Growing from a source for auto parts at a discount for his own 10-Minute Oil Change and Full Service Garage over 18 years ago into one of the industry’s leading auto parts suppliers and inspection businesses, Mitch Rand, president of C&K Auto Parts and Warranty Inspection Services shares an informative Q&A with the readers of P&A Magazine this month.
Tell us about your company and the products that you offer.
I believe I have a unique perspective on the industry, in that I am the president of two major vendors to the VSC Industry, one on the parts side of the business and the other on the inspection side of the business.
C&K Auto Parts (C&K) has been a supplier to this industry for over 18 years. In 2008, we partnered with a private equity company which has allowed us to invest in and significantly expand our business. We now carry all types of parts, from OEM parts for all manufacturing lines, to remanufactured assemblies (both large and small), to used powertrain assemblies. Our warranties are all inclusive (we cover shop labor rate, book time, diagnostic time, rental etc.) and flexible. We will vary the length of our warranty to fit the Administrator's need for a specific contract. The idea being that the Administrator can purchase one of our parts and feel completely safe knowing that they will not have to revisit that claim again during our warranty period. Since our warranties are so comprehensive, it is incumbent upon us to make sure that the quality of our parts is of the highest standards, and our failure rates are as low as possible. We do extensive monitoring of our failure rates to identify as quickly as possible any recurring failures, and take appropriate steps to correct the problem. Failures are the absolute worst thing that can happen to us - not only do they cost money, but every failure causes multiple phone calls to the Administrator, delays for the installer (who might be a selling dealer), and frustration for the vehicle owner - all of which reflect poorly on C&K and could ultimately result in lower sales. On the positive side, after 18 years of steady growth, we seem to be doing a good job.
Warranty Inspection Services (WIS) is our inspection company. We started WIS a little over eight years ago, at the request of a few customers who had commented that they wished their inspection providers were as responsive as we were at C&K. We simply took the ball and ran with it from that point. This business was particularly challenging for the first few years, in that most every other major inspection company had been around for a long time and offered virtually the same service. We spent a long time trying to figure out how to differentiate WIS from everyone else, short of simply offering inspections for a few dollars less. We finally decided that technology was the answer, and we invested a significant amount of money into developing a proprietary tool that allows the inspectors to provide a faster, more accurate inspection - which are the two touchstones that are most important to the Administrators. One of the additional benefits of this investment into the IT world is that we are in position to do direct integrations with any Administrator to help facilitate easier, faster, more accurate data transfer. Every minute that is saved by an Administrator is another minute that their adjuster can be on the phone with a customer, improving the Administrator's service level, and often improving their bottom line. It's obviously a benefit to us, as well.
How does your product offering differ from other providers?
In both of our businesses our goal is to help our Administrator customers in every way possible. This means helping them save money, operate efficiently and make their customers, selling dealers and installers happy.
C&K - Our OEM Parts Portal allows the Administrators to verify not only the List Price, but see their wholesale cost, on every OEM part that they are getting quoted. It saves a huge amount of time, by not requiring the adjusters to call or email for part quotes, and it saves an enormous amount of money by providing them with a negotiating tool on virtually every part, and the ability to purchase every part from us if their negotiations are not successful.
We have also been investing heavily in warehouse expansion. Shipping to the coasts quickly has always been a difficulty for the suppliers in our industry. We have recently opened warehouses in Tampa, Denver and Salt Lake City, and have more planned openings for 2012. We fully expect to be able to deliver any remanufactured powertrain product, which is our bread and butter, anywhere within 1-2 days. Not only does this improve customer service, but also it saves a significant amount of money for the Administrators in rental expense. Additional rental expense has always had a negative effect on our sales potential, effectively reducing the amount of savings that we can provide vs. the OEM option. Expanded warehousing will result in more savings for the Administrators, more sales for C&K, and improved customer service to both the installer and the contract holder - everyone wins.
WIS - We've developed a proprietary system that we call VeriScan, which allows our inspectors to essentially copy the information in a vehicle's on-board computer, and upload that information along with digital photos, video, and the written report while on-site. This has had a tremendous impact on the speed and accuracy of our reports. VeriScan allows us to be different - and better. One other difference between WIS and everyone else is that for years, the inspectors were expected to provide all of their own technology - they bought their own cell phones, cameras, computers, etc. When WIS decided to develop VeriScan and made it proprietary, we felt that we couldn't expect the inspectors to pay for something that they would only use for WIS, so we decided to provide both the hardware and the data plan to the inspectors for free.
