Tool designed to demonstrate life-cycle costs. The Holland Group has developed a software program, Cost Value Analysis (CVA), designed to help customers cost-justify their purchase of Holland products.
According to chairman Richard Muzzy, component manufacturers have had a hard time tying a product's in-service performance to cost-per-mile, maintenance savings, and operational costs. As a result, "fleets have become more and more focused on the initial price or concession up front, and tend to overlook overall performance and life-cycle product costs," says Jim Bush, Holland's vp-marketing and sales. "We have never felt comfortable with that process, especially because we have always felt that a premium technology offers significantly more value than lower-price components. We never quite had the tools to prove that conclusively. Now we do."
The CVA program begins with collecting and evaluating data from a fleet customer. Beyond traditional questions about the scope of operations, Holland wants to know landing gear speed, frequency of suspension repositioning, idle-time fuel costs, and worker's comp costs.
Analysis of the data reveals how performance, cost, and value interact. It also demonstrates the cost savings a customer may realize when they spec Holland components.
"The CVA will totally change the way the selling and buying process is conducted in our industry," says Bush. "It has already done just that for the Holland Group and for those fleets that have participated in the CVA process."
Holland also applied the same thinking in developing a sister program, System Value Analysis (SVA). The OE need to pare costs and integrate production processes is leading "toward a different kind of supplier relationship than our industry has traditionally known," explains Woody Weigandt, president of Holland/Binkley and Holland Axle Products.
SVA translates the value of Holland products to its OE partners. "It provides each customer with actual cost information, not just promises or guesses," says Bush. "We can give our OE tractor and trailer partners quantifiable cost, value, and savings information on a regular basis."
The systems approach is being implemented at Peterbilt's Denton, Tex., facility, as well as at Volvo GM, Mack, and Ford plants.