September 20, 2017
The following comes from the September 2017 issue of Truck Parts & Service. To read a digital version of the magazine, please click the image below.
While there may be no one size-fits-all answer to creating a successful business, many aftermarket leaders say one business practice that’s almost universally valuable is a strategic alignment plan.Ensuring a company’s market strategies, work initiatives and overall end goals are totally aligned for everyone plays a significant role in determining the success of a company.
Strategic planning is important to an organization because it provides a sense of direction and outlines measurable goals. It is a tool that is useful for guiding day-to-day decisions and also for evaluating progress and changing approaches when moving forward.
In order to make the most of it, a company should give careful thought to the strategic objectives it outlines, and then back up those goals with realistic benchmarks for evaluating results.
Many aftermarket distributors have found such a plan to be useful.
“You have to have everyone on the same page, working towards the same thing,” says Tommy Hill, general manager of Truck Supply Co. of South Carolina. “Everyone needs to know their responsibilities and what the ultimate result is that we want.”
Inland Truck Parts President Greg Klein likens the planning to that of the military.
“Getting an organization to perform in harmony towards a desired strategic objective is in many ways similar to how a military operates,” Klein says. “The organization chart of a business mirrors the various layers of military hierarchy. Just as a military needs a battle plan, a company needs a strategic business plan, which should spell out the vision and mission of a company and the key strategic objectives to pursue that will make the company successful.”
Strategic or corporate alignment means that all elements of a business are arranged in such a way that all employees are working towards the company’s set goal. Strategic planning starts with defining a company mission. Having a set mission is important because it clearly defines the ideas linking all aspects of the business.
“Once you have a good strategic business plan you then need to communicate it effectively throughout your organization so everyone knows what the plan is and then develop effective ways to measure your performance against your strategic objectives,” Klein says.“If only the senior corporate leaders or even the store managers understand the strategic business plan it will fail.”
Defining strategic missions in a way that is broad enough to guide both management and employees, and narrow enough to focus their efforts is key.
“It goes from top down,” Hill says. “It’s not something that just works in one department or another. We all have to be heading in the same direction.”
For example, ‘To take care of our customers’ is too broad of a mission and leaves too much wiggle room in its meaning.
But, ‘To take care of our customers by providing the best parts available within 24-36 hours’ or some other well-defined mission statement clearly sets the objective of the company.
Midwest Truck Parts President Howard Siegel says by stating clear goals and objectives, a company can lay out what expectations are for associates.
“When everyone knows exactly what is expected of them it’s easy to determine who’s doing what they need to do and who is not,” Siegel says. “It’s pretty clear then where the successes and shortcomings are.”
Think of a company in its entirety, or select a strategically important element of it, and consider how well does the business strategy support the fulfillment of the company’s purpose and how well does the company support the achievement of that strategy, says business analyst Laura Ritter, who serves as an adjunct faculty member at Union University.
She describes purpose as being what the business is trying to achieve, while strategy is how the business will achieve it.
The purpose should not change. It is something that should be the ultimate end result that everyone is striving to achieve. The strategy, however, involves choices about what products and services to offer, which markets to serve, and how the company should set itself apart from rivals for competitive advantage.
“Sometimes you might figure out there’s a different way of doing something that’s a little better than the way you’ve done it,” Siegel says.
Klein says the best plans sometimes need changes.
“Adjustments may need to be made if the conditions in that market are changing. Plans should not be static, but rather flexible,” he says. “If you create an annual plan and stick it in a file, never to be seen again, that effort was a waste of time and a mere check the box.
“To be meaningful, a plan must be continually reviewed against actual performance. For Inland, we call our annual store plans a Planning Tool, which is prepared by our stores after completing a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis and then the actual results are captured in what we call a Scorecard, which is reviewed monthly by the store managers with their regional operations managers. I then review all the individual store scorecards with the regional managers every two months.”
Strategic objectives are based on the best information you have at the time and your most realistic assessments of what your company can achieve.
Emphasizing those objectives and making it part of achieving the mission is a responsibility of everyone.
“We have a monthly department meeting. This hap-pens once a month, after hours, so that we have the full attention of everyone,” says Action Truck Parts Vice President Nick Seidel.
“We go over things that are coming up the next month. Whether it is a sale, promotion, event, or anything else that would need to have the focus and dedication of the group. We include everyone from drivers to management in this meeting. It puts everyone on the same page going into the next month.”
But, strategies can change.
For example, if an aftermarket distributor plans to grow its belt sales business by 20 percent during a specific year, only for a large competitor to open a superstore down the road, it’s likely the distributor will need to redefine its objectives and evaluate progress in terms of preserving market share.
The process of strategic planning can be as important to a company as the results. It can be a valuable process when it includes employees in all departments and at all levels of responsibility thinking about how their activities and responsibilities fit into the larger picture, and about their potential contributions.
“We drive it home,” Seidel says. “We strive to provide the best customer service in the Chicagoland area. My managers are tasked with providing our customers with anything they might ask for. If we don’t have it, we will get it for them. Like any supplier in any industry, we do not want our customers to go anywhere else for their products. A constant reminder of that from management, makes sure all our people know what we are trying to accomplish.”
Seidel says that meetings and constant reminders are the norm, but presenting promotions that can be easily tracked and followed with reports are also important.“Each month we have sales promotions,” he says. “We track each individual’s sales on that certain product or vendor. It is also an incentive and competition between counter sales, outside sales and each individual branch. It is monitored each Monday of the month with progress reports sent out Monday afternoon.”
Keeping track of those results is an essential element of a strong strategic plan. Measurable goals set specific, concrete objectives expressed in terms of quantities and timelines. Measurable goals are important to any distributor because they enable managers and employees to evaluate progress and pace developments.
To grow substantially during the next few years is not a measurable goal, but to increase sales by 30 percent during the upcoming year provides a concrete objective to be achieved in a specific time frame.
“When you have that outline of what needs to be done, when it needs to be done and what the end result is, everyone is on the same page,” Hill says.
Ritter says the best strategic plans are measured and monitored routinely and the results are clearly defined.
“When there’s no questions left—it’s black or white—we met all goals or we didn’t, it’s easy to see why the results ended up as they did,” says Ritter. “A leading cause of business failure is not having any type of strategic plan.
“If a business has little idea where it is headed, it will wander without priorities, changing constantly, and with employees confused about the purpose of their jobs. This is why corporate strategic planning is critical to business success, even if the planning process takes time and resources.”
That is true in the aftermarket segment where changes happen often and the competition is always ready to pounce.
“If you have a good, solid plan and everyone works within that plan,” Siegel says, “you can see the results at the end. If everyone is doing what they are supposed to do, you can achieve your goals.”