PALM DESERT, Calif. (Jan. 14, 2000) — Providing the right product—and enough of it—at the right time is a real high-wire act. For at least part of the past year, TBC Corp. has been working without a net, so to speak.
The company´s raison d´etre, first and foremost, has always been customer service, and that covers a lot of ground: offering competitively priced product, exclusivity, consistency, high profit margins.
When it can´t fully deliver on its promises—to provide plenty of tires, for instance—execs with the nation´s largest private brand marketer hear a hue and cry from customers that sounds suspiciously like "Don´t Be Cruel." And since the company´s based in Elvis´ adopted hometown of Memphis, Tenn., you´d better believe they can name that tune.
So for the annual meeting of some 300 TBC customers, dealers and suppliers in Palm Desert, Jan. 5-8, there was news about new product lines and some positive prognosticating about what the year may hold. Still, the one question on the lips of many seemed to be: "But can we get more tires?"
The short answer: You betcha—we hope.
Otherwise, it´s "Heartbreak Hotel" time, especially coming on the heels of TBC´s announcement that it has redesigned, expanded and is relaunching its Sigma private label line as well as introducing three 100,000-mile touring tires it hopes will be big sellers. To sell big, you must deliver plenty of tires.
Suffering under the same dark fill-rate cloud as the rest of the industry, TBC officials once again have targeted 95 percent as their goal for 2000. The same as last year. For a time, it looked like the company would hit that: it enjoyed 94 percent in the first quarter of 1999—the best in TBC´s history.
Then, in the last six months, the situation deteriorated to the point the fourth quarter´s fill rate was 84 percent, and the year´s average ended up at 90 percent.
Not good enough, execs said, and they apologized for it.
So did officials from Goodyear, which manufactures more than half of TBC´s Multi-Mile, Cordovan and Sigma private brand lines, and Cooper Tire & Rubber Co., TBC´s other principal supplier.
Thomas A. Dattilo, Cooper´s president and COO, admitted at the meeting: "Our service fell to levels unacceptable to us and TBC."
By the beginning of March, if not sooner, "expect that there should be real and continuing improvement...," he promised.
New life for Sigma
TBC will spend $12 million on new tire molds, the single biggest such investment in its history, much of which will go toward the reborn Sigma, the smallest of TBC´s private-label lines.
Goodyear is making the new Sigma Paramount, as well as its counterparts, the Multi-Mile Excel and Cordovan Century, all of which carry a 100,000-mile treadwear warranty. The rest of the Sigma line-up will come from Cooper.
Boasting a UTQG treadwear rating of 700, Paramount, Excel and Century have 21 S- and T-rated sizes. Each has a different tread pattern and sidewall treatment. To improve marketability, TBC is offering a 30-day "test drive" with a no-questions-asked return policy, and free roadside assistance for consumers through a 24-hour toll-free number.
All three touring tires, available by March, feature Goodyear´s new ventless mold technology, allowing them to leave the factory in "virtually showroom condition," said Glen Gravatt, TBC´s senior vice president, purchasing.
TBC said its strategy is not only to re-engergize Sigma, but to eliminate the "neutral" tire designs that had become common to Cordovan and Sigma and, in effect, watered down the geographic exclusivity of their distributors.
Rather than being a case of boosting a poor stepchild brand for Sigma´s 25 distributors, Barry Robbins, TBC executive vice president, sales and marketing, said the company believes revitalizing the line "is a good way to grow our core business."
Without giving numbers, he said the goal is to at least double Sigma´s sales this year.
Rounding out the Sigma passenger line-up are the S-rated Regent (27 sizes), broadline Shadow (27 sizes) and entry-level Tempest (11 sizes). In the performance category, the line has the Supreme HP (14 sizes) and Supreme TR (33 sizes).
`New and improved´
James R. Pascover, director of communications, said TBC will support its distributors´ private brand sales through a broad, integrated set of resources that will include newly redesigned product sheets, warranty brochures, banners and point-of-sale materials.
