TO a great extent, the aftermarket parts business is a lot like real estate. It involves location, location, location.
Parts managers give a lot of thought to the layout of the shelves — both in the showroom and behind the counter. Where should the parts be located for the biggest impact to the customer and the least amount of motion for the guys working in the back?
The same holds true at the parts distribution level. The way the parts distribution center is organized affects its efficiency. But just as important is where the PDC is located.
Utility Trailer Manufacturing is one of those rare trailer OEMs that continues to be actively involved in the aftermarket. Where other OEMs have turned their parts operations over to companies that specialize in parts, Utility has chosen not only to remain in the business but to significantly increase its commitment to the aftermarket.
The California-based trailer manufacturer did just that earlier this year, opening a new parts distribution center near Cincinnati, Ohio. The 243,000-sq-ft facility in Batavia is three times the size of the parts distribution center that Utility had been operating in nearby Sharonville.
Beyond simply being more than triple the size of its previous location, the new PDC in Batavia has a higher ceiling. The increased area and height equals between five and six times the stocking capacity of the company's facility in Sharonville.
“We plan to take advantage of this,” says Mike Moore, director of the new PDC. “We plan to grow vertically as it makes sense for us to do so.”
With the opening of the new PDC in Batavia, Utility not only moved out of its Sharonville facility but also closed the parts operation the company had maintained in California.
The capacity of the new PDC enables Utility to serve the entire aftermarket from one parts distribution center. Aftermarket accounting, sales, and marketing continue to be performed in California, but the shelves are in Ohio.
Batavia is more than 2,000 miles from Utility's corporate offices in City of Industry, California. But the shelves are much closer to most Utility dealers and the fleets that they serve.
“Our aftermarket had been based in California,” says Steve Bennett, vice-president. “We went back and forth about where to locate a parts distribution center, and we commissioned a study to find the ideal location. The result of the study was that the ideal location was not far from where we already were operating.”
Utility had been operating two parts distribution centers — one for the western half of the US and another for the east. For those vendors located east of the Mississippi, parts were shipped out to the California PDC. From there, parts were shipped to Utility dealers, including those as far east as Omaha.
The Batavia location puts Utility closer to 95% of its vendors, Moore says. Utility decided to serve the entire aftermarket from a single PDC.
“Once we decided on a one-PDC model, we began looking for a location,” Moore says. “Batavia is close to center of the trailer aftermarket. And as a bonus from our standpoint, it is only 25 miles from our old location. We were able to staff the new PDC with experienced people from Sharonville. With the exception of one person, we didn't lose anyone when we moved.”
What they found
Utility had searched extensively for a larger location before acquiring the new PDC in Batavia.
“I actually looked at this facility two years ago,” Steve Bennett says. “It had been occupied by Georgia Pacific, but the economics had changed with the recession. It was vacant for two years before we moved in.”
Utility purchased the building from Koch Industries. Built on a 21-acre site, the location offers 10,000-sq-ft of offices, parking spaces for 36 trailers, and 24 dock doors for quicker shipping and receiving.
The move is part of Utility's strategic plan to provide a centralized shipping point for reaching all of North America and to increase capacity to meet demands by offering more parts from more suppliers.
“Utility has 105 dealer locations,” says Craig Bennett, vice-president of sales and marketing. “We have more than 350,000 Utility trailers on the road today. Fleets are trying to keep their trucks and trailers longer, which means that they will need parts — either to do the repairs themselves or to have it done. Trucking is a competitive business, and the only way fleets can compete is to keep their equipment operating. It's up to us to help them reduce downtime.”
Making it work
Over 5,000 stocked items and 140 Utility aftermarket parts suppliers are currently shipping from the new location.
Every dealer in the Utility network is on a weekly ordering schedule, Moore explains.
“If the dealer orders on Monday, we ship on Wednesday,” Moore says. “We ship seven days a week.”
Moore recognizes that a weekly shipping date does not always work if a trailer dealer is out of stock and a customer needs a part right away. In those instances, the company offers pre-paid shipping for orders going UPS.
Regular shipping, however, seems to work for the vast majority of the orders leaving the PDC.
“We have a dedicated milk run,” Moore says. “The same drivers make the same stops each week.”
The parts may be delivered in trailers manufactured by Utility, but the company does not own them. Crum Trucking of Batesville, Indiana, delivers the goods.
“We don't operate trailers — we just make them and sell them,” Moore says. “We don't want to be in the trucking business and compete with our customers.”
Digitally and physically, Utility has thought through how it can get the most from the new facility.
“We know which parts sell quickly and which ones don't,” Moore says. “That's what drove us when we were laying out the warehouse. All of our A movers are in the front. The C movers are in the back. Everything is located based on how quickly it moves. With that in mind, we set up a rack where we store a lot of our small parts. We only need to walk 20 feet or less to pull 60% of the parts we ship.”
Those slow movers get stored in the back.
“We stock parts for 40-year-old trailers,” Craig Bennett says. “Need one of those old parts or new disc brakes? We have it in stock. We believe in supporting our products from cradle to grave.”
Utility made sure ordering is efficient.
“We have an electronic ordering system that interfaces with the computer system that our dealers have,” Moore says. “To place an order, dealers simply upload to our system. We also make it possible to order from the internet.”
And there is much more to buy from the new PDC. With the move from Sharonville, inventories have grown from $5 million to $8.5 million now.
“We have the capacity to increase our inventories to $15 million or even $20 million here if we need to,” Moore says, “as long as we keep it turning.”
Utility management likes what it sees from the new parts distribution center, both now and in the years to come.
One of the bright spots for the future is the way goods may flow between Asia and North America.
“We asked ourselves ‘what about goods coming in from China?’” Craig Bennett says.
Shipping goods from Asia to Ohio may get easier beginning in 2014 when the Panama Canal expansion is expected to be completed. That project will double the size of the canal, allowing more and larger ships to pass through. Goods that otherwise would go to ports on the West Coast will be able to go directly to ports either along the Gulf of Mexico or the East Coast. The goods can be loaded onto railcars and delivered directly to the PDC.
“We have full rail facilities here,” Craig Bennett says. “We see that as working to our advantage.”
Just one more reason why Utility is pleased with its new location, location, location.