Bringing Analytical Models in the Auto Aftermarket

Introduction

Indian Auto Aftermarket is a very complex and fragmented market with various players in the chain of distribution. The Auto Aftermarket is characterized by robust growth rate and exports. We see that the major component (~80%) of the Auto Component company’s business is the OEM business which is relationship based. The rest of the component (~20%) is from the Aftermarket. Due to this we can see that experience and intuition and relied upon while making decisions to drive the business forward. With the increase in Vehicle Parc in the country and increasing export opportunity due to globalization, the Auto Component sector is beginning to focus more on generating more revenue in the Auto Aftermarket space but the workings in the Aftermarket are complex due to large numbers of players involved in the chain.

Current State of the systems in the Aftermarket space

Since Aftermarket involves distribution of Auto Spare parts in the market, adoption of technology becomes very slow due to customers not being much tech savvy in the interior parts of the country and the good quality data being restricted to the metros and Tier 1 cities. Apart from manual processes being followed in the Auto Components space, companies have realised a need for some degree of automation regarding the Auto Aftermarket space from the viewpoint of capturing, maintaining, and Analysing data, examples of which are given below:

1. Implementing Transaction Systems/ERP: Many large size Auto Component companies and OEMs have implemented ERP systems to capture and maintain good quality data. Usually, the implementation is done throughout all the functions of the company.
2. Using excel for Analysis: Companies are still heavily using excel when it comes to doing analysis of their Aftermarket data. Excel is also used with regards to their planning functions. This takes a lot of time and manual effort.
3. Implementing Visualization systems: Since excel has limitations w.r.t visualizations due to factors like data size, consistency etc, companies have implemented visualization tools to gain visualization regarding the performance of their sales in the Auto Aftermarket.

Vertical Analytical Solutions as an Alternative for aiding Decision Making in the Auto Aftermarket

Unlike visualization tools, vertical analytical solutions, in addition to having visualizations, can as an aid in decision making can be very helpful. In addition to visualizations, the Vertical Analytical Solution also provides a decision support system in the form of predictive and prescriptive solutions by predicting and recommending the actions that can be taken in the future and the manager can decide what actions to take. Be it optimising the trade promotion through simulating various scenarios or be it demand forecasting by predicting the sales forecast for the next month, it can enable and empower the manager to take a decision in the direction of Revenue Growth. Vertical analytical solutions are not just limited to fancy graphs and charts based on clients data but aid in decision making through predictive and prescriptive analytics through the models.

Vertical analytical solutions have a lot of benefits such as:

1. Reduction in time and Manual effort which goes into calculation due to in-built models.
2. Improvement in processes of the company through automation and optimisation
3. Vertical Analytical solutions have built-in Industry knowledge which standard visualization tools and excel might not have.
4. Have real benefits in terms of cost saving, improvement in Revenue and change management as compared to visualization tools which are mostly intangible?

About Digilytics AI

At Digilytics AI, we aim to drive business value leveraging our platform. In an ever-crowded world of clever technology solutions looking for a problem to solve, our solutions start with a keen understanding of what creates and what destroys value in your business. Founded in 2014, by Arindom Basu, the leadership of Digilytics is deeply rooted in leveraging disruptive technology to drive profitable business growth. With over 50 years of combined experience in technology-enabled change, the Digilytics leadership is focused on building a -values-first firm that will stand the test of time.

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Author Akshat Dev, Sales Strategist Digilytics AI, RevUP