If you could boil the needs of the trucking equipment parts world down into two words, ease and speed would be the choice, so says Kathy Seegebrecht, vice president-marketing and brand for the Navistar Parts Group. At the end of the day, the demand for easier ways to find and price parts, along with speedier delivery options, are what's driving the wave of digitalization now sweeping the truck equipment parts world.
“Fleets today also have fewer people doing more work, so they are turning to a variety of electronic systems for help with parts, as well as in other areas of their business,” says Seegebrecht.
Paul Tuomi, director of parts marketing for Daimler Trucks North America (DTNA), agrees. “The Internet's impact on heavy-duty parts distribution is mostly about speed and accessibility, plus improving effective communication and information exchange,” he notes. “Catalogs and parts documentation have moved from the printed page to the web, providing ready information about the whole spectrum of suppliers from the OES [original equipment supplier] to ‘offshore’ options.”
The Internet is also fostering stronger business-to-business connections, Tuomi adds. Businesses can now schedule service work or parts delivery; receive status updates on repair work; and receive “more complete responses” to customer service needs between partners, all at a lower cost and in real-time.
The “digitalization” of the truck parts business is not limited to just the Internet, though, Pete Painter points out. “It involves e-commerce initiatives, or connections through virtual private networks operated via enterprise resource planning systems,” explains Painter, vice president-sales & marketing for parts wholesaler FleetPride. “The Internet changed how fleets access part information. Now we have web portals and other systems set up that allow for part ordering, purchasing, and other services. This goes far beyond merely accessing part pricing information.”
While the Internet has provided more accessibility and information to fleets, including the ability to electronically connect fleets with their service providers, it still is not the preferred method for purchasing, according to Jim Pennig, vice president-business development for aftermarket parts supplier Vipar Heavy Duty.
“At this point, we don't believe the heavy-duty segment of the business has migrated to a retail online purchasing method,” Pennig stresses. “The end purchase is still largely taking place between the fleet and provider, in our case the aftermarket distributor.”
One thing the Internet has done is create another line of communication. That means fleets can quickly see whether a part is available from a particular supplier, how much that part will cost, and whether other suppliers might offer a better value. It has not, though, replaced the need for human interaction.
“The Internet, in this respect, has created much more transparency to ultimately benefit customers but nothing further,” says Jeff Sass, general marketing manager for Paccar Parts. “Our research indicates that customers prefer to be contacted directly by a sales contact through face-to-face interaction or by telephone, and paper-based communication through direct mail and magazine advertising. Within the last couple of years, we have seen a shift as email has become the preferable way of communication.”
A SHIFT IS COMING
Navistar's Seegebrecht believes the big digital shift is closer at hand than many think. “A lot of the trucking parts business today is still conducted over the phone,” she explains. “But over the next five years, we believe that will really change as the next generation of fleet managers moves into the business.”
The ability for parts suppliers to match the flexible 24/7 schedule of today's fleet manager who is no longer tied to his or her desk is becoming more critical, Seegebrecht says. Whether that information is delivered via computer, smartphone or other mobile device, it needs to be provided quickly on the manager's schedule and with the options necessary, such as pricing OEM parts alongside competitive alternatives.
With knowledge and information comes increasing complexity. Too many choices can bog down the decision-making process; not enough information can slow the process. That's why Tuomi believes the experience and training of parts professionals remains vital to making the correct decisions.
“For all its speed and power, the Internet has not yet replaced the need for distribution networks that provide local product support and local parts inventory,” he says. “The need to fix trucks quickly and get them back on the concrete superhighway is even more time-and-place sensitive than the information superhighway can support.”
One area that is slowing down due to the Internet is parts distribution. Customers with the ability to search nationwide for just the right part at just the right price are now faced with longer waits for that part to be shipped across the country.
“The Internet has made parts distribution less efficient because customers are searching across the country for parts that they could find near their home base,” Paccar Parts' Sass explains. “Rather than go to their local retailer for quality-ensured parts, they order from suppliers all over the world.”
That's why, he says, many suppliers like Paccar Parts continue to place a greater importance on developing partnerships. These partnerships can provide peace of mind to fleets through improved customer service, warranty support, and the knowledge that the part purchased is a quality part with a local company that will stand behind it.
“These elements have become vital to our business and are a result of a growing influx of lower quality and untested parts entering today's market by other suppliers,” Sass says.
The same arguments for staying local apply to the aftermarket side of the parts business as well.
