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AASA Pulse: Supplier KPI Benchmarks 2013

AASA Pulse: Supplier KPI Benchmarks 2013. Contents. Executive Summary. Executive Summary (1/4) . Executive Summary (2/4) . Executive Summary (3/4) . Executive Summary (4/4) . How to Use this Study. How to Use this Study Results can be an invaluable resource in your business planning.

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AASA Pulse: Supplier KPI Benchmarks 2013

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  1. AASA Pulse:Supplier KPI Benchmarks2013

  2. Contents

  3. Executive Summary

  4. Executive Summary (1/4)

  5. Executive Summary (2/4)

  6. Executive Summary (3/4)

  7. Executive Summary (4/4)

  8. How to Use this Study

  9. How to Use this StudyResults can be an invaluable resource in your business planning What is the AASA Pulse? What to use the data for: • A benchmarking survey conducted on an annual basis • Available exclusively to AASA members • Covers such key benchmarks as returns, payment terms, order metrics and key financial metrics • Developed with the assistance and input of the AASA Marketing Executives Council (MEC) • Analysis specifically targeted at aftermarket manufacturers. It is the only research of its kind available • The AASA Pulse is absolutely anonymous and answers are kept strictly confidential • Detailed results are shared only with survey participants • Use the AASA Pulse as a vital tool to assist you in your business and strategic planning • Allows you to benchmark against industry standards and best practices • The data can help you determine what you should target for improvement • And help identify where you are a benchmark • And therefore allow you to focus your improvement on other areas and metrics • Industry benchmarks to help in discussions with your Board and investors

  10. Understanding Box PlotsBox plots are used throughout the report; please use the following chart to reach a better understanding of how to read and interpret a box plot 4th Quartile Range of responses 3rd Quartile or Upper Quartile Average or mean of responses 100% of responses 2nd Quartile or Lower Quartile The line between the blue boxes is the median or the midpoint of all the responses. 1st Quartile

  11. Returns

  12. Warranty Returns (1/2)While warranty made up 1% or less of sales for 47% of respondents , 38% had 1-5% of sales as warranty and 15% had greater than 5% 15% 38% 47%

  13. Warranty Returns (2/2)While warranty returns averaged 2.6% of sales, the range of responses was very large Based on this feedback, the aftermarket has roughly $3.5 billion dollars of parts warranty returns a year. Note: at retail sales level Source: AASA/AAIA Joint Channel Forecast Model

  14. Warranty Returns and Quality Issues85% of respondents indicate that 2.5% or less of returns are related to actual quality issues If the industry could reduce warranty returns by half, the industry could save ~$1.8 billion which would go straight to the bottom line of suppliers and channel partners. If the industry could reduce returns just to quality issues the industry would have $3.4 billion in addition profit. Source: AASA/AAIA Joint Channel Forecast Model

  15. Stock and Obsolescence Returns (1/2)Stock and obsolescence returns clustered around 2-3%, with a wide range of results

  16. Stock and Obsolescence Returns (2/2)Stock adjustment rose in 2012, raising concern about this practice across the industry Note: ~1 out of 10 respondents had >5% returns in this category In an era of “big data”, advanced analytics and supply chain integration, should the industry be experiencing this level of annual stock and obsolescence returns?

  17. Discrepancy ReturnsAverage discrepancy return continues to decrease, with 56% experiencing 0.05% or less discrepancy returns

  18. Fill Rates

  19. Fill Rates by Unit Volume (1/2)Differentiation through high fill rates is becoming more difficult as 74% of respondents had 94% or better fill rate by unit volume

  20. Fill Rates by Unit Volume (2/2)Fill rate by unit volume continues to increase with both the mean and median of respondents falling above the desired target of 95%

  21. Fill Rate by Dollar Value (1/2)Fill rate by dollar value averaged 95.4% for respondents with 25% falling between 96.1% - 98% Mean = 95.4%

  22. Fill Rate by Dollar Value (2/2)Average fill rate by dollar value continue to increase from the low seen in 2010; the 95% fill rate goal in the industry is increasingly becoming standard

  23. Fill Rate by Line Item (1/2)Fill rate by line item averaged 94.9%, slightly below the typical 95% goal in the automotive aftermarket Mean = 94.9%

