HDAW Report: Why fleets buy

Between them, they make buying decisions for more than 100,000 vehicles: Sid Gooch, FedEx Express; Kevin Tomlinson, South Shore Transport; Steve Duley, Schneider National; and Carl Lyth, Pepsi Americas. So it stands to reason, that any parts supplier or distributor would do well to learn a few things about what drives the buying decisions of each of those executives.
To think they make purchasing decisions based on price would be naïve. In fact, Schneider’s Duley said during a panel discussion at the recent Heavy-Duty Aftermarket Week that price ranked third in that company’s list of considerations, behind ‘Part meets criteria’ and ‘Service performance.’ “We never buy anything purely on price,” Duley said. Schneider alone accounts for US$45 million a year in parts purchases. Duley admitted it’s not easy to convince Schneider to switch suppliers – 90% of the parts the company buys are under contract and 60% of the parts are bought directly from the OEM.
FedEx Express’s Gooch said his company looks for the lowest cost of ownership, whether they can get the part on-time and at a competitive price. The company spends $84 million in parts each year, more than $100 million if you include tires and lubes. It tries to keep its parts inventory low, so timely and reliable delivery is crucial, said Gooch.
Lyth said “cost is the key to open the door” at Pepsi America, but it’s not the only factor when choosing where to source parts. “Quality and support are the final determining factors,” he said. “Not all suppliers do a good job serving our smaller locations.” Lyth said longevity is very important to his company, since their tractors undergo length life-cycles.
Representing the smaller fleet segment, Tomlinson said South Shore Transport demands parts within a day, since most of its trucks return home nightly. He admitted price is a factor, but quality is more important and price will be haggled over later.
The fleets were unanimous in voicing their preference for name brand parts versus will-fit or offshore alternatives. But that’s not to say they won’t approach new products with an open mind. When dealing with an unfamiliar supplier, Duley said Schneider does its due diligence, first qualifying the part itself, then taking a good look at who supplies that part and conducting interviews with suppliers and references. The company may also visit the production facilities of that supplier to determine its capabilities and ensure it can meet demand “Then if they meet our needs, we’ll talk price and if the quality is there, we’ll make the move,” he explained.
Lyth said his company will consider using products it’s not familiar with only if other reputable fleets are using it. “I nose around bigger fleets and I pay attention to what they’re doing,” he said. “I don’t like to lead the parade – you get hit by all the bugs.”
Gooch said FedEx uses only name brand parts for nearly everything, but will experiment with parts such as wiper blades, where safety will not be compromised. “The big thing for us is availability and how we order,” he said. “The vendor has to be able to keep up.”
As for the smaller fleet, Tomlinson said “We’re all brand stuff. I have nothing that is not a branded product.”
Panel moderator, Bruce Plaxton of BGP Marketing, said there are two types of parts purchases: Predictive (filters, coolant, lube, brake shoes, etc.) and Non-Predictive (seats, clutches, fenders, etc). “The more predictive it is, the more price-sensitive it is,” he explained. Typically, he said “The larger the fleet, the sharper the pencil…The larger the fleet, the greater likelihood there is that management understands to the penny, the cost of downtime.”
With non-predictive purchases, availability is often the key factor, Plaxton explained. “The firm with the part on the shelf will capture that business.”

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James Menzies is editor of Today's Trucking. He has been covering the Canadian trucking industry for more than 20 years and holds a CDL. Reach him at james@newcom.ca or follow him on Twitter at @JamesMenzies.

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