Building a three-way alliance between manufacturer, distributor, and customer

The obsession with efficiency in today's corporate environment makes it all too easy for fleet managers to have their attention diverted by a low price tag and lose sight of the actual cost to operate equipment over its lifetime. But by availing themselves of the resources up the supply chain, fleet managers can actually improve productivity and efficiency, while keeping the lid on costs.

How fleets can improve efficiencies by partnering with their distributors and manufacturers will be one of the featured sessions at the 36th Annual National Truck Equipment Assn. (NTEA) Convention & T3 2000 - the Commercial Truck, Trailer and Technology Expo - that will be held in St. Louis, Mo., February 23-25, 2000.

Ray Kohler, administrator for fleet engineering at GPU Energy, understands this first-hand. Until 1995, Kohler's department would sit with its various user groups to discuss their needs and then build a spec for the 4,000 pieces of equipment that fall under the scope of fleet services operation. He would then send that spec out for bid, which meant conducting a technical evaluation on each vendor's proposal.

These reviews generated numerous questions because of the diverse and complex array of equipment in Kohler's shop - everything from cars to heavy-duty trucks, from bulldozers to forklifts. The questions forced the fleet administrator to go back to his vendor base to ensure an "apples to apples" comparison. Once the bids were evaluated, Kohler made recommendations to his purchasing department, which then awarded the bid.

This process - which is painfully familiar to many fleet operations - often turned into a four-month process. In addition, it resulted in a wide range of equipment, further adding to the complexity supporting the fleet.

That all began to change in 1995 when the electric utility industry was deregulated and businesses were no longer able to pass rate increases on to their customer base. "We had to look at new and better ways of doing things," says Kohler. "Over the years we had decreased vehicle costs and increased our service to the field. But we still had a cumbersome bid process."

The result was an alliance between GPU Energy and its vendors. Today, vendors join him in the spec'ing process and help make equipment decisions that have contributed to lowering the overall life-cycle costs by directing purchases of more standardized equipment. This, in turn, has helped eliminate costs and complexity in a number of areas, including parts, warranty, and maintenance, while at the same time optimizing the equipment. To his surprise, Kohler also found that the new process eliminated many items that had been considered necessary under the old system.

As a result, downtime has decreased dramatically, Kohler explains. That's because longer service intervals can be achieved with equipment that is more standardized. Plus, mechanics are more efficient since they are able to work on the same units day in and day out.

The bottom line is that the partnership between the fleet, the manufacturer, and the distributor must be based on open communication and realistic goals of ensuring that each partner in the alliance remains profitable. "It does me no good if the manufacturer builds a unit without any profit built in," Kohler explains. "If they do that, then they won't be around; I need them to be around if I'm going to achieve my business goals."

Trip Forman, president of Pick Up Pals in Lubbock, Tex., agrees that in today's price-sensitive marketplace the distributor has a responsibility to add value to the fleet. "Our role is to understand how to complete the vehicle so that it's safe, reliable, and able to perform up to the customer's expectations. We have to understand how the various products work together."

Another intangible value-added the distributor brings, according to Forman, is that "my name is all over that truck. I want to take the time to build it the right way. It's good community relations."

Attracting and retaining good employees also helps move fleets away from the price-tag mentality. "When the end-user gets better and equipment is more functional, they know employees will be happier and more productive." And as any employer knows, there's less turnover when employees are happy.

This subject is typical of the new approach NTEA is taking to provide the entire commercial truck marketplace - from manufacturers to distributors, from dealers to end-users - with the tools needed to increase understanding and improve performance.

For more information on this, as well as the dozens of other topics that will be presented at the 36th Annual NTEA Convention & T3 2000 Expo, call 800-441-NTEA; use the organization's fax-on-demand service at 800-700-2099 and request document #1110; or register online at www.T3expo.net.