  24. Fill Rate by Line Item (2/2) Fill rate by line item also increased in 2012 capping a three year upward trend

  25. Order TurnaroundAverage order turnaround for respondents averaged slightly above 3 days, though 75% had order turnaround of three days or less 75%

  26. Vendor Direct (1/2)Business models diverge: while 26% sell more than 10% through vendor direct, 39% report business through vendor direct programs is less than 1% 26% 39%

  27. Vendor Direct (2/2)Although on average only a small amount of business is done through vendor direct programs, this involvement has been increasing steadily for the past 3 years

  28. Overnight Shipping (1/2)The majority of respondents (59%) indicate that less than 1% of their business was done with overnight shipping, though the range of responses is wide

  29. Overnight Shipping (2/2)Surprisingly, median use of direct shipping has been declining though the average remains fairly high (2.5% of business) due to outliers who utilize a lot of overnight shipping

  30. e-Tailing Through Direct SaleMajority of respondents (76%) sell virtually nothing directly in the e-tailing channel, but that means 26% are selling direct online 1% or more of sales 10% sell 3% or more through direct e-tailing, indicating that the direct e-commerce sales model is being explored by some suppliers

  31. e-Tailing by Channel PartnersRespondents estimate that on average 3.4% of their sales ultimately are sold through e-tailing Mean = 3.4%

  32. Drop Shipments and Cross Docking (1/2)Business requiring drop shipments/cross docking averaged 8.5% for 2012 Mean = 8.5%

  33. Drop Shipments and Cross Docking (2/2)In contrast to the previous three year decline, there was a significant spike in business done by drop shipments or cross docking in 2012 While median remains lower than 2009-2010, average has increased as drop ship/cross docking increased significantly among a subset of suppliers

  34. Financial

  35. PriceAftermarket price changes declined in 2012 versus 2011, averaging +1.8%; 56% of respondents increased prices while 18% saw declines 56% 18%

  36. Terms with RetailersPayment terms with retailers averaged 177 days for respondents in 2012; 24% had average terms of 291 – 360 days Mean = 177

  37. Terms with WDs/DistributorsPayment terms with WDs/Distributors were much less than retailers, averaging 86 days with 2/3 of respondents reporting terms between 46 to 90 days Mean = 86

  38. SG&A expenses in 2012General selling and sales administration (SG&A) expenses as a percent of aftermarket sales averaged 12% across respondents Mean = 12.0%

  39. SG&A expenses over timeAverage SG&A has crept up over the last 3 years, though the approximate quartile range of 6% to 15% has remained steady

  40. Gross Margin in 2012Weighted average gross margin across all respondents was 32.6%; the range was large with 26% at 25% or lower GM and 29% above 40% GM 29% Mean = 32.6% 26%

  41. Gross Margin over timeWeighted gross margin quartile range expanded and increased in 2012; mean increased slightly (31.7% to 32.6%) although the median remained on par with 2011

  42. Aftermarket Research and Development Spending in 2012Respondent’s companies’ estimated average spend on R&D was 3% for 2012, although over a fifth spend less than 1% Mean = 3%

  43. Aftermarket Research and Development Spending over TimeR&D spend continues to increase for aftermarket suppliers

  44. Operations

  45. In-House ManufacturingThe percent of sales manufactured in-house increased to an average of 63.6% in 2012; nearly half of respondents manufacture more than 80% of their goods in-house

  46. Manufacturing in the U.S.On average, respondents reported that 47% of aftermarket sales were manufactured in the US, about the same level as the previous year Will the reshoring US “manufacturing renaissance” be seen in the future in the aftermarket?

  47. Manufacturing in Low Cost CountriesManufacturing in low cost countries averaged 36% for 2012, up 10 percentage points from 2011

  48. Inventory Days on HandAverage days on hand of inventory reported by respondents was 63 days, with nearly a third reporting “Greater than 90 days” Mean = 63 days

  49. Outbound Freight Costs3.1 – 5% was the most common range for freight costs as a percent of SG&A

  50. Inventory CostInventory costs averaged 19% of cost of goods sold; inventory was 20% or more of COGS for 35% of respondents 35% Mean = 19%

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