’s just a matter of getting the information into his system. As Wyly said, “This data is absolutely essential; literally, I can’t operate my business today without it.”

Clearly, there is an efficiency issue with automating the process. As Wyly pointed out, “I hope nobody ever does the math to calculate what we paid over the years to have hourly help stand on a scale and pull out a tape measure on every order, because I don’t want to know what it cost us.”

Wyly went on to stress the importance of all data in the future saying, “As we get more and more dependent on automated stocking systems, the need for accurate, synchronized data from our vendors will only grow.”

Other distributors spoke of how becoming standards compliant was opening doors for them with major retail chains.

“The merchants at big retailers understand that to sell parts and accessories, their counter people must be able to answer consumer’s questions about everything from fit and size to availability and price,” said one distributor who asked not to be identified. “When we are able to ‘speak their language,’ our products appear in their catalogs, on their websites and on their point-of-sale terminals. By accommodating large chain stores and plugging into their systems with the standard data they require, we are selling a lot more products to them.”

The SEMA Business Technology Committee (BTC) is conducting a Data Pilot Program and its members are learning more about the data-standardization phenomenon. And, as it turns out, accurate standardized data is improving business throughout the specialty-equipment market.

Ed Rammel made the point eloquently by saying, “I think of getting your data in the industry standard format as being like learning a new language: Once you have gone to the trouble to do it, the benefits remain with you forever. Having our data synchronized pays benefits over and over again.”

Bob Moore is the president of Bob Moore & Partners, a consulting company that specializes in the automotive aftermarket. He is also a monthly columnist in Aftermarket Business magazine. Bob Moore can be reached at bob@aftermarkethink.com.