Trucks are on the road much longer than they used to be, and that translates into a greater demand and investment in parts, service, and ongoing maintenance, according to Paul Tuomi, director of dealer and fleet parts sales for Daimler Trucks North America.
This makes parts purchasing decisions more important than ever, because purchasing the wrong part, paying too much for a part, or choosing the wrong supplier can have significant consequences.
“You need to have consistency [in your parts purchasing] out of the cradle or heading into the grave,” says Jim Pennig, vice president of business development for Vipar Heavy Duty. “By this I mean you need quality replacement parts purchased at regular intervals from a reputable point of distribution.”
The lowest price for a part is not always the best choice. Factors other than price need to be considered when making parts purchasing decisions.
For instance, lower-priced brake friction may appear to be a bargain, but if it wears prematurely, causes early drum wear, and you have to replace it more frequently, “the parts and labor cost will quickly out run any initial piece parts saving,” says Aaron Bickford, aftermarket business unit director, drivetrain, Meritor.
Mike Cueto, director of parts sales and marketing for California-based dealer Velocity Vehicle Group, says fleets “make a big deal out of the price of parts, but parts only represent 15% of their operating budget.”
He adds, “You can buy something for $10 and it’s only going to last a year, or you can buy something for $20 that’s going to last three years. You’re better off spending the $20.”
Following are five areas to consider when buying parts for your fleet.
Life Cycle Matters
Whether you choose to stay with the original brand or go with an aftermarket part, purchasing parts properly does not mean buying the least expensive one. It also does not necessarily mean buying the most expensive.
Tim Bauer, aftermarket business unit, director, undercarriage products at Meritor, says fleets must identify suppliers that have a variety of quality/price levels to offer them without sacrificing safety.
“Having a good, better, and best product offering allows fleets to maintain their vehicles properly while balancing the cost of the total maintenance of the fleet” throughout the life of the vehicle, Bauer says.
For instance, consider brake life. “When proper brake components are purchased and installed, there can be a savings of hundreds of dollars over the life cycle of the truck due to longer brake life and time between required maintenance,” says John Thompson, sales manager, commercial vehicle NAFTA, at TMD Friction.
However, parts choices may differ based on vehicle age.
“If you look at somebody who is trading a truck every three to five years, they are going to use [original equipment parts] wherever possible,” says Mark Terry, general manager, truck and bus at Yancey Bros. Co., a Georgia-based dealer and parts supplier. “But as we get into the second owner — anybody who is downstream of that initial trade — there is a tremendous opportunity for the all-makes side of the business. And if someone buys a truck and keeps it for 10 or 12 years, we see a point where, in their mind, the value proposition from the aftermarket part exceeds the price premium they would pay to the OEM or Tier 1 suppler.”
Brittany Stewart, COO of online truck parts marketplace FinditParts, encourages fleet managers to do their homework and determine what is appropriate based on how long they plan to keep the vehicle. “It may not be a part with an eight-year rating; it might be one with only a two-year rating,” she says. “If they only plan to keep the truck for two years, they don’t need a part that lasts longer.”
Remanufactured parts are one component of a successful parts purchasing strategy. The decision to use reman parts is fleet-specific, according to David Schultz, director of marketing, Bendix Commercial Vehicle Systems. “Factors that come into play are vocation, what they are using their vehicles for, the expectation of their vehicle’s performance, the longevity, and so on.”
At the same time, Bendix’s Jerry Conroy, senior director, aftermarket sales, recommends that fleets “consider who the remanufacturer is, because different suppliers have different capabilities.”
Dan Bambrick, manager of private brand and segment marketing at Road Choice Truck Parts, a new all-makes brand from Mack, also believes there are various levels of reman parts.
“In using reman parts, a fleet should look for a reputable supplier that has proven to have a true remanufacturing process,” Bambrick says. “Sometimes we see companies that say they have reman parts, but we refer to them as rebuilt parts. It is not completely brought up to specifications; only a few components are replaced and the unit is put back together. We don’t consider that a true remanufactured product.”
Using brake shoes as an example, TMD’s Thompson says to make sure shoes are coined: placed in a die and pressed at very high tonnage to bring them back to their original, factory shape.
“Some reliners only remove and replace lining,” he explains. “This is not the best starting place for a brake reline, as the high forces involve in braking will ‘stretch’ or distort the shoe in normal operating conditions.”[PAGEBREAK]
The Internet as a Tool
The Internet provides another avenue for purchasing parts, or at least for researching parts and suppliers before making a purchase.
“One of the most useful ways the fleet can use the Internet is getting information about different products, and being able to compare similar types of widgets from a form and fit, and function standpoint,” says Bendix’s Conroy.
Stewart of FinditParts says fleets can use the Internet to streamline the parts procurement process, but adds that it is not a replacement for local distribution. “The fleet probably will get 80% of its parts from its primary local source.” Hard-to-find and legacy parts are good candidates for Internet purchasing.
Bill Wade, managing partner, Wade & Partners, says the Internet is a “fantastic tool,” but he says the Internet is not always the answer. “There are times when you need the diagnostic help of a good counter man or a good dealership mechanic.”
