While heavy-duty truck sales are expected to decline this year due to heavy ‘pre-buying’ in 2006 to beat the 2007 emissions rules, parts sales are expected to jump due to the growth in the rolling stock population. And they’re expected to remain relatively strong for the next few years. That’s great news for parts makers, distributors and dealers alike.
|Class 4 – 8 Truck Sales: 2005 vs. 2006|
|Total 4 – 8||536,293||581,199||8.4|
|*Includes some Class 3|
That doesn’t mean everything is rosy for the heavy-duty market. On the contrary, like the light vehicle market aftermarket, the heavy-duty aftermarket has its challenges, too, and some of them are virtually identical to those of the light vehicle market.
Market Similarities: Same Pressures
Aside from stagnating new vehicle sales in both the heavy-duty and light vehicle markets, high and fluctuating fuel prices also pose a threat. While they’ve moderated a bit in the last few months, most reports show them trending upward this spring and through the summer as consumption picks up. This could drive miles-driven down and reduce somewhat demand for parts and service.
Or consider the shortage of well-trained service technicians because fewer young people are choosing vehicle parts and service as a career opportunity.
Or, consider vehicle and part life: both markets feared the introduction of higher-quality, longer lasting parts, thinking this would reduce parts sales. On the contrary, better parts led to improved vehicles which had second, third and fourth owners who kept them on the road with the required maintenance which strengthened the service market. But this also required manufacturers to provide broader, deeper parts catalogs covering more years which in turn led to higher inventory costs, demand for better customer service and increased distribution costs.
And, in the heavy-duty sector this year, new, emissions-friendly engines and exhaust systems are going to create a bump in inventories and in catalog content, not unlike the parts proliferation happening in the light vehicle market with the introduction of new models and entire vehicle lines.
Lastly, consider consolidation. Both markets have undergone considerable consolidation through mergers and acquisitions.
The point is, whether you’re in the HD or light vehicle market, or enjoying a strong economy or slogging it out in a down market, a robust end-to-end product (part) information management system would make your life a lot easier and your customers happier, cut your overall marketing and sales costs, and give you a competitive edge by which to grow your revenue and market share.
DETROIT DIESEL: Case in Point
Just ask the executives at Detroit Diesel Corporation (DDC). As their business was growing in North America and around the world, DDC was still trying to handle their product information management requirements manually, with information lodged in a number of legacy computer systems around the company that couldn’t be shared.
With a worldwide network of more than 2,700 dealers and distributors servicing more than 2 million diesel engines, Detroit Diesel had a daunting Product Information Management challenge.
The Key Challenge
“The challenge to keeping everyone profitable – and happy – is to keep their equipment running by getting them the right parts, at the right price, at the right place, at the right time,” explains Terry O’Reilly, president and CEO of Pricedex. “That can only be done with the right IT systems backing up good corporate management.”
While needing to optimize its own revenue and profit opportunities while reducing customer support costs, Detroit Diesel executives also set a goal of providing better customer service by making it easier for customers to do business with the company through faster and more accurate order fill, parts replenishment, invoicing, pricing and catalog management.
“While taking aim to deliver on these objectives, Detroit Diesel recognized that a significant challenge lay ahead of them to reconcile product, part and pricing information for millions of engines, for which essential information resided in multiple corporate data silos,” says O’Reilly.
“Take pricing, for instance. Detroit Diesel had been using a combination of a 20-year-old mainframe and paper-based manual system to maintain its price books and conduct pricing analysis. With that system, it would typically take more than six months to roll-out price changes to the field, including publishing the data. What’s more, given the volatility of commodity markets and their influence on materials such as oil and steel, by the time customers got the price changes, DDC’s pricing could be out of date the day it arrived at the customer.”
Holistic, Step-by-step Solution
To help DDC fix this and many others problems, Pricedex took a holistic approach to examining the situation and saw what the company really needed was a robust, end-to-end fully-automated Product Information Management system – but one that could be implemented, and rolled out, in stages to give employees, the IT department and company executives enough time to get comfortable and proficient with each segment. Over the course of five years, DDC expanded the use and scope of their core solution, to automate an ever-increasing load of sales support functions. And Pricedex guided DDC through this in a logical, step-by-step manner, retiring, along the way, a number of legacy mainframe functions and a number of other, standalone point solutions.
Pricedex started by implementing a new pricing management system which totally automated the company’s pricing and price publishing functions, allowing DDC to modify and roll-out new prices on millions of parts in a matter of days, rather than the six months it previously required.
In 2003, Pricedex implemented “The Matrix” – a customer pricing and deal management system that integrates with the DDC Warehouse Management system, and tracks and maintains special customer arrangements and deals for invoice-level pricing.
The next year, DDC rolled out the Pricedex-developed XML-based e-Parts Catalog and Catalog Management system that allowed publishing of engine catalogs and part manuals in any form and format, whether Web-based, CD or print-ready.
In 2005, Pricedex implemented print-on-demand for serial number-based parts manuals, and developed the DDC eReports Site that shows — in real time — product performance by part number and product line.
This past year has seen the addition of special promotional programs on the eCatalog site, including the DDC “Step Up” program which gives DDC dealers the opportunity to create ‘tailor-to-order’ service quotes. This program was able to be launched and live on the web in under 45 days, thanks to Pricedex technology.
Most recently, Pricedex developed DDC’s new sales reporting site that tracks virtually in real time all sales activity by customer, region and product line up to the “day before.”
The overall impact on DDC’s business has been significant, says O’Reilly. “We have been told by executives at DDC that their product information management system has saved them millions of dollars a year by being able to react to cost changes and – within days – roll-out new pricing around the world”.
“In addition, more accurate parts delivery and billing has dramatically reduced customer calls for clarifications, adjustments and returns, saving both DDC and its customers a great deal of time and money. And the list of advantages and improvements goes on and on. That’s why we are very proud of the work we’ve done with DDC,” says O’Reilly.
“One of the problems many IT vendors seem to have – for whatever reason — is over promising and under delivering, and then charging a lot of money on top of it. We do our very best to under promise and over deliver – and then come in under budget. Maybe that’s why DDC named us their IT supplier of the year!” (see related story)