CoDestiny

A CoDestiny Success That Became A Way Of Doing Business In The Automotive Industry

Tuesday, October 26, 2010 - Permalink
A CoDestiny relationship between Affinia and O’Reilly allowed Affinia to expand its business, O’Reilly to expand its business, and both companies to cut costs.  

O’Reilly Auto Parts is a huge national retailer and wholesaler in the $120 billion automotive aftermarket.  The other player in this story, Affinia, is a $1.8 billion company that supplies customers like O’Reilly with filters, and brake components.

Both companies are involved in the demanding filtration business. In this market, end customers demand filters for everything from passenger vehicles to heavy duty trucks, to special vehicles and stationary applications. Filling every conceivable order would require several thousand  SKUs, but no vendor like O’Reilly could carry more than the most popular 1,500 or so. “We don’t carry that” became a common response to potential customers.

Occasionally, an enterprising O’Reilly employee could call to ask if Affinia makes a certain part and order it. Eventually, we realized that by linking the Wix Filter systems with O’Reilly’s, we could offer O’Reilly’s customers easy access to any filter that we make. Working with my counterpart at O’Reilly, I helped start a campaign to share information between the two companies. 

In the beginning, we faced enormous resistance to the idea of sharing information, because it just wasn’t done that way in the industry.  No one wanted a customer or supplier to see their level and location of  inventories.  But we persisted because we could see the value of linking our information systems.

Even after the two companies’ leadership teams agreed to take a chance on more openness, the effort to link systems was very challenging.  In the beginning, the errors came crashing down and it was a tedious process to fix them.  Affinia and O’Reilly had no common language – their systems called vehicle models, parts, etc, by different names.  But, we knew that this work was a big deal and pushed through the tough initial period, manually creating ways to link information together in a manner that had never existed before.

The outcome was beneficial to Affinia and O’Reilly. It is very tough to put a dollar value on the increased sales of either party or the cost savings by both, but all are substantial. Our efforts eliminated a number of redundant activities, resulting in significant savings.  The real demonstration of the significance of this development is the ongoing expansion of initiatives to share more and more information.

Today, there is a tremendous amount of business done on the internet that wouldn’t have been possible otherwise.  Now, O’Reilly can look into Affinia’s system, see if a part is in stock in enough volume to fill their order, order it, and have it drop-shipped to an O’Reilly store or even the home of a mechanic.  The only people that need to get involved are at the ends of the transaction.

Affinia and O’Reilly were able to trust each other and begin to work as partners.  This was a striking move away from the trend in the industry.  We both benefitted by being first; everyone else is struggling to catch up.  The gain to us was significant, even though we were very open about what we were doing.

What was really important was the change in the level of trust in the industry as a whole – it started with a handful of people seeing a small hole in a wall that they were able to chisel through to look at the other side.  This experience shows how far things can go if two companies really work together.

-Jerry McCabe, J&B Service (Formerly of Affinia) 



A Railroad Industry Challenge Solved Through A Successful Four Way Collaboration

Monday, October 18, 2010 - Permalink
Sometimes complicated relationships do produce positive outcomes. This is just such a story.

When rail car brake hoses are disconnected from one another in order to decouple two train cars, the pressure releasing from the hoses causes them to flail about. This presents a safety risk to the worker and has the potential to damage or crack the hose coupling if it smacks into the rails or other hard surfaces. Recognizing this, the industry had been trying various strap-like solutions over the years including rubber and wire. But none of the attempted solutions fully addressed this very severe application.

As a result, the governing industry association compiled a new ideal specification for the application complete with an enforcement date.  This was a big challenge for the supply base as no current product on the market came close to meeting the specifications.  They came up empty for a while but eventually a particular raw material supplier was challenged with the application by a current industry supplier.

This material supplier could provide the raw material but was not in the business of modifying the material to the form and performance characteristics needed for the railroad brake hose strap application. However, the material supplier was aware of a manufacturer who could do so, but that manufacturer was not even remotely close to being in the railroad products market.

Thus the ultimate final and very successful combination became the material supplier >> the non-railroad products manufacturer (who could modify the material to achieve the desired performance characteristics for the severe brake hose strap application) >> a railroad supplier (who led the project design, development, and distribution to the industry) >> the railroads.

To date, the solution provided by this customer chain of suppliers is the only one that meets the specification of the Railroad Association.

This successful collaboration underscores a number of interesting elements:
•   The importance of networking
•   The courage of an industry association to self regulate and push its supply base beyond its current capabilities
•   Bringing four parties together, a complex collaboration to work on what was ultimately a simple product

And possibly, the most interesting concept…
•   Trust, fear of one party having control kills innovation.  Knowing and valuing the strengths of each party and constructing a deal to reward all participants is key to a good project.  The trust that develops from this approach is the key to developing a good business.








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"Understanding the customer chain is the lever for value creation in any business. Companies that follow the path outlined in CoDestiny will unlock growth opportunities, build customer loyalty, motivate employees, and grow shareholder value."

David D. Petratis, Chairman, President, and Chief Executive Officer, Quanex Building Products, Houston, TX, and former President and Chief Executive Officer, Schneider Electric North America
Boston Web Designer