DST offers a range of integrated and modern technology, designed to increase efficiency, lower costs, improve customer service and provide more accessible information to better support business decisions. The company's products include its Part-Select electronic parts catalog, the Turbospark technology that connects a distributor online to its service – more... dealer customers, and a range of distributor-based software and hardware business management systems.
Join us as Ray sits down with us to talk about DST and what can be learned from the decline of certain aftermarket dot-coms, and industry adaptation to new technology.
What benefits have come about to Distribution Service Technologies, Inc. (DST)?
There's literally a revolution going on in the industry with cost pressures, parts proliferation and other challenges. The president of AAIA has described the situation as creating an industry under siege. This climate creates compelling reasons for people to change their businesses. In our opinion, technology is one of the key tools for people to use to take advantage of this climate of change.
Simply put, no company offered all the pieces of the technology puzzle until the formation of DST. We now have a complete product line that is based on modern, open, technology standards.
It's all about flexibly responding to market change and taking costs out of the system,doing more orders at less cost. We see a 30-percent efficiency gain in the supply chain when people start pervasively taking advantage of this technology. This kind of change won't simply be an advantage; it will mean survival and prosperity. There are going to be some big winners out there. In fact, there have already been some big winners among our customers. People need to understand that there are companies out there that are successfully using technology and that they, too, can turn the inevitable changes in the market to their advantage.
The recent downturn in aftermarket dot-coms has been well documented. Some industry professionals have even gone so far as to voice concern that this kind of a business runs on smoke and mirrors. What are your thoughts?
Well, I think you have to separate the financial models of these businesses from the technology they produced. For example, Sparkhorse actually achieved some superb business results. So, if you're characterizing technology as being smoke and mirrors, that's absolutely wrong. The financial model -- the necessity to extract huge dollars or huge margins in an industry that's already challenged with cost pressures -- is what did not work, and, in my opinion, will not work in the future. The technology, at least in some cases, does work and will become a necessity for successful aftermarket distributors.
What lessons do you think that the aftermarket learned from the dot-coms that are no longer with us?
While I really don't have a good feel for what the average distributor learned, what I do know is that, to my direct knowledge, at least $250 million in venture capital has been poured into the aftermarket. This has at least gotten the attention of almost every participant.
Some, I am sure, take the crash of the dot-goners as vindication that they need to stay as far away from technology as they can. Others -- savvy players, both big and small that we are working with today -- realize that, in an industry that is driven by a 30-minute delivery cycle, bricks and mortar are necessary and will never go away. I believe that almost every company and organization realizes that they will need to improve customer service and cut costs out of the transaction, which will be essential to the successful business of the future.
Some dot-com critics say that this kind of technology only adds middlemen and expenses. What would you say to this? What evidence do you have that it can reduce costs in the supply chain?
This technology is not brand new. People have been saving money with it in areas such as inventory for the last 10 years. What is new is direct connectivity between companies and the supply chain. For instance, we continue to supply the Turbospark technology, which was developed by DST for Sparkhorse. And, we see it cutting costs by 7.5 percent in order taking alone.
Similarly, one service dealer using Turbospark with 14 bays had two full-time people on the phone sourcing parts. Because of the technology we provided, he now has one person doing that job.
Another byproduct we see is a big reduction in return rates. We believe this is probably tied to improved ordering accuracy.
In the case of the Turbospark application, the goal is to never force the service dealer to make a phone call and to always, without fail, deliver the correct part. This saves the service dealer the time and expense of calling multiple distributors and saves the distributor the cost of restocking parts that have been ordered from multiple sources. – less – More from ZoomInfo »
