How technology saved a business Featured

10:07am EDT July 22, 2002

Jeff Slesnick had two choices last year: Figure out how to dramatically increase sales at Slesnick Auto Parts or close.

A monstrous increase—say doubling sales in one year—was an admirable goal, but it was a laughable one as well.

That is, until, Slesnick invested $10,000 to link electronically to nearly 2,000 other auto parts suppliers nationwide. The system allows Slesnick to offer walk-in customers an inventory database of 47 million parts nationwide—everything from that hard-to-find front bumper for a 1970 Skylark to an alternator for a 1990 Pontiac 6000. This allows Slesnick to be a one-stop resource and allows him to earn a modest profit on someone else’s inventory.

More significantly, the system lets those 2,000 outlets sell his inventory. He can peddle hundreds of parts daily without the overhead of a large store and sales force.

A means to survive

Slesnick Auto Parts in Canton started in 1980 as an extension of Slesnick Iron & Steel Co., the now-42-year-old business founded by Jeff’s father, Stanley. Started as a scrap yard, the business today employs 50 people and supplies aluminum and stainless steel to businesses including plumbers, heating and cooling contractors and truck body shops. Auto parts is one division; Slesnick Structural Steel is the other.

The company, run by Stanley and sons Jeff and Edward, stumbled into auto parts because the scrap yard acquired a large number of wrecked autos and it had extra warehouse space.

But after 17 years, Slesnick Auto Parts last year generated a modest $250,000 with a slender profit margin. “There isn’t enough volume with just the local market,” Jeff Slesnick says. “If we were going to stay in this business, we had to do something. We had no choice.”

Slesnick had wanted to purchase the ADP Parts Services software system for seven years, but its high costs and incompatibility issues made it an unwise decision. By last year, the costs had dropped in half and the system was compatible on Windows 95 and was Year 2000 compliant. In addition to the $10,000 start-up costs, Slesnick pays a $1,000 membership fee. He expects that this year both the system will pay for itself and sales will increase 50 percent.

Boosting volume and profit margins quickly

The ADP system works simply: A Slesnick employee enters in the car, year, model and the part being sought. The modem taps into the national database and, in less than a minute, indicates which dealers have the needed part and how much it costs. Slesnick can then call the dealer, verify the part’s availability and cost, and arrange to have it shipped overnight.

The dealer could charge Slesnick the $35 distributor price for an alternator for a late-model car, for example. Slesnick would then charge $50 (the same price he would charge if it were his own part), plus $10 he paid to ship it. That transaction would bring the original supplier a 40 percent profit margin and bring Slesnick a 30 percent profit margin. The customer, meanwhile, has a part he needed without hassle—with only the overnight shipping costs added.

“This is the Information Age,” Slesnick says grinning. “I can say, ‘Yes, I have that part, or ‘Yes, I can get it for you, here’s what it will cost and here’s when you’ll have it ...

“I don’t have to call eight different scrap yards and the customer doesn’t have to run all over town.”

Slesnick says he’s generating 50 to 100 requests a day and matching and selling 20 to 50 parts a day through the ADP system.

Going after ‘real money’

The software capability is linked directly with Slesnick’s plans to become a more sophisticated supplier. To build desired volume, Slesnick must deal with more body shops and auto dealers. Demand from individuals has plummeted, as Saturday morning mechanics find they can’t repair their cars as they once did.

To provide a resource, Slesnick has had to increase inventory and improve inventory management.

The salvage yard carries 400 to 500 cars at one time, but most of them are scrap. Slesnick hopes to increase the percentage of late-model wrecked cars purchased from auctions. “That’s where the real money is,” he says, explaining he might spend $450 for a 1992 Corsica but harvest and sell $1,000 worth of parts.

Slesnick carries 6,000 parts in inventory now and hopes to double that by year’s end. Within five years, Slesnick hopes to have 80 percent of sales from his own stock.

The software then allows Slesnick to track all of those parts and cars. “I can look it up on the computer and find the part or say, ‘That Buick you need is in Row A and it’s car No. 12.’”

The supplier can also become a resource to body shops trying to develop quick estimates. “If someone needs a door for a Buick Century, I can tell him it’ll cost about $200 regardless who he buys it from.”

Slesnick says his computerization shows that even non-technical businesses are benefitting from—and being forced into—the Information Age. “Companies that are going to be in business in the Year 2000 have to provide service. I might not be able to give them the best price, but I can provide them with information and service.”