OEM, fleet partnerships

Isuzu exec urges fleets to enter into associations with vehicle suppliers -- just as they do with customers. Most for-hire carriers close the books on a fiscal year with net profits in the 1-3% range. So it's understandable that these fleets are pressing truck OEMs to develop more varieties of trucks and introduce more efficient componentry."Carriers need help in finding ways to protect their profits

Isuzu exec urges fleets to enter into associations with vehicle suppliers -- just as they do with customers. Most for-hire carriers close the books on a fiscal year with net profits in the 1-3% range. So it's understandable that these fleets are pressing truck OEMs to develop more varieties of trucks and introduce more efficient componentry.

"Carriers need help in finding ways to protect their profits by lowering the costs of vehicle ownership and by increasing uptime," explains Todd Bloom, vp-commercial vehicle business development and marketing for American Isuzu Motors Inc. (AIMI).

At the International Trucking Show, Bloom said that closer cooperation between fleets and OEMs can be a far better method of cutting costs. But these days, many OEMs seem to spend more time wooing their customers than acting as consultants to them. Since they think that customers are most interested in price concessions, they are prepared to offer juicy blandishments -- deep front-end discounts and reductions in service-related costs, for example -- or agree to inflate residual values. "None of this," says Bloom, "addresses the root cost-control issues."

Bloom concedes that price-cutting can enable an OEM to mollify some fleets over the short term and help increase sales for the year, perhaps even plucking a market share point or two from a competitor. "But the price-chopping tactic takes its toll because an OEM's profitability gets hit.

"Maybe it's time for OEMs and fleets to take a more positive approach to cost saving," he suggests.

Fleets would benefit from partnering with their truck makers, accessory suppliers, and bodybuilders, much as they have with their own customers. "When fleets and truck makers work together more closely, chances increase that they can develop more innovative transportation solutions. The results can become the focal points of strategic marketing plans," says Bloom.

Some small-truck users are showing the way, he points out. In the early 1990s, The 7-Eleven organization undertook a nationwide effort to remake itself. Clark Matthews, Southland Corp.'s (7-Eleven's parent company) president and CEO, penned the following in the most recent annual report to shareholders: "Our goal is to give our convenience store customers the ever-changing selection of products and services they want, at fair prices, in quick transactions, in clean, friendly store environments."

To accomplish the mission statement, 7-Eleven created a network of combined distribution centers (CDCs) owned by independent third parties that specialized in meeting distribution challenges.

But for the concept to work, the distribution centers needed highly maneuverable vehicles to deliver refrigerated and slightly chilled products. For that task, 7-Eleven management and the distribution companies worked with Isuzu engineers, Morgan Corp., refrigeration specialist Zexel, and liftgate maker Maxon to create an integrated transportation solution.

The result was an Isuzu FRR with 19-ft. reefer body containing moveable bulkheads. The 20,740-lb.-GVW truck, which has a short turning radius and an Allison automatic transmission, can carry 7,500 lb. of combined products.

At the heart of its cooling technology is a new engine-driven temperature control system -- an OEM-level marriage of chassis and body. The vehicle's front compartment is kept at 61¡F, plus or minus 3¡. Its rear compartment is maintained at 35¡, with much more stringent tolerances.

The system is highly flexible, allowing various combinations of products to be distributed, depending on the needs of the local CDCs. In addition, the system provides a 700-lb. payload improvement vehicle compared to conventional reefers.

There are currently 240 of these Isuzus servicing more than 2,000 7-Eleven outlets. More vehicles will be rolled out in additional cities in the near future.

Is it working? Clark Matthews thinks so. In his letter to shareholders, he proclaims that with the CDC concept, "significant costs can be driven from the system, creating a win/win situation for everyone, from the manufacturer and supplier to the end user."

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