Auto Care Insider Volume 92 - (Page 20)
By Steven H. Ganster, Managing Director, Technomic Asia
Photos: Aftermarket Auto Parts Alliance, Inc. Warehouse, Little Rock, Ark.
CHINA'S AFTERMARKET DCs -
A LONG WAY TO GO
CHINA'S distribution structure is
struggling to keep up with aftermarket
demand growth, as I have cited
in previous articles. As the vehicle
parc expands both in number and
geographic breadth, parts suppliers
and distributors have scrambled to
develop an appropriate infrastructure
to get the right part to the right
customer at the right time. This goal
is especially challenging, given the
parc's fragmentation in vehicle models,
with many of these vehicles having
relatively low volumes on the road (and
being relatively young in age as well).
As the spine can be considered
the center of the human skeletal
structure, the distribution center (DC)
or warehouse can be looked at as the
hub of the aftermarket's distribution
system. In this regard, China has a
long way to go in the development
and modernization of its DCs. First,
AUTO CARE INSIDER |
little investment has been made in
warehouse development for the
independent aftermarket, the latest
figure being ~10 percent of all logistics
investment. From a physical standpoint,
DCs tend to be small. Warehouses
are mostly limited to less than 30,000
square feet due to China's construction
code for warehouse buildings. It is
common for most distributors to use
multiple shelves and lots of floor stock.
Compared to a large DC in the U.S.
which may carry well over 100,000
SKUs, the bigger distributors in China
handle only about 30,000 SKUs.
From an equipment and technology
standpoint, almost no conveyor
systems are used (we recently saw one
in Shenyang that was ~100 meters long,
but this was a rare citing). Almost no
independent aftermarket distributors
use commercial WMS (warehouse
management system). WMS is at
a very early stage in development,
mostly being a small function of an
in-house designed IT system.
The OES channel is a different
story, though it too has its challenges.
In addition to the OEMs' own
warehousing systems, some large
players like Anji-Ceva and Sinotrans
have fairly sophisticated and large
DCs and operating systems.
In order to satisfy the growing demands
of the independent aftermarket in China,
DCs will have to advance on all levels.
The auto parts cities must give way to
larger, more sophisticated warehouses
in order to provide competitive
logistics. Independent distributors will
struggle and may balk at the forward
investment needed to take their DCs
to the next level of efficiency and
scale. A clear competitive advantage
may be the reward for those with the
courage to take leadership here.
Table of Contents for the Digital Edition of Auto Care Insider Volume 92
Association News-YANG Connect
Market Intelligence: e-tailing infographic
Inside Technology-social influencer program
Member Profile-Kathleen George
International Focus-looking at Latin America
Government Affairs-advocacy leadership team
Impact Awards-Brandi Gardner
Head of the Class-Olympus Imported Auto Parts Corp.
Market Intelligence-checking in with China
An Industry Treasure-Be Car Care Aware
Auto Care Insider Volume 92