CCITRIAD-Sponsored Industry Research Reveals New Trends Compelling Change In Automotive Aftermarket

After Years of Talking About the Severity of Its Problems the Study Finds The Industry is Now Poised for Rapid Action

AUSTIN, Texas, June 9 -- "Few industries have talked more about -- but then done less about -- critically eroding business conditions than the automotive aftermarket," concludes a recent study by Park City Research (PCR). The report identifies new marketplace and technology dynamics that will at last drive significant industry change. CCITRIAD, which had anonymously sponsored this independent research, presented an overview of the findings at the June 2003 meeting of the Aftermarket Auto Parts Alliance, Inc. in Little Rock, Arkansas. CCITRIAD is donating $5,000 in scholarship funds to Northwood University as a token of appreciation to the many industry executives and business owners who assisted PCR in the study.

"This research is part of a much bigger top-to-bottom CCITRIAD strategic business review," says Hoon Chung, the company's SVP and General Manager, Automotive. "The study confirmed our view that businesses must transform to reach new levels of supply chain and operating efficiencies to thrive -- and in some cases survive -- in these challenging business conditions. While the study identified that CCITRIAD was best positioned to be a catalyst for change, it also highlighted that the company would need to significantly alter how it interacts with its customers and the marketplace to be able to assume this role."

"We set out to do a different kind of study -- the industry already knows the challenges it faces and the difficulties with its inventory and operating models," according to PCR Chairman Richard Currier, who directed the research. "Our research focused on practical forms of solutions, and especially on the drivers that could force change in an industry that has long known the challenges, but has yet to transform its business models. Our focus was less on enumerating the problems and more on what sets these problems apart from other industries."

The study concluded that the aftermarket has a "network-model supply chain," a fundamentally different environment from other manufacturing and distribution markets. The network model is characterized by the sideways and backwards movement of goods and information. This is in stark contrast to the traditional straight-line industry model where business effectiveness is defined by increasing speed and efficiency of the flow of goods and information. In the network-model, an individual manufacturer or a warehouse distributor cannot readily optimize their position. Supply chain optimization can only be realized at the market level. "It's not that the aftermarket 'missed the boat' on the inventory efficiencies that have swept every other industry, it's that they need a different boat," notes PCR's Currier.

The study examined potential "carrots" and "sticks" for compelling change. The research predicts that carrots will come in the form of better "market- level" solutions for a network-model environment. Additionally, the study also found that recent "combinations" of problems have further impacted the pressure to act. The study concludes that with the right "carrot and stick" many industry participants will now make quantum leap improvements in their inventory and operating efficiencies. And, as industry leaders move well ahead of the pack with implementing these changes, other participants must rapidly catch up, or be swept away.

CCITRIAD has made significant business changes consistent with the conclusions in the study. For example, the company has expanded the licensing of its Industry Standard electronic catalog and suite of databases. Since late 2002, CCITRIAD has licensed over 15 Service Dealer Shop management providers and 11 Distribution System providers. Several of these VAR's (Value Added Resellers) have also licensed AConneX to connect their data customers to the trading network of existing CCITRIAD customers. The company is also moving to new platform technologies and is focused on upgraded connectivity and analytics capabilities. Additionally, CCITRIAD is increasing its involvement with industry associations and intends to take a more active role in leading industry-wide initiatives.

CCITRIAD plans to broadly distribute major portions of the Park City Research study. The detailed findings were obtained on condition of confidentiality and cannot be published, but the aggregated findings, analysis and conclusions will be distributed later in the year.

About CCITRIAD

CCITRIAD is a leading provider of technology solutions for complex-goods, high service distribution environments. CCITRIAD drives breakthrough performance for these Complex Distribution Environment (CDE) businesses -- which include manufacturers, wholesalers and retail distributors in automotive parts, hardware, lumber, nurseries, plumbing, paint, building and electrical supply-through a comprehensive set of technological solutions. CCITRIAD provides best-in-class products, services and operations in each market it serves so that all constituents can achieve their goals, whether business, financial, or personal. More information can be found at www.ccitriad.com .

About Park City Research

Founded in 1985, Park City Research helps leading technology firms worldwide better understand and serve emerging market trends and thereby drive value to their customers and realize competitive advantage. The company has conducted over 400 assignments for over 300 high-tech software, hardware, and services technology clients, including Ariba, Halliburton, HP, IBM, Intel, JD Edwards, Manugistics, PeopleSoft, PWC, and numerous emerging growth and startup ventures. More information on the company can be found at www.parkcityresearch.com .