Fast start in parts

Oct. 1, 2005
WHEN Vanguard National Trailer Corporation began manufacturing trailers last year, it put in place a plan to quickly become one of the industry's largest

WHEN Vanguard National Trailer Corporation began manufacturing trailers last year, it put in place a plan to quickly become one of the industry's largest companies in just its first year.

The company is in the process of doing the same thing in the aftermarket parts business. By most measures of growth, the operation is meeting or exceeding objectives set in its business plan.

Plans called for the company to have a network of 100 parts distribution and service centers by the end of 2005. But the company's Vanguard National Parts Division already reached that goal this September and expects to have 140 to 150 in place by year-end.

To serve its parts distribution and service centers, Vanguard National Parts (VNP) established a parts distribution center in a 70,000-sq-ft warehouse. The building was part of the Monon campus that was included when Vanguard acquired the assets of HPA Monon. The operation, however, already has outgrown that facility. To more effectively service their customers, VNP has acquired an additional 145,000-sq-ft warehouse at a separate site near company headquarters in Monon, Indiana.

The additional warehouse provides Vanguard with several advantages, including more than twice the square footage of its other location and additional office space. The building provides storage on a single level, overhead crane system, and five loading docks on each end of the building that also offer 100% indoor loading.

Vanguard has spent the month of October installing a new racking system that will enable the company to take advantage of additional ceiling height. Pickers have been acquired that are better suited for the storage system, and new forklifts with longer forks are arriving to provide additional material-handling capabilities.

“We started the move October 1,” says Craig Czupka, general manager of Vanguard National Parts. “We still have some things on order such as a portion of the racking systems that have not yet arrived, but we expect to be completely moved in by the end of November.”

Vanguard will continue to use its original parts warehouse to facilitate bulk items. Chris Rodehan, the newly appointed warehouse manager, will oversee both locations.

“Vanguard National Parts is a division of Vanguard National Trailer Corporation,” Czupka says. “The expansion to an additional location is a sign of our independence as a parts distribution company, supported by the long term strategy of the corporation.”

Fast start

Management has been pleased with the fast start for the parts operation.

“We have received a great response from our vendors and distributors,” says Rich Dessimoz, president of Vanguard National Trailer. “We are building up what we wanted — a network of individually owned parts and service centers that are solid in their local and regional markets. We weren't looking to saturate the market, but we did want to be sure that we covered the major areas — especially as Vanguard increases our volume of trailers on the road.”

As Vanguard National Trailer was planning its own path to manufacturing trailers a couple of years ago, the aftermarket parts distribution was part of the plan.

“Parts were a key part of our strategy from the beginning, Dessimoz says. “We actually were selling parts before we began manufacturing trailers. That's because when we bought the HPA Monon assets, we had parts — Monon parts — right away. The Vanguard National trailers that we manufacture came later. Being able to provide parts to our customers was important. For many of our customers, parts sales represented the first experience our customers had in doing business with us. We spent all of 2004 showing that we could serve them.”

Czupka says the number of Vanguard parts and service centers will plateau by the end of 2006.

“Our strategy is not setting up as many people as we can set up,” he says. “We are just seeking those who will represent us well across the market.”

Seeing opportunities

Vanguard saw aftermarket opportunities from the beginning.

“At the time we were getting started, Wabash was selling its parts business,” says Dessimoz, who had served as president of Wabash National prior to the formation of Vanguard. “We are now one of the few trailer OEMs who are really involved in the aftermarket parts distribution business.”

One thing that promises to make Vanguard a different player in the aftermarket is its parent company — China International Marine Container Group, LTD(CIMC). The Chinese company grew by 94% last year and is now 698th in the Industry Week magazine ranking of the 1,000 largest global manufacturing companies.

In addition to its financial resources, CIMC brings some unusual perspectives to the North American aftermarket, including distinct international sourcing, significant fabrication capabilities, and a strong emphasis on ISO and domestic container parts.

“Vanguard made a strategic decision to rapidly grow the parts business,” Dessimoz says. “We want to be the leader in sourcing from China where it makes sense. As a subsidiary of a major manufacturer with containers and container chassis operating throughout the world, VNP will have the opportunity to provide parts for products throughout the US, Canada, and Mexico.”

Key advantages

Being the North American aftermarket parts marketing division of CIMC and Vanguard National Trailer provides Vanguard National Parts with several advantages, Dessimoz says:

  • International reach
  • Worldwide global sourcing
  • OEM affiliation

Other major trailer manufacturers have left the market. OEMs previously had dominated the market for trailer parts.