Who are your target markets and what message would you like to give them?
Our focus for most of our history has been the VSC Administrators, although we do work with certain large dealer groups around the country. Our overall message has always been one of flexibility. Every customer, even within the same industry, has unique concerns and needs. If GM, Ford, or any of the OEMs wants to make a major policy change, and they want to be rigid in its enforcement then everyone generally has to dance to their tune. However, we're not quite that big - and I think one of our strengths is that we recognize that. It's our job to adapt to the needs of our customers, and recognize that the adage that "the customer is always right" is, in fact, true. If I have a customer that wants a red stripe painted down the side of their transmissions, I will do my best to make sure that we use the brightest red paint possible. There are a lot of businesses, including some of our competitors that have a different philosophy. They think it's important to do things the way that they think is best. I respect their position, but I disagree with it.
Tell us about yourself and how C&K Auto Parts came to be.
My brother and I started out in the automotive industry in the early 90's, in South Florida. We owned a 10-minute oil change and a full service garage. We started C&K primarily to supply parts to our own garage at a discount, and sold some parts to some of the other garages around town at a discount. One day a vehicle came into our shop that had an extended warranty contract from US Warranty. We'd never heard of an extended warranty before, but since it was a local company we went up to meet them, and started a wonderful relationship that we have to this day. One thing led to another, and we started to supply parts for them to other repair facilities in the area, the relationship grew from there. Shortly thereafter, an adjuster at US referred us to another warranty company that she had worked for, and we started doing the same thing for them. At that point, the light bulb went on, and I started to research other warranty companies around the country, and sent out some letters introducing C&K to them. A few weeks went by without hearing back, and on the same day, within about an hour, I got called by the managers of Geico and GE Capital. We started to work with both of them (and still do), and we quickly decided that this was the niche that we'd been looking for. We sold our garage and concentrated full time on C&K, and have grown from there. It was just the two of us at the beginning, and now we have about 30 employees.
Looking back over the past five years, how has the industry changed and how do you see it changing in the future?
The last five years have been by far the most challenging years since we got into the business. Not only because of the Great Recession but the industry has grown up and become much more sophisticated. 18 years ago, I could get an Administrator to try us with a quick phone call. There simply weren't too many companies doing what we do, and our service was needed. Now, every Administrator knows the game, knows our competition, and has certain expectations. There are industry standards of service, if not explicit then at least implicit, that they expect. And after so many years, they may have developed loyalty to the vendors that they've been using. To get a new customer today, it's not nearly enough to simply introduce yourself - you have to be able to show why your service will make them better. This has forced us to evolve, and we are continually evaluating and offering new products and services, improving our IT capabilities, expanding warehousing to improve delivery times, refining our inspection processes (both from a technological perspective and from an internal systems perspective), and generally trying to distinguish both of our companies from our competitors.
I see the industry becoming much more dependent upon technology, specifically integration with their vendors. If one adjuster has to spend 10 minutes submitting an inspection request and copying and pasting a completed inspection report into the Administrator's computer, and a different adjuster simply has to click one button and have it done automatically, who is more efficient? It's a no-brainer, and that example can be used in a myriad of situations, with both parts and inspections. Time is money, and integration saves time. It also eliminates a lot of human error. As this is the direction that we see the industry going, we've gone from simply outsourcing our occasional IT needs to having a rapidly growing IT department, with numerous programmers giving us the tools that we feel will help us stay ahead of the curve. It's better to have the competition react to you rather than playing catch-up, and it's better for the customer in the process.
What products do you believe will drive your future success?
Simply offering the widest range of products possible. I like the idea of becoming a one-stop shop. The more a customer uses us, the less likely they will use someone else and become happy with their services. A big part of business is simply getting the adjusters to get into the habit of calling us. Once they call us, we need to have what they need.
What technology or services do you believe will drive your future success?
Direct integration with our customers is the key. The customers that give their adjusters direct access to our products through their claims software have a much greater ability to save time and money handling a claim. Once a customer recently told me that since integrating with us his adjusters save 15 minutes per inspection between ordering the inspection and consuming the results. If you multiply that across every inspection and every part, the savings really add up. We have just reached the tip of the iceberg in terms of integration. We are working on integration through the leading claims software providers in the industry and we are able to provide much of the required IT services for one-off integrations as well. As we help the administrators succeed at their tasks of saving money, operating efficiently and making their customers, selling dealers and installers happy, we will find success as well.