Aftermarket

Why Do Fleets Buy?

January 2010, TruckingInfo.com - Feature

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Every day, millions of replacement parts are purchased in North America for commercial trucks.
There are a thousand and one plus reasons why fleet managers buy those parts and where they buy those parts," said Bruce Plaxton, president of BGP Marketing Solutions and moderator of an HDAW panel discussion on fleet buying decisions. "It's a challenge to anticipate as many reasons as is practical and figure out how to address these profitably, and assure the necessary resources are in place to do that."

For instance, Plaxton said, you can divide replacement parts into predictive and non-predictive. The more predictive it is, the more price-sensitive it is. Predictive parts are things such as filters, coolant, motor oil and brake shoes. Non-predictive items are parts such as clutches, seats, fan clutches, evaporators, hoods and fenders. "Even the largest fleet cannot predict they're going to need a replacement hood or fender for this truck tomorrow," Plaxton said. "You don't know when that accident is going to occur."

The age of equipment is another factor affecting replacement parts decisions. For instance, he said, refrigerated trailers are generally kept seven to nine years. A fleet may be willing to pay more for a part for a 4-year-old trailer than for an 8-year-old trailer. "Generally speaking, the older the fleet, the higher the percentage of non-warranty predictive parts usage, and hence the sharper the pencil."

When you're looking at non-predictive parts, availability often becomes more of an issue than price. "If it's August in the Mohave Desert, you've got a load of frozen pizzas and the condenser goes, price is not really an issue," Plaxton explained. "In a non-predictive situation, availability is key to why fleets buy. The firm with the part on the shelf will capture the business most of the time."

The panelists pointed out that while price is a factor, they looked at factors beyond initial purchase price. For instance, Steve Duley, vice president of purchasing for Schneider National, said that quality and performance were ahead of price when it came to decision criteria.

If Schneider is considering a non-OE part, Duley said, first they make sure the quality and the spec are satisfactory. "Once we've qualified the part, we would look at who the supplier is. We'd do an interview and look at their capabilities, probably get some references, learn as much as we can. We would then move to the price element, and if there is a price element and the quality and availability's there, we would make that move."

Sid Gooch, managing director of vehicle maintenance for FedEx Express, notes that with the nature of his business, downtime is a huge problem, so quality is very important - but, of course, price is still a factor. "We look to reduce our total parts cost, not just the price we pay for the part."

Carl Lyth, northern Ohio fleet manager for Pepsi Americas, the second largest Pepsi bottler in the world, noted that his operation keeps equipment a long time, so direct replacement aftermarket parts are often used during the second half of a vehicle's life. "But we expect support, not just cost savings," he said. Longevity of a supplier is also important, he said. "The worst thing that can happen to us is a key supplier builds their business on price and prices themselves out of the market, and then they're gone."

Support is also important for Lyth, who notes that "not all suppliers do a great job of supporting our smaller locations. Everyone wants to deal with Chicago or St. Louis. But we do buy parts in New Philadelphia, a small town in Eastern Ohio."

The price equation also could include factors such as shipping costs, Gooch explained. "For example, if we're buying brake drums for a Class 8 tractor and we look at price and what it would cost to ship them vs. what we can have through local dealers, we may purchase them through the local dealer because of the difference in the cost of shipping," he said. "If it's a remanufactured part and there's a core involved, how do you work the core returns? That could push us more to a local decision than a national decision."

These fleets are all careful about using non-OE or non-big-name-brand parts.

Kevin Tomlinson buys mostly OE parts. He's director of maintenance for South Shore transportation, a 200-tractor flatbed carrier based in Sandusky, Ohio. "We cannot afford to have a truck go down because of a product malfunction," he said. "I really don't want to use something that is not a proven piece."

At FedEx, Gooch said, "generally speaking, we don't use what I will call will-fit parts, but there are certain parts where we will make an exception." The procedure is to test the product on a small number of vehicles for the lifespan of the product to determine if it offers the same life and quality. "If it passes those tests, we'll accept it and put it into the parts system." A test on wiper blades took a year and a half.

It's that kind of testing that prompts Lyth to look to larger fleets when looking at non-OE parts. "If a supplier brings me something, I ask, 'Who else is doing this?' I don't like to lead the parade. If you can show me there are other companies that have more resources than me to research, and they're using that part or component, that's a reasonable part for me to look at. We'll try that part and see how that tests out over a short term."

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