Current Issue
Published on August 30, 1999

TIRE FILL-RATES REMAIN TOP CONCERN

The jostling among tire makers for market supremacy in North America has been fast and furious this past year. Bridgestone/Firestone Inc. proudly proclaims it's jumped ahead of Michelin North America as No. 2 in terms of sales.

No. 1 Goodyear, despite having lost ground to these two arch rivals, aims to replenish its recently diminished lead once it takes over marketing of the Dunlop brand later this year.

It's an exciting and high-stakes contest to watch.

But to independent dealers, where a tire manufacturer ranks among its competitors means nothing unless that company can fill orders and make deliveries on time.

Despite numerous plant expansions in North America in the past few years, nearly all tire makers—big and small alike—continue to have trouble filling orders.

Everyone knows that a business can't remain viable for long without receiving prompt and satisfactory delivery of the products and supplies it needs.

Yet few tire dealers today can say they regularly receive accurate orders, in full and on time. In fact, some complain of fill rates as low as one-third.

Tire manufacturers need only look at their own operations to determine what it means not to have orders delivered on time and in full.

What would it do to their costs, efficiency and customer relations if the raw materials needed to run their plants arrived so sporadically?

Most tire companies are well aware of this shortcoming and are feverishly trying resolve it.

For the past two years at Michelin's national dealer meetings, executives have acknowledge the company's fill-rate problem and pledged to remedy the situation.

Goodyear recently consolidated its North American distribution system to make it more efficient.

Yet the company continues to struggle to balance supply and demand.

Bridgestone/Firestone, too, has had its share of fill-rate problems. But the company apparently has found some way to get tires to dealers, judging from its market-share growth.

The addition of non-traditional retail channels, such as warehouse clubs and more recently auto dealerships, only exacerbates distribution problems.

These large retailers siphon off production runs and tend to receive favored treatment at the expense of the smaller dealership.

Yet it is the independent tire dealer—not the mass merchandiser, discount club or automobile dealer—who continues to sell the majority of replacement tires in North America and therefore deserves priority status.

With product life cycles growing shorter and the array of tire types and sizes increasing, the fill-rate problem likely will get worse before it gets better.

The suppliers who solve this problem will earn dealers' loyalty and business—and gain market share in the process.

Comments

Frequently Asked Questions

For any questions regarding your subscriptions or account, please click HERE.