Butler Transport reduced its parts inventory by more than $100,000 by using Kenworth’s PremierCare Connect Plus to give managers visibility on parts usage and automatic re-ordering features. Shown above: Butler Transport shop manager Paul Arnold (standing), with technician Barry Rhymes and Daniel Salas, who works in the parts department.
John Boggus manages maintenance on 105 trucks, but he doesn’t spend much time managing his parts inventory. His company, Napa, Calif.-based Biagi Bros., receives automatic replenishment of its parts inventory. A barcode system alerts the carrier’s parts supplier once parts usage dips into a predetermined reserve level.
Various types of parts management systems and online programs help fleets squeeze down costs by reducing the inventory and purchase of overstock or unnecessary parts. Perhaps more importantly, these systems help prevent shortages of critical parts, which can help you avoid downtime and service failures. Most maintenance software packages include some type of parts management system, but to make the move to just-in-time (JIT) inventory, fleets must track more than the parts they have in stock.
Biagi Bros. is one of many carriers that uses barcode technology to accurately track the flow of parts into and out of inventory. Its software system uses the data to generate reports on parts usage and inventory “turns” – important benchmarks for Boggus, maintenance director for Biagi Bros.’ Southern California zone, to adjust his inventory levels to keep minimum supplies on hand. For JIT replenishment of parts, Biagi Bros. and many other fleets connect with suppliers’ systems online to automate the process of ordering parts as parts are pulled from the shelf.
Waste not, want not
While most carriers use computers to improve their operations, small carriers often still use manual systems to manage parts inventories. Fleets that move from a manual system to a computerized parts management system typically find that a third of their inventory consists of nonusable or outdated parts, says Charles Arsenault, president of maintenance software provider Arsenault Associates.
The first step in implementing a computerized parts management system is to benchmark usage. That process can take up to one year, says Arsenault. Parts management systems begin to produce some reliable statistics after three to six months. After a year, managers have a “look and feel of what is real” in terms of data on parts usage, he says. Then they can establish effective minimum inventory levels and re-order points.
Boggus has used Peterbilt’s TruckCare Connect Plus for about one year to manage parts inventory and maintenance scheduling. He says that it took three months of using the system to identify trends in parts usage for fast-moving items and “a little longer” for the slower moving items.
“We have a fairly good feel for [trends],” Boggus says. “TruckCare Connect Plus allows me to monitor my levels more accurately to keep less inventory on hand.” Based on those trends, Boggus established minimum inventory levels for each part in the system as well as re-order points based on the expected time to replace each part.
Kansas City, Kan.-based Butler Transport uses Kenworth’s PremierCare Connect Plus maintenance management system to gain valuable insight into the company’s parts usage and minimize inventory, says shop supervisor Paul Arnold. By tracking the flow of parts, Arnold discovered that mechanics thought some “fast-moving” parts were used two to three times a week. The parts management system soon uncovered the truth: parts were being used much less than expected. Now the carrier reviews the previous day’s usage and compares it to the previous 30 days to generate a purchase order.
“We used to keep in stock at least a week’s supply of filters, wiper blades and items we used a lot of,” Arnold says. “Now we keep a day’s or two day’s worth of stock.” The software system and barcoding have helped Butler Transport reduce its parts inventory from $175,000 to about the $60,000 to $70,000 range, Arnold says.
Noblesville School Corp. uses International Truck and Engine’s Diamond Connection parts management system to control overstocking of higher-priced parts, such as radiators, heater motors and exhaust parts. “With less overstock of parts, we have more money to apply in other areas of the transportation department,” says Dwayne Vandiver, lead fleet technician of the 65-vehicle school bus fleet based in Noblesville, Ill.
Automating data entry
Replacing paper with a computer presents some advantages, principally because you can search and sort information. Replacing a paper form with a keyboard also may help reduce errors, but neither ensures that managers and technicians remember to enter the data on a timely basis – or even at all. The first rule of computing is “garbage in, garbage out.” No system will produce the desired result if the data it relies on is flawed. A maintenance shop is a busy place, so many fleets choose to automate data entry.
During implementation of its parts management system, Biagi Bros. switched from entering parts activity manually to a barcoding system to “get a more real-time inventory,” Boggus says.
At Butler Transport, parts managers use barcode scanners to check parts into inventory, while technicians can use scanners to assign labor to a work order, Arnold says. Managers also can use scanners to check parts out of inventory by assigning them to a work order. For items difficult to affix barcode labels to – oil, greases and tires, for example – technicians can scan barcodes printed on a sheet for managing incoming and outgoing parts.
Fleets commonly use barcoding to track usage and inventory levels for significant parts but not for items that fall into the “miscellaneous expendable” category. To order parts such as fasteners and shop supplies, carriers may deal with several suppliers – one for fasteners, one for hydraulics, one for janitorial supplies, and one for cutting tools, etc.
To bring efficiency and labor savings to the miscellaneous parts level, Imperial Supplies developed a program that gives fleets the same level of visibility and accountability as “hard-chargeable” items. The company, a national distributor of maintenance supplies, provides fleets with an inventory reduction program using barcode technology.
Terry Johnson, parts and service manager for Buckhannon, W.Va.-based Buccaneer Enterprises, uses a barcode scanner provided by Imperial Supplies to scan items and bins as he walks through the shop to make a purchase order.
“I look at what I need, scan it, and right away it goes to my computer,”he says. Johnson then visits Imperial’s website to review and edit his purchase order and to view other parts in the online catalog. The 120-truck Buccaneer has combined purchase items it previously got from two or three different suppliers and saved money and labor in the process, Johnson says.
