{"id":4480,"date":"2020-02-26T16:59:11","date_gmt":"2020-02-26T15:59:11","guid":{"rendered":"http:\/\/en.advancedfleetmanagementconsulting.com\/?p=4480"},"modified":"2020-02-26T16:59:11","modified_gmt":"2020-02-26T15:59:11","slug":"how-oem-parts-service-programs-adjust-to-industry-trends","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2020\/02\/26\/how-oem-parts-service-programs-adjust-to-industry-trends\/","title":{"rendered":"How OEM Parts & Service Programs Adjust to Industry Trends"},"content":{"rendered":"

How OEM Parts & Service Programs Adjust to Industry Trends<\/strong><\/h3>\n

Fleet requirements are changing the parts distribution model and OEM service networks. The goal of OEM parts and service programs has always been to provide trucks with the parts and service they need to stay on the road and maximize uptime. While this mission has endured, the fleet industry continues to change. Trucks are more complex than ever before, mountains of truck data are available, and the Amazon effect is changing customer expectations.<\/p>\n

As the fleet industry evolves, parts and service programs are adapting to keep up with fleets\u2019 changing needs. Here\u2019s how.<\/p>\n

Providing Parts to Address Truck Complexity and TCO<\/h5>\n

When it comes to parts purchases, Todd Shakespeare, director of parts marketing for Volvo Trucks North America, notes two industry trends impacting parts programs.<\/p>\n

The first is the increasing complexity of the way trucks are built, which is making use of original OEM parts more critical for peak performance.<\/p>\n

\u201cEngineers are working diligently to ensure the parts spec\u2019ed for the vehicle maximize fuel efficiency, aerodynamics, uptime, and more. When we offer those parts in the aftermarket, we are selling the same part your vehicle was built with. You know, at the time of purchase, when you replace that part, it will perform exactly as the original part did when the truck rolled off the assembly line,\u201d he said. \u201cThere are phenomenal third-party parts companies out there and there are poor quality ones \u2014 you just don\u2019t know. With OEM, you know exactly what you\u2019re getting.\u201d<\/p>\n

Frank Donnelly, head of fleet service operations at FCA (Fiat Chrysler Automobiles), explained some of the\u00a0differences between using OEM parts versus aftermarket parts.<\/p>\n

\u201cAnyone who has ever purchased aftermarket parts for their gas grill has learned that \u2018universal\u2019 tends to mean that it fits nothing very well,\u201d he said. \u201cCompanies that deal with volumes of vehicles have the experience to realize the part designed for the vehicle avoids issues down the road and prevents excessive labor requirements.\u00a0It\u2019s also important to note that many parts have safety implications, and the OEM parts are tested to maximize safety.\u201d<\/p>\n

Erik Strom, sales & marketing manager for Ford Fleet Service Operations, noted there are other benefits to choosing OEM parts as well.<\/p>\n

\u201cOEM parts provide original equipment design and fit for vehicles to help restore new-vehicle-like performance and reliability,\u201d he said. \u201cOEM parts typically are backed by the OEM with longer warranty coverage than aftermarket parts suppliers.\u201d<\/p>\n

The other trend Shakespeare sees is customers focusing on the total cost of ownership (TCO) and getting more thoughtful about their parts purchases.<\/p>\n

\u201cCustomers have their business management systems and are tracking their total spend; in doing so, they\u2019re seeing that the OEM part might cost a little more upfront but lasts longer and provides better performance in the long run,\u201d he said. \u201cSo, over five years, the OEM part is going to lead to a lower TCO, even though the initial part cost may be a little higher.\u201d<\/p>\n

While TCO and truck complexity may be driving more OEM parts purchases, Shakespeare said there might be circumstances where a cheaper part is the wiser purchase.<\/p>\n

\u201cYou manage assets differently as time goes by,\u201d he said. \u201cIf you have a truck for seven to eight years, it may not be the best decision to buy the original part.\u201d<\/p>\n

For that reason, Volvo offers a tiered parts program so customers can make the best decision for their fleets: genuine parts (the part the truck was built with to maintain initial OE quality), genuine remanufactured products rebuilt to OEM specs but at a lower price point, and, as trucks get older, private-label offerings.<\/p>\n