“Don't overlook the true value of salespersons/sales managers who call on and service the wholesale distributors and original equipment dealers,” says Aaron Bickford, marketing director-aftermarket for Meritor Inc. “They are problem-solvers, troubleshooters, and facilitators [ready] to take care of customers. They have massive industry experience and relationships still matter.”
THE DISTRIBUTOR'S ROLE
Despite the growing use of the Internet to find parts, Bickford still believes distribution centers play a vital role.
“The bottom line to an efficient aftermarket is stocking and sending the needed part to the truck operator who needs it now,” he explains. “Until a vehicle can send its own signal that ‘I need a brake part or driveline part replaced in the next 100 mi.,’ we will need a viable, proactive, quality-focused aftermarket with speedy, on-time delivery, as promised.”
From Bickford's perspective, parts suppliers use tools like the Internet as a means to provide faster, quicker services as part of a more sophisticated warehouse management, logistics and freight optimization strategy. As convenient as the Internet has made ordering, the reality is that fleets are still spread out geographically across the U.S. and still require just-in-time inventory delivery, according to Vipar's Pennig.
“It has allowed us to make the process more efficient,” Pennig points out. “In our case, using our v-Enterprise e-commerce system, we connect our fleet customers with us and our distributors electronically for everything from placing the initial order to receiving the final invoicing, while reducing the time and resources needed for the process.”
Yet he also notes that the Internet and other electronic connections with customers combined with a robust parts distribution network are allowing many fleets to outsource most, if not all, of their parts inventory — freeing up capital resources to fund other aspects of their operation.
This has led to an “inventory reduction” by fleets, according to Brett Fincham, DTNA's fleet parts team manager. During the Great Recession, fleets looking to cut costs began utilizing more web-based inventory management systems to reduce their on-hand inventory “to only those parts most critical to keeping their units up and running,” Finchem says. “[Some] even went as far as shifting inventory around their various terminals and shop locations to avoid adding costly inventory at each particular location.” Fleets have only recently started increasing their parts inventories, he adds.
Due to the ability to order and receive parts quickly, more fleets are now keeping only parts for routine maintenance and repair, Paccar Part's Sass says. There is also an increase in fleets looking for national programs with standardized pricing, centralized billing, and national parts availability. That is leading to a one-stop shop mentality where a provider must service all makes and all models.
“Fleets would prefer to call a single source, or as few as needed, to cover all their needs rather than having to utilize multiple sources. They want one-stop shopping,” explains Vipar's Pennig. “The source that has the strongest relationship with a fleet is the one who has the ability to provide bumper-to-bumper coverage for the fleets' demands.”
To take advantage of this trend, Heavy Duty America and Truck Pride Partners merged last year to form HDA Truck Pride, an aftermarket parts distributor. The company's plan is to unify and expand their distribution networks, consolidate product and program offerings while still maintaining the independent aftermarket channel as a viable alternative to dealership networks, notes Don Reimondo, HDA's CEO, in a speech at the Heavy Duty Aftermarket Week conference in Las Vegas earlier this year.
“With a new unified group with the power of 700 locations, all able to service independent repair shops, national fleets, regional fleets, and vocational types of all sizes with the right parts and with a network of over 400 service facilities, we'll have the ultimate in flexibility versus the OE brands,” he said.
Meritor's Bickford agrees, suggesting that even the OE dealer community is beginning to move towards all-makes parts to service the modern dealerships, many of which now include multiple brands.
THE POWER OF PRICE
Even as the industry starts focusing on the ease and speed of ordering parts, one factor still garners a considerable amount of attention: price. “We are seeing a lot of pricing pressure from our dealers and their customers, especially as imported products are gaining acceptance as quality has improved and maintenance budgets have been cut,” says Dan Haggarty, director of parts marketing for Daimler Trucks North America (DTNA).
Indeed, the economic pressures that continue to dog fleets of all shapes and sizes is one reason OEMs themselves are trying to bring lower-cost products to their parts shelves.
Yet Haggerty notes that extended warranties for parts are only proving marginally popular. “We've also seen other OEMs launch their own brands of ‘second-line’ parts focused at value customers like second or third owners,” he says.
Meritor's Bickford says that parts sourcing can occur from all around the world, so quality materials and workmanship must be present at all times.
“Equal to that is the after-the-sale service support,” he stresses. “Truck operators must still ask themselves, Who will stand behind the part? Who can I turn to? What's the engineering-approved use for a particular part? A price is not always the correct answer or solution.”