BOB HINTON has a very straightforward approach to growing his parts business.
Go where the growth is.
Hinton, president and CEO of New Life Transport Parts Center, may have his office at the headquarters facility in Grand Rapids, Michigan, but increasingly the company is serving customers farther away — and the wholesale parts distributor is building the infrastructure to make it possible.
New Life has a 200,000-sq-ft parts distribution center in Grand Rapids, but new and/or improved distributions centers — each with 20,000-65,000-sq-ft warehouses — are making it possible for the company to more effectively meet the parts needs of wholesale customers in a wider area.
New Life now operates locations in Atlanta, Georgia; Chicago, Illinois; Dallas, Texas; Fargo, North Dakota, Milwaukee, Wisconsin; Minneapolis, Minnesota; and Sarasota, Florida, in addition to the flagship location in Grand Rapids. The company expects to announce a ninth location shortly.
The past year in particular has been marked with major expansion. Here are some of the steps New Life has taken in 2005 and so far this year:
Opened warehouses in Fargo and Sarasota.
Expanded its Fleetcraft Products operation with a new 37,000-sq-ft facility for brake and wheel parts. Fleetcraft is New Life's private label for a variety of trailer parts.
Expanded its Dallas warehouse by 30%. New Life has had a warehouse in Dallas since 1983.
Opened warehouses in Milwaukee and Minneapolis.
Opened a new 37,000-sq-foot facility for its Fleetcraft products division.
Added West Coast service to New Life's delivery system.
To put the expansion in perspective, New Life opened its Chicago warehouse in 1980, six years after the company was formed. Dallas, the company's second satellite location, opened three years later. New Life went 11 years before opening another location — Atlanta in 1994.
The company has opened these warehouses to provide quick parts deliveries through most of the United States.
“The population growth in our area has been flat,” Hinton says. “Trucks and trailers — and the demand for parts — tend to follow the population. We have been locating our branches where the population is growing.”
Each location is a parts specialty operation offering sales and customer service. None of the satellite operations has a warehouse that approaches the size of Grand Rapids, but they all are well-stocked for quick delivery to their customers. New Life serves companies such as warehouse distributors, small original equipment manufacturers, and larger repair shops. All are wholesale customers. New Life does not sell at retail.
“We are a strong believer in inventory,” says Dave Broyles, vice-president of sales. “And the closer we can get that inventory to our customers, the better. The way we see it, we can get parts to our customers a lot faster from multiple warehouses instead of trying to serve everyone out of Grand Rapids.”
Interestingly, Broyles sees the opening of the Fargo warehouse as a major step in the company's ability to serve western markets.
“Fargo really gives us a door to the West,” he says. “Past Fargo, you are in Big Sky Country. There are a surprising amount of customers — although they are spread out.”
New Life added another dimension to its operation when it signed an agreement with Strick Trailer in 2002 to serve as the trailer manufacturer's parts operation.
With the closing of the Strick National Parts operation, New Life took over, providing an outlet for Strick dealers to acquire parts.
“Like several other trailer manufacturers, Strick wants to concentrate on manufacturing trailers,” Broyles says. “They would rather not have to fabricate a rear bumper for the aftermarket. But they will do a production run, which we put in inventory. Getting a rear bumper from a trailer manufacturer typically can take weeks. But since we keep them in stock, we can get them to the customer right way.”
Rear headers and corner frames are other examples of parts that Strick must fabricate and New Life keeps in inventory. These components present somewhat of a challenge, but other proprietary Strick parts are easily obtained when produced by an outside supplier. Items such as top rails, lower rails, and other extrusions can be shipped directly from the supplier to New Life.
Strick and New Life work together to promote the arrangement. Customers visiting the Strick Web site in search of parts are directed to the New Life site where they can then access an array of information regarding parts, New Life, and the promotional specials the company may be offering.
New Life believes it should compete in the marketplace as a value-added supplier, rather than simply the source with the lowest price.
“It's both an offensive and defensive strategy,” Hinton says. “By meeting customer needs, we win their business. By continuing to meet their needs, we make it easier to retain the customer. If all we provided was a low price, we would be far more vulnerable.”
One example of a value-added service is the company's custom-built trailer axles. New Life starts with a supplied axle, typically one produced by ArvinMeritor. However, the warehouse includes a production area equipped with special jigs and fixtures. There New Life personnel finish out the axle to customer specifications.
“We can build to spec within 48 hours after receiving the order,” Broyles says. “When the customer receives the axle depends on his location, but we almost always can have the axle to him by the Monday after he places the order.”
The concept of adding value can entail a variety of areas, including shipping, product, sales support, and marketing assistance. As part of the marketing support New Life provides, customers can obtain custom-published parts catalogs. The catalogs have the same content that the New Life catalogs contain, but the front and back covers contain the customer's logo, address, and telephone numbers.
New Life owns 45 trailers to get orders delivered quickly.
“We don't own any power units,” Broyles says. “A logistics company handles all of that. Trucking is a completely different business from what we do, and we decided a long time ago to use the services of a logistics provider to offer the best freight service we can.”
