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January 08, 2007 01:00 AM

Michelin unit attempts to satisfy dealer complaints

Bruce Davis
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    GREENVILLE, S.C.—Michelin Americas Small Tires has doubled the size of its field sales team in the past 18 months in response to complaints from its dealers that they had little or no direct contact with the tire maker.

    "We streamlined our approach to dealers a few years back and went too far with it," said Jean-Michel Guillon, chief operating officer, MAST. "We didn´t pay enough attention to the personal aspect of doing business."

    At the same time, Michelin is revising its strategy toward logistics, opting out of an agreement it signed in 2002 with TNT Logistics North America to operate nine distribution centers and instead taking back more direct control over distribution.

    At the time, Michelin cited unspecified cost savings and improved services as reasons for its decision to outsource.

    "There´s a fine line between taking charge and giving up this responsibility," Guillon said. "We gave up too much responsibility to a third party; we need to keep a certain level of responsibility to the dealers.

    "There´s a certain level of expertise we need to keep in-house."

    TNT continues to oversee logistics for Michelin at five centers in Canada and one in Independence, Va., and Michelin has partnered with new logistics providers at five other U.S. distribution centers, the company said.

    Michelin´s renewed commitment to effective logistics coincides with the growth of the company´s Alliance dealer program, Guillon said.

    "Alliance helped us meet our goals in the late ´90s," he said, "but with the new complexity of the marketplace-the number of SKUs, etc.-the level of service needs to change.... We´ve got to get to the next step with Alliance."

    At a recent media day presentation at Michelin´s headquarters in Greenville, Pascal Couasnon, vice president of marketing for MAST, noted the company´s concern for efficient logistics is based in part on the growing complexity of the product range.

    To underscore the changing marketplace, Couasnon pointed out that 46 percent of the consumer tire aftermarket is 16-inch and larger rim diameter sizes — up from 21 percent as recently as 2000 — and that 41 percent is made up of V or higher speed-rated tires or light truck/sport-utility vehicle-type tires.

    "It is our job to drive traffic to dealers," he said, "by investing in brand equity in order to reach consumers willing to invest in their cars."

    Couasnon pointed out that Michelin research shows consumers who buy Michelin or BFGoodrich brands spend on average 30 percent more-or $388 per average ticket-at their retailer than on competing brands.

    In the coming year, Michelin will devote more resources to getting its message out to consumers and dealers.

    Some of the areas Michelin is looking at to help its dealers include developing tools to optimize working capital (such as inventory management) and tools to communicate the value of the product.

    In addition, Couasnon said, too few dealers realize a cost benefit to selling higher quality products: fewer returns.

    "We sell mobility to consumers, profitability to dealers," he said. "We haven´t focused enough in the past to communicate the value of our brands."

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