“Many domestic OEM component manufacturers are expanding into China,” Czupka says. “Initial interest may be to serve the Asian market, but it's reasonable to believe that those same products built in Asia will ultimately come back to the North American market.”

Czupka is careful to point out, however, that the Asian sources are evaluated thoroughly.

“Chinese sourcing is important to CIMC, but we are an OEM source of supply,” he says. “That means that every potential CIMC sourced product we may consider representing will be tested carefully by Vanguard National engineers.”

A major part of Vanguard's parts line represents trailer components produced by North American vendors. Many commodity parts or fabricated parts can be potentially supplied very competitively by CIMC.

“A good example is plywood,” Czupka says. “We get plywood through a sister company, CIMC Xinhui. Dock bumpers and other small components are other examples. But if it's a branded product — a major component like axles and landing gear — we get it from North American OEM suppliers.”

Management has been encouraged by the response the start-up operation has received from its domestic suppliers.

“Vendors have been very supportive,” Czupka says. “Relationships with vendors and customers are very important to support our growth.”

Adding veterans from the industry is key to developing VNP's product opportunities with various vendors. VNP recently added Brian Franscoviak as the aftermarket purchasing manager to focus on product expansion. Rapid product growth is instrumental to Vanguard and their customer's success as single-source suppliers.

Customer support is another good example of the VNP commitment to quality experienced personnel. Kerri Mahling and Julie Hawthorne have recently been added to the inside customer support staff. Along with the current regional managers, Jeff Driver (East Coast) and Larry Brown (Plains States), Peter Ristau has been hired as the West Coast Regional Sales Manager to focus on west coast expansion. Completing the territory coverage allows VNP to achieve coast to coast coverage for trailer, chassis, and container parts distribution.

Mutual benefit

The relationship between Vanguard and its parent company has been mutually beneficial. Vanguard, for example, is helping introduce a North American dry van trailer to the CIMC product mix.

Trailers as we know them are relatively new to CIMC and to China. Vanguard's parent company manufactures containers, container chassis, specialized vehicles and new trailers. It also is a major steel fabricator.

“CIMC is the world's largest container manufacturer,” Czupka says. “A lot of those containers make their way to North America. That's why we carry parts for containers — including refrigerated containers.”

The opportunity for selling aftermarket parts for containers includes specialized models. CIMC produces various types of equipment besides ISO containers. VNP has the unique opportunity to support domestic containers, heated containers, and refrigerated containers through their growing service and parts network.

“So far, there is no systematic program for handling parts for containers,” Czupka says. “This has opened opportunities for ‘will-fitters’. Vanguard will concentrate on supporting various brands and models of containers with genuine OEM parts.”

Making the commitment

Vanguard has committed time and resources to get the company's parts operation started quickly. One of the first moves was to stock the shelves with key products and then provide depth and breadth. The company keeps more than $4 million in inventory, and will continue to commit capital to grow inventory levels to serve customers immediate needs.

“One of our biggest challenges at first was to determine our stocking levels without the benefit of any sales history,” Czupka says. “We had to do a lot of forecasting in those early months. With a year of experience now, we have a good idea what sales are going to be and how much inventory we need.”

Vanguard has placed 11 trailers into its parts delivery service. The fleet should total 14 trailers by the end of the year.

The fleet is designed to deliver stock orders to Vanguard parts and service centers on a regular schedule once a week. The 53-ft trailers are set up to handle bulky items such as top and bottom rails.

Reaching into cyberspace

Vanguard has begun to supplement its telemarketing and direct sales efforts with an online store on its Web site.

Working with an independent Internet service provider, the company recently rolled out a revamped site that provides customers a wide range of information, along with the ability to purchase parts day or night.

The system, developed in conjunction with Parts123.com, interfaces with Vanguard's computer system to keep inventory and accounting up to date.

Customers and prospects are using the site to place orders, learn the status of existing orders, research parts information, and transmit documents.

“It's a great communication tool,” Czupka says. “It's not our main way of doing business, but we believe it will become increasingly useful. The current version of this program provides upgraded features that enhance the users capabilities.”

Reaching out globally

For Vanguard, the real distinction is its global perspective.

“People talk about the products coming into the U S from China, but it's really a two-way flow,” Czupka says. “Haldex, for example, is shipping a significant amount of product to China. So is ArvinMeritor, and CIMC in China is one of their largest customers. There is a real push on the part of the Chinese government to establish regulations on trailers similar to the standards of equipment used in the USA.”

“Many component manufacturers are going to China,” Dessimoz says. “Initially they are going to serve the Chinese market. But you know that eventually product from their plants will come back for sale in the North American market. That's just the direction things are going, and it's something that will continue to work to our advantage.”