\u201cVolvo Trucks offers a part for wherever your vehicle is in its lifecycle. The entire offering helps customers make the right decision for them based on what they feel is important, such as uptime, resale value, or repair cost,\u201d Shakespeare said. \u201cHaving a partner like Volvo Trucks can help make the right decision and prescribe the right part for the situation, so they get what makes the most sense. We understand we need to make sure buyers are getting the most out of their investment.\u201d<\/p>\n

Brian Tabel, executive director of marketing for Isuzu Commercial Truck of America, said Isuzu also offers a tiered program: Isuzu genuine parts and FleetValue, a line of competitive parts that are available in the aftermarket at lower prices but that still meet or exceed OEM standards.<\/p>\n

\u201cOne of the major challenges trucking fleets face is reducing their cost per mile (CPM) operations costs.\u00a0The main driving force behind this is the maintenance and repair costs of their fleets.\u00a0This is done through properly maintaining their fleet and utilizing quality repair facilities and parts,\u201d Tabel said. \u201cOur FleetValue parts line is an example of how they can reduce costs by utilizing quality parts that meet or exceed our OEM standards.\u201d<\/p>\n

\"It\u2019s
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It\u2019s important to note that many parts have safety implications, and the OEM parts are tested to maximize safety. Photo: FCA North America<\/p>\n<\/figcaption><\/figure>\n

Adapting to the Amazon Effect<\/h5>\n

Another development in the world of parts is the ability for fleets to purchase them online \u2014 at times, trading quality for cost, convenience, and quick delivery. But this tradeoff can be problematic.<\/p>\n

When fleets buy parts through online stores like Amazon, they can face the same quality issues, just as they would with any other aftermarket parts.<\/p>\n

How are OEMs adjusting as online tempts more buyers than before?<\/p>\n

Shakespeare said Volvo Trucks is investing in its online platform to provide the e-commerce options consumers have come to expect.<\/p>\n

\u201cThe online component is adding a new wrinkle to the entire supply chain,\u201d Shakespeare said. \u201cRoughly 8% of our volume goes through our e-commerce platform. We expect it to be near 26% in the next few years. You see a shift in how customers want to transact with their providers. If we don\u2019t provide those online tools, we risk losing that business to providers who offer the online tools\/platform but don\u2019t have the technical expertise that Volvo Trucks would have.\u201d<\/p>\n

As OEMs offer online buying solutions, fleets can benefit from the ease of purchase while also purchasing the right parts \u2014 and high-quality ones, at that.<\/p>\n

Tabel said the Amazon effect is also increasing fleets\u2019 own customers\u2019 expectations of quick delivery \u2014 and as some fleets must operate extended hours to meet those needs, service programs must also adjust.<\/p>\n

\u201cAs online shopping and home delivery have become common and the brick and mortar stores are becoming obsolete, the needs of fleets are changing,\u201d he said. \u201cSeven-day-a-week delivery is common in most areas, and their customers have come to expect this service.\u00a0If a customer wants a good or service, they need to receive it within a few days because often they can no longer drive to the local store to receive it.\u00a0Due to this changing business model, fleets need the ability to operate seven days per week and need servicing facilities to accommodate this operation.\u00a0Dealers that have extended service hours and seven-day-per-week availability are needed to accommodate the changing needs of fleets.\u201d<\/p>\n

Joe Kory, senior vice president, parts for Navistar, sees these fleet requirements eventually changing the parts distribution model and OEM service networks.<\/p>\n

\u201cFleet customers\u2019 expectations are changing and are shaped by every other experience they have, like Amazon,\u201d he said. \u201cOEM networks of the future need more distribution points with smaller facilities located closer to the fleet customers. We need more ways to get parts to customers the same day, and multiple times per day.\u201d<\/p>\n

Kory said Navistar is already making changes toward this end by offering same-day deliveries of critical parts and conducting a pilot with Lyft on parts deliveries from the distribution center to the dealer and the dealer to the customer.<\/p>\n

DTNA is also making changes for a more on-demand part ordering service. In early 2020, the company plans to launch its new e-commerce platform, Excelerator, which allows for delivery in as little as 12 hours through the company\u2019s Dedicated Delivery Service and PDC network, a spokesperson said.<\/p>\n