There also are times when if you can get a case of filters shipped to you, the price differential may be enough to make it worth your while, Wade believes. “The whole thing revolves around the issue of cost vs. value. If you don’t have the value, the cost is a stupid focus. Value is all about keeping the trucks running. To the extent that the supply chain can help it, great. To the extent that the supply chain gets in the way of that, then we have to rethink it,” Wade says.
Bambrick at Road Choice cautions fleets to research suppliers when purchasing over the Internet to ensure they are buying parts from reputable sources.
Vendor Managed Inventory
Once you have inventory, it has to be managed properly. Many suppliers are now offering to take that headache away from fleets by managing inventory for them. “Done correctly, [vendor managed inventory] takes excess working capital out of the supply chain, making the supply of parts more reliable with less inventory and hence less capital,” Bickford says. “It is essential that knowledgeable and experienced people manage the process and allow the system to do its work without unnecessary intervention.”
VMI improves the overall breadth, depth, and fill rates to end users by using daily demand to predict future demand and replenish sales on a more consistent timeline, Meritor’s Bauer explains.
Joe Laux, CEO at Wisconsin-based Freightliner dealer group River States Truck and Trailer, says another benefit of managed inventory is that it reduces obsolescence. “A dealer may run 5% to 10% obsolescence within a 12-month period, but fleets may have 50% obsolescence.” Having your parts supplier manage inventory can help control obsolescence.
John Wisdom, marketing technology manager, Paccar Parts, agrees. “The unfortunate thing that happens with a lot of the fleets is they become parts collectors because they buy a part and then it just sits on the shelf. That is money that is not being put to good use.
“You have to know why you are buying it, and then a good inventory control system will help you see you really don’t necessarily have a need for that particular part, but maybe you have a need for other parts you should have in stock.”
VMI systems should not just be allowed to run on autopilot. Parts ordering plans need to be reviewed in context of what is happening with the fleet.
“For example, if someone using VMI has a significant business win or loss, the algorithm will not know,” Bickford says. “If there is exponential growth of a product for some reason, the system will not pick up on the step change in demand as quickly as demand grows. This is why you must have competent people at the supplier and the customer engaged in managing the process.”
Ted Rose, vice president of customer support at Virginia-based Kenworth dealer Truck Enterprises Inc., says dealer managed inventory in theory is a great idea. “But if you didn’t have a person on the fleet side who is committed to it, it doesn’t work. You can put all the electronics you want in play, but it comes back to a warm body to make it work.”
Consigned inventory is another option some parts distributors offer. The benefits include having replacement products on the shelf at all times and only paying for the part that are used at the time of restocking.
“The challenges usually involve consistent tracking and replacement of parts used in a timely and efficient manner,” says Vipar HD’s Pennig. “Products that involve core-credits can be very difficult to keep accurate count of. Consigned inventory is becoming less common as Internet and e-commerce ordering/purchasing gains acceptance.”
The Value of Service
VMI is just one example of how the services offered by your supplier need to be considered alongside other parts-buying considerations.
River States’ Laux says the number one driver of parts purchasing should be availability. “The cost of a truck being down is estimated at somewhere between $500 and $750 a day. If you are able to procure that part the same day, fix the truck and get the truck back up on the road, there is a real value added.”
According to Yancey Bros.’ Terry, most customers tend to focus on the right part, at the right price, right away.
“When you start looking at why a fleet should buy from you vs. somebody else, it starts with, how good your people are on the counter? Are they able to identify what you need, source it, and then give it to you at a competitive price?” Terry says. Other things to look at, he says, include delivery, as well as how a supplier handles cores for remanufactured parts.
“If you provide a solution and you are fair and competitive in your price, if you offer some things like consignment or delivery and you have got a good approach to how you manage cores on behalf of the customer, those are some things that have got to transcend the price you are paying for the part,” Terry says.
Truck Enterprises’ Rose advises fleets that when a supplier comes in and says he is going to sell you a part for $10 less, “make sure you are armed with the right questions. How about the training? Do they come on site if you have your own techs and help train them and get them up to speed? If you really want to have all the rest of this quality and service, then there is a cost to that. If you want outside sales people coming to see you and helping you through things, if you want tech and spec [advice] from one of our folks to make sure that you get the right product, it is going to cost you.”
Wade advises fleets — whether it’s a single location or a multi-location fleet — to form relationships with their parts suppliers. “Whether it is a dealer, or an independent or a buying group, it does not matter,” Wade says. “What really matters is that you develop that relationship, because anybody will sell you an AA part on Wednesday at noon. You want the guy who will bust his butt to find you an obscure part on Saturday morning or Sunday night because you have a truck down.”
Choosing the right parts supplier and building a strong relationship with them is paramount to running an efficient fleet, according to DTNA’s Tuomi. “Not only can a reputable supplier help choose the right parts for fleets, but they can also alert customers of new parts, maintenance, or savings programs that will help to lower the total cost of ownership down the road.”
When choosing a supplier, Velocity’s Cueto says it’s all about uptime. “Fleets need to pick a parts supplier that is going to give them the maximum amount of uptime. They need to keep the trucks on the road. If they save $5 on a $100 part but that part fails, it isn’t worth it because they lose $700 when they are down.”