For Sigma, that means "a whole new look with retailers in mind." The tire line´s new theme, "It´s time for a change," not only plays to the turnabout in the program for distributors, Mr. Pascover said, but also reminds consumers when it´s time to change tires, think Sigma.
Typically, a distributor carries only one TBC private brand.
The company also has ratcheted up its "Authorized Dealer" programs for each brand with new materials, and is urging its distributors to pursue and sign more independent dealers.
With 1,700 SKUs—what TBC officials called the broadest product offering in the industry—the company said this year it will launch the largest number of consumer-tire products in its history.
Among those will be a redesigned dual-channel Aqua Flow II wet-traction tire to replace a single-channel model. It has also updated the Sonar line from Nankang Rubber Tire Corp. Ltd. TBC debuted Sonar last year as its exclusive—in name and tread design—import brand in 34 sizes. A new, competitively priced radial light-truck "Trail Scout" will be available in five sizes.
The private brander also is continuing to promote its exclusivity and controlled distribution rights in North America for Goodyear-made Fulda, one of Germany´s top-selling high-performance lines.
It unveiled a German-language Fulda TV commercial, and although the ad will be redone in English, retail chain Kost Tire & Muffler, based in Binghamton, N.Y., already is using the edgy German version.
Another point-of-sale tool being pushed as "new and improved" is TBC´s "Today" credit card from GE Capital. "We feel credit card programs should be for your benefit," noted Ken Dick, senior vice president, sales, "rather than for your supplier´s."
Better customer focus
TBC is Goodyear´s largest "distribution partner" on the continent. William J. Sharp, president of the tire maker´s North America tire division, admittedly has caught flak about the company´s ability or inability to maintain adequate fill rates.
Mr. Sharp pledged that 2000 would be "The Year of the Customer"—``a time when we as a company concentrate our energies toward the needs of those whose future success is linked to our own."
As the century drew to a close, "It seemed we might have lost some of the customer focus that truly defined much of our success in our first 100 years as a company," Mr. Sharp conceded.
"And we are working very hard to reverse that loss...."
Goodyear, he added, will address not only "the quality of personalized contact, but the performance of key operations such as fill rate, on-time delivery and billing accuracy."
Since joining TBC in 1998 as president and COO, Larry Day has, like a proctor, graded the publicly held company on performance.
He cited a number of key developments in the industry over the past year—Ford Motor Co.´s aggressive program to sell tires and Goodyear´s alliance with Sumitomo Rubber Industries Ltd. among them. Then Mr. Day restated TBC´s mission to provide customers with the highest profit potential in the North American replacement tire market while maintaining the product line-up and support systems necessary to ensure No. 1 market share in the segments it serves.
He went on to render grades on various TBC endeavors: P for "passing," F for "failure" or M for "making our way."
To no one´s surprise, fill rates received an "M." "With the twin torments of line and size explosions and short supply, TBC has done a good job with fill rates," Mr. Day said, but the company is striving to do better.
Despite less-than-terrific rates, some customers felt TBC was doing the best it could.
Frank Abbadessa, manager-import/export for Worldwide Marketing Inc., Branford, Conn., told Tire Business he´s averaged 95 percent on his orders. "Everybody´s complained last year, but I´ve been fortunate. I guess somebody likes me," he laughed.
Another TBC customer, James F. Miller, president and CEO of Twin City Tire in Minnesota, acknowledged there were shortfalls. About 55 percent of his company is wholesale; the rest retail, including two stores in Minneapolis. He handles TBC´s Multi-Mile private brand.
"Our fill rates have been from 92 percent to 84 percent, but because of our warehousing strategy, we´ve been able to give our customers a 93 percent fill rate.
"But TBC jumped through hoops to help me, which has been great for my business. Despite the shortages, we depend on them for a large percentage of our supply."