In the future, Kory foresees that parts inventory systems will use analytics, telematics, and AI to predict what parts will be needed and where they need to be stocked rather than relying on historical demand to forecast.<\/p>\n

\"OEM
\n

OEM parts provide original equipment design and fit for vehicles to help restore new-vehicle-like performance and reliability. Photo: Ford<\/p>\n<\/figcaption><\/figure>\n

Finding Ways to Improve Uptime<\/h5>\n

A focus on uptime is another fleet trend that is prompting a change in OEM parts and service programs.<\/p>\n

\u201cIf a vehicle is down, it\u2019s not producing revenue for that user, and to utilize a rental incurs additional costs.\u00a0As a result, their vehicles must be repaired on time to get them back on the road,\u201d Tabel said. \u201cThis is especially important with Isuzu customers due to most of our fleets being small to midsized; often, these fleets do not have a spare truck to utilize.\u00a0If their truck is down, they are out of business for those days.\u201d<\/p>\n

Michael Hartman, national account manager OEM & OES at SKF, said ensuring the continuity of a parts and service program is one way the company has helped improve fleet uptime. To do so, SKF and an OEM parts and service provider partnered with a large fleet to provide a wheel-end program to help manage the fleet\u2019s unscheduled downtime and parts cost related to wheel-end failures. SKF worked with the OEM to roll out the SKF Trouble Free Operation (TFO) program to more than 60 maintenance locations.<\/p>\n

\u201cThis gave the fleet continuity in its SKF parts purchases and consistent training standards for its service technicians,\u201d Hartman said. \u201cThe SKF TFO program helped the fleet extend the service life of wheel-end components, protect its vehicles from costly damage, and made the fleet safer in the process, with an overall improvement of the fleet\u2019s uptime.\u201d<\/p>\n

Volvo Trucks is also actively addressing uptime through a master technician program, ensuring technicians have the expertise they need to perform the work \u2014 and efficiently.<\/p>\n

\u201cWhen you look at the complexity of a Class 8 trucks these days, knowing that you\u2019ve got certified technicians at the local Volvo Trucks dealership is key,\u201d said Phillip Swaim, director of network fixed operations for Volvo Trucks North America. \u201cThese aren\u2019t trucks just anybody can work on anymore. Proper training is critical because they are complex. Also, 40% of our technicians have reached our master technician level \u2014 and that means there is nothing they can\u2019t do on our trucks.\u201d<\/p>\n

Volvo Trucks customers can also use the company\u2019s dealer locator to find a Certified Uptime Dealer.<\/p>\n

\u201cThese dealerships have a streamlined process to repair trucks faster \u2014 1.7 days faster than uncertified locations based on third-party reviews \u2014 all to drive revenue for that customer,\u201d Swaim said.<\/p>\n

Volvo Trucks also operates an Uptime Center, which works to identify problems, then connect customers and dealers faster.<\/p>\n

\"New
New technologies are launching every day to help fleets mitigate unscheduled downtime and keep their vehicles in service and on the road as much as possible.<\/p>\n

Photo: SKF<\/p>\n<\/figcaption><\/figure>\n

\u201cIf a Volvo truck is on the road and has an issue that could create downtime, an alert is generated that goes to our Uptime Center in Greensboro, North Carolina, and the customer\/decision-maker and the dealer,\u201d Swaim said. \u201cWe\u2019re at the center of the interaction, and we\u2019re able to quickly get that vehicle into a dealer, get the repair done, and get the vehicle back on the road faster. When you look at uptime, Volvo Trucks stands out based on having real people ensuring our customers stay up and stay running.\u201d<\/p>\n

Strom said mobile service is another way OEM parts and service programs are helping to address uptime.\u00a0\u201cMobile service is the idea of bringing the ability to perform maintenance and light repairs to the lot or location where fleet vehicles are stored or parked while not in use,\u201d he said.\u00a0\u201cMobile service has become a popular topic as fleet vehicle uptime, and utilization is being analyzed and monitored in more detail by the companies that own the vehicles.\u201d<\/p>\n