Just as barcoding is becoming common in truck maintenance shops, a newer technology promises to replace it. Radio frequency identification, or RFID, could further increase accuracy and automation of parts inventory management. By using tiny RFID tags on parts, technicians would be relieved of any responsibility for checking parts into or out of inventory. RFID scanners could be placed in the shop to automatically record inventory and track parts usage by equipment.
“You’re going to see that as RFID becomes cheaper,” Arsenault says. But he doesn’t expect RFID to replace or even supplement barcoding anytime soon. A few fleets are already using RFID, however, to manage tire inventory and even the condition of tires as trucks enter and exit company facilities.
Improving the speed and accuracy of data entry helps reduce unnecessary inventory. But you may still leave efficiency on the table if you depend on busy shop managers to review that information and make timely re-order decisions. So some parts suppliers have incorporated into their systems automatic generation and transmission of purchase orders based on re-order points and real-time usage data.
Using TruckCare Connect Plus, Biagi Bros. automatically transmits purchase orders to its local Peterbilt dealer to receive next-day delivery on parts. Next-day delivery lets the company set its re-order point to virtually match its minimum levels, saving the company about $8,000 a month in inventory costs, Boggus says. Butler Transport uses Premier Connect Plus to automatically place orders to its local Kenworth dealer for deliveries up to three times a day.
International Truck and Engine’s Diamond Connection helps its customers lower expenses associated with overstocked inventory, order placement, dealing with multiple vendors, and un-recovered warranty costs. The fleet sets minimum inventory levels, and the system automatically orders parts from the local International dealer for next-day delivery, says Michael Heyden, manager of marketing services for International.
Volvo and Mack dealers currently use an arrangement known as the Logistics Partnership Agreement (LPA) to manage parts inventory. Volvo and Mack customers will soon be able to use their existing software systems to connect to those inventories, says Joy Johnson, LPA manager for Volvo Trucks of North America. Currently, TMT Software is the only third-party maintenance software system that interfaces with LPA, but Johnson says Volvo is working with other fleet maintenance software providers to provide connectivity to LPA.
Freightliner Group offers a program called FleetConnect. As part of the FleetConnect installation process, Freightliner dealers work with customers to establish proper stocking levels and to individually barcode each item. As parts are used and scanned out of inventory, FleetConnect automatically places an order through the Web once the reorder points are hit for just-in-time delivery from dealers, the company says.
Third-party parts supplier FleetPride recently released a software program for managing repair orders and inventory. In addition to features found in other maintenance software programs, the program lets users send purchase orders directly to FleetPride through the Internet for order fulfillment. FleetPride ensures that all parts delivered to the fleet are barcoded and that both fleet and vendor use the same part numbers for re-ordering.
FleetPride also is looking at opportunities to be a clearinghouse for its customers’ purchase orders to other suppliers. Customers could produce one purchase order for all vendors and suppliers, and FleetPride would be the broker or “one-stop” service to process purchase orders, says Scott Smith, FleetPride’s Western region sales manager. FleetPride would forward to a customer’s other vendors purchase orders for parts it doesn’t stock.
“When we visit with customers, we find that many fleets and businesses are trying to reduce the number of purchase orders,” Smith says.
With parts management systems that automatically order parts, by vendor, based on pre-determined inventory levels, fleets are finding that the day-to-day chore of managing inventory is a job better suited for computers than people.
A search engine for parts
The effectiveness of any parts management system depends on consistent data. Since even small fleets manage thousands of part numbers from suppliers, ensuring data quality is an important, though often overlooked, task.
“Having a unified parts numbering system and strategy is critical to identify part types, quantities, and what the prices are and variances are,” says Derek Berry, director of business development and marketing for PartsRiver, a company that provides parts data and analytical services for fleets and parts suppliers.
In addition to maintaining a current list of the part numbers used by the manufacturer or supplier of products, many fleets use an identification system called Vehicle Maintenance Reporting Standards, or VMRS – the trucking industry’s common shorthand for equipment maintenance reporting. VMRS is used to identify parts by equipment category, manufacturer, supplier, and location on the truck, for example.
In March, the Technology and Maintenance Council of the American Trucking Associations, which created VMRS, officially launched a subscription-based information service called FleetPortal (www.fleetportal.com). The main purpose of FleetPortal is to assimilate parts and service information in a similar format for all manufacturers’ parts and service information, says Dave Foster, director of maintenance for Southeastern Freight Lines (SEFL) and a TMC member who was instrumental in the launch of FleetPortal.
“The biggest problem most fleets have is that most every manufacturer has a website or furnishes their parts and service information on a CD-ROM,” Foster says. “All of these proprietary programs or websites have a different look and feel, and navigating through them to find the information you are looking for wastes time.” Additionally, keeping up with that information, which is continually being updated, is difficult for any fleet. FleetPortal will help fleets keep up with current information and make them more efficient in finding what they are looking for, he says.
“[FleetPortal] has the opportunity to become as common in our field as Google and Yahoo in the rest of the world,” Foster says. Two of SEFL’s 20 maintenance centers currently use FleetPortal. The PCs in those shops are connected to the Internet, but Web access is limited to FleetPortal, he says.
The system also can interface with a company’s back-office systems. If you visited FleetPortal to identify a part, for example, you could create an interface into your back-office inventory system to tell you whether or not you had that part in inventory, he says.