Close to 50 truckloads leave the New Life warehouse in Grand Rapids each week, destined almost exclusively for delivery to customers. The figure would be larger were it not for the fact that New Life frequently arranges to have product shipped directly from the supplier to the customer whenever it is advantageous to do so.
The volume of shipments in and out keeps the Grand Rapids warehouse an active place. The building has 19 dock doors along one side of the facility. Shipping and receiving tend to be segregated, but the functions performed at each door will vary with demand. Late in the week, shipping occupies the majority of the shipping and receiving area in order to provide customers with Monday morning delivery.
“It seems almost everything is leaving over the weekend,” says Joe Melinsky, director of distributor sales.
Brick and mortar is not the only thing New Life has been buying to improve customer service. The company has invested in a computerized telephone system that provides a wealth of information that can be used to improve the product mix and fine-tune the sales effort.
The system monitors call volume in real time, enabling the company to know how many calls are active at any given time, how many people are on hold, and for how long. The system also generates a history of calls — including graphs that enable management to quickly identify trends in calling patterns.
“It's great for spotting when our call volume is the highest,” Melinsky says. “That way we know how to staff, when to take breaks, and when to eat lunch so that we have the most people available when our call volume is the highest.”
Melinsky's computer terminal is configured with multiple windows that track the volume of incoming and outbound calls, hold times, and a variety of other variables.
“Hold times can be misleading sometimes,” he says. “Our goal is to maximize our ability to serve our callers, but we still have to do some analysis of our own to find out why hold times are higher than what we think they should be. A lot of our customers, for example, prefer to do business with a particular rep, and they choose to remain on hold until that person becomes available. At any given time, I can see how many calls we have on hold and compare that with the number of reps who are not on the phone. It's not unusual to find customers waiting to speak to a particular rep even though others are available to serve them.”
Don't hang up
Incomplete calls are another factor that may not be exactly what the computer-generated reports might indicate. The system tracks the number of calls received in which the caller hangs up after being placed on hold.
“These are the types of calls that you want to address,” Melinsky says. “They indicate that you are not taking care of your customers fast enough. But we have found that a lot of people hang up almost immediately after being placed on hold — for a number of reasons. We will discount the calls that hang up within 30 seconds because they frequently call right back. It's the calls that hang up after 30 seconds that we really need to address.”
One easy way to reduce the number of incomplete calls is to reduce the reasons for putting a customer on hold in the first place. New Life does this by providing its reps with wireless receivers. The ear-mounted Bluetooth sets allow the rep to continue the conversation while being free to walk throughout the warehouse to gather the information that the customer requests.
Another way to keep customers from hanging up is to have a wealth of information at the rep's fingertips. The caller identification system allows reps to know who is on the other line. The phone system can be programmed so that the customer's call screen comes up immediately on the rep's computer monitor.
New Life is spreading out with a growing number of regional parts warehouses, but the nerve center of the operation remains in Grand Rapids.
All support functions such as accounting, human resources, logistics, and general administration are concentrated at Grand Rapids.
“We want to free our warehouses from these operations so that they can concentrate on serving the customer,” Hinton says.
The company — including its multiple parts warehouses — remains a parts wholesaler
“We don't sell any parts at retail,” Broyles says. “Everything we sell is for resale.”
New Life has been a parts wholesaler for more than 30 years. The late Joe Hinton founded the company in 1974 following the bankruptcy of Brown Trailer Company. Hinton had been in charge of Brown's aftermarket parts operation.
“At the time, Brown and Fruehauf were the trailer manufacturers with the best parts program,” Bob Hinton says.
Joe Hinton, Bob's father, bought certain assets of the Brown parts operation, including tooling to produce proprietary trailer parts for Brown trailers and in effect continued to serve as the parts outlet for a company that, in the early 1970s, was one of the industry's largest trailer manufacturers.
The Hinton family continues to control the company today. Key managers own a minority interest.
Demand for Brown trailers, of course, diminished with each passing year. New Life has responded by expanding the lineup of products it stocks.
“Even 10 years ago, 85% of the parts we sell were trailer related,” Broyles says. “That's changed. We have been selling more parts for the power unit. Our mix is about 65% trailer parts now, with the rest going on tractors. That reflects a desire on the part of the customer to be able to get parts at a single location.”
New Life customers now include some transport refrigeration unit dealers. While Carrier and Thermo King continue to control distribution of their proprietary parts, New Life has been able to supply these dealers with other truck and trailer related parts and enabling them to reduce the number of stops refrigerated fleets might need to make to get the parts they need.
New Life continues its search of new — and sometimes distant — markets.
“The West Coast is our latest and greatest,” Broyles says. “We are sending trucks out there weekly.”
But the real key to growth is in doing things better.
“It would be difficult to start this business without a catalyst like we had when Brown Trailer went out of business,” Hinton says. “We only had 19 people working for New Life when I joined the company in 1983. In those early years, we were a small company competing against a lot of companies that were much bigger than we were. We had to work hard to do things better.
“Now we have grown into a good-size company. We can't allow ourselves to think that we are big and that our size will get us through bad decisions or tough markets. Size can actually weaken a company if you let it cause you to lose your edge. Size by itself does not do it in this business.”