Capitalizing on Connected Trucks & Data Abundance<\/h5>\n

As trucks become more \u201cconnected,\u201d using telematics to provide increasingly large amounts of data, OEM parts and service programs are finding ways to help customers make the best use of it.<\/p>\n

\u201cNew technologies are launching every day to help fleets mitigate unscheduled downtime and keep their vehicles in service and on the road as much as possible,\u201d Hartman said. \u201cThese new technologies provide fleets predictive data with insights on potential component failures.\u201d<\/p>\n

For example, SKF\u2019s TraX wheel-end monitor can notify fleets of a potential bearing failure several thousand miles before the failure occurs, affording fleets more time to schedule the truck for service on their terms, using their preferred service and parts providers to control their cost.\u00a0The SKF TraX monitor communicates wirelessly with telematics providers to allow them to monitor the fleet\u2019s wheel-end remotely, increasing safety and security.<\/p>\n

FCA is also working to arm customers with data that can benefit their fleets.<\/p>\n

\u201cTelematics is becoming a bigger part of the overall process.\u00a0Fleets can now better track their vehicles, and the more integrated into the vehicle the telematics solution, the more fleets can anticipate maintenance and repair needs,\u201d Donnelly said.\u00a0\u201cFCA is offering the fleet telematics solution for Ram Commercial customers. This fleet telematics solution can help businesses be more productive and efficient.\u201d<\/p>\n

Telematics provides real-time information including performance and diagnostics like tire pressure monitoring, fuel usage, fault codes, and more, all of which are used to make service timelier and more efficient.<\/p>\n

Navistar has a similar offering with OEConnect, which allows fleets to monitor the health codes of all their trucks, helps with predictive maintenance, and protects uptime.<\/p>\n

\u201cIn the future, integration with the OEM\u2019s systems, processes, and programs will make life easier on the fleet managers so they can focus on what\u2019s important to their business,\u201d Kory said.<\/p>\n

Swaim said Volvo Trucks\u2019 dynamic maintenance service, launched last October, is helping customers make the proper adjustments to their maintenance programs.<\/p>\n

\u201cDynamic maintenance allows the dealer to work with individual customers to dynamically measure their maintenance,\u201d he said. \u201cLet\u2019s say a fleet manager sets maintenance intervals at every 25,000 miles. Based on connected trucks, the information pumped into the cloud tells the algorithm how the truck is driven, so we can say, \u2018You\u2019re driving at a lighter duty than you thought you were, and you can replace it at 45,000.\u2019 Using this information, dealers can help customers know when the ideal time for maintenance is, and then they can do repairs at the same time and reduce downtime.\u201d<\/p>\n

While data can be beneficial to fleets, it can also be overwhelming. Swaim said having an OEM and their dealer network as partners can help fleets make the best use of it.<\/p>\n

\u201cMany customers over the last year or so want the data coming out of the trucks. Now that they see it, they\u2019re seeing it\u2019s very rich but also very complex,\u201d he said. \u201cThey\u2019re realizing they need someone to help them understand it in a way that helps them solve their business challenges.\u201d<\/p>\n

More Change Will Require More Guidance<\/h5>\n

While OEMs may have differences between their parts and service programs, they share a similar outlook: They must continue to adapt and act as a partner to their customers, helping them navigate never-ending industry changes.<\/p>\n

\u201cRegulations, the ELD rule, data, and the complexity of the technology for trucks have all changed the market, and often fleets don\u2019t know where to go \u2014 and it\u2019s only going to get more complex,\u201d said Swaim of Volvo Trucks. \u201cEverybody is going to have to know the business better and customers will need to make tough choices over the next few years. Will they do maintenance and repair the ways they\u2019ve always done it? We are prepared to make it easy when it comes to technology to get the truck in and out and repaired quickly. Partnership, using the data that\u2019s there, and helping to make the right decisions for future business needs will have to be at the center of what we do.\u201d<\/p>\n

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Using Technology to Make Parts & Service Easier<\/h5>\n

OEMs are continually finding ways to make their parts and service program customers\u2019 experiences better. Here are a few examples:<\/p>\n

DTNA<\/h3>\n