Recently industrial distributor Grainger announced a new e-commerce initiative it is calling Gamut. Company officials said they did it in part to stem competition from Amazon Business, which is increasingly becoming a source for all sorts of things — including truck parts.
A quick search will demonstrate that you indeed can purchase parts for your trucks on the Amazon website. Of course, a closer look shows that you can’t buy all your truck parts there. Amazon is very adept at handling quick-moving, smaller parts that can be easily shipped.
You still need to rely on a local distributor for those slower-moving parts and large parts. While the slower-moving parts provide higher margins for distributors, they come with higher inventory holding costs.
So why should a fleet care about this? Because distributors cannot survive on the slow-moving parts alone. If Amazon continues to take an increasingly larger share of the A and B items, it is likely that distributors are going to find themselves facing serious financial pressure that may force them to close their doors.
Where will that leave a fleet when the part fails on the road? Without support from a local distributor to provide parts in emergency and breakdown situations, the fleet could find itself accruing more downtime until a part can be secured.
The point is, supply chain health matters to a fleet’s success. The supply chain is not just from supplier to distributor; it must include supplier to distributor and distributor to fleet.
The way things are in the truck parts business today, only two-thirds of the supply chain is involved in keeping it healthy. Going forward, everyone needs to take on that responsibility.
That means fleets need to sit down with their best distributors and say, “How can we work better together so that we both benefit?”
If you are not involved with vendor-managed inventory with your distributors, now might be the time to consider it. That will give them insight into your actual parts usage and can help them right-size their own inventory levels and reduce their inventory carrying costs – cost savings they may be able to pass on to you.
The goal is to take inefficiencies out of the supply chain, and the best way for that to happen is for you to make sure the distributors you rely on fully understand your business so they can best meet your needs. But it also means that you are going to have to suggest some areas you would like to see them grow into. Maybe it’s adding services to their parts operations. Maybe it’s something else.
At the same time, you need to realize that you can’t relegate your local distributor just to a source for those slow-moving parts and free technical expertise. You have to play a role in their financial success if you expect them to be there for you on a Saturday night when your truck is on the side of the road.
The reality is no matter how many parts a fleet buys from Amazon, it still is going to need local support. It’s not likely that the folks at Amazon are going to have people on staff who can answer installation questions or provide other types of technical support.
That is not to say that Amazon or other online sources can’t play a role in your parts procurement strategy. However, if you want to be able to get parts when you need them, where you need them, you are going to have to play a more active role in ensuring local distributors are still around when you need them.
You could end up saving yourself some money in the process. Bill Wade, managing partner at aftermarket marketing consulting firm Wade & Partners, believes that improving the efficiency of the supply chain could take significant costs out of it. He contends that as much as “20% of real hard dollars are being left on the table” because of supply chain inefficiencies. In a $15 billion aftermarket, that’s a lot of cash.