PartsRiver Blog

This is the third in a series of blogs that talk about the major differences between B2C and B2B. The last blog talked about why managing part numbers are critical to successful B2B. This blog will talk about the importance of cross-reference and alternate parts.

When an online consumer searches for a product, like a blender, they may be shown several different blenders made by different companies and for different prices. Fortunately there are often user reviews so the buyer can get some information about quality and service. Or they can go to a shopping comparison site and compare retail prices for one of the products. Once they decide what they want, they can pull the trigger and buy the one they want.

Heavy duty truck parts buyers on the other hand, need options for the same form-fit-function part especially if the truck is down. An accurate alternate part might be just the thing if the OE part is not available. When he or she enters a part number in an online store or marketplace, getting back alternate parts will provide him or her valuable information in one search. There can be can be a dozen part numbers out there for the same part and having this information can save the buyer downtime, part searching time, and money.

Where does this cross-reference information come from? A B2B online site must have access to a database of part cross-reference information. When the buyer enters a part number into an online website, the search engine will look at the parts database for the available cross-references and display those back to the buyer. A valid cross-reference is one that crosses all part numbers to the component manufacturer part. To maintain a good cross-reference database, new parts must continually be added.

Consumer online shoppers may not care in what country a product was manufactured. However, business shoppers may be very concerned about buying only domestic products, especially in the Heavy Duty truck part market. It is important that alternate parts reflect the buyer’s preferences.

Clearly, offering good alternate parts is challenging but the value for the buyer can be huge.

My previous blog talked about the significant differences between successful B2C and B2B which have a lot to do with why online B2B has grown more slowly than B2C. The next series of blogs will address each one of these differences specifically. Whether you are buying or selling parts, understanding and managing these issues is critical.

Let’s compare buying a sweater online with buying a D2 Governor online. You can find a sweater on your favorite e-Store like Macys.com or Market Place like Amazon or eBay. When you search for the sweater you care about brand, color, size, material, and so on. Most likely, you don’t care what the part number is or where it ships from.

Buying heavy duty truck parts, like a D2 Governor, on the other hand, requires much more information to make sure the buyer is getting the right part, from an acceptable seller, and at the right price. First, this part may have multiple part numbers because of several reasons. One is that the part might be made by different manufacturers. Second, it will have different OEM numbers. Third, each OE Dealer might give it a unique part number, often by adding a prefix or suffix. And lastly, aftermarket sellers may give it yet another part number.

And there is another part number that you may have: an incomplete part number. A buyer may have only part of a part number or one that contains characters that really shouldn’t be there (like a dash).

With all of these possibilities, it is important that B2B search engines be able to wade through this list and give the buyer some result besides “no results found”. There are two main pieces to managing these searches. First, search engine to look beyond the part number format such as dashes and slashes, and to be able to give options for an incomplete part number. If you know only part of a number the search engine should show you the different options. Even better is if you can filter searches by manufacturer or product category, like “brake system”.

The second is to compare the part number search against a cross-reference database that contains at least some of the part number options. Often a buyer can use a part whether it is marketed by more than one company. The ability to find parts online with a partial part number and get several options to choose from can provide huge value for the buyer who needs a part right now, not to mention for a good price.

Many of us, if not most of us, have purchased something online, either from an e-Store or a Market Place like Amazon or eBay. In fact, online spending is capturing a larger and larger share of the consumer dollar. Which brings me to the question that we at PartsRiver have been asking. If B2C (Business to Consumer) is growing so quickly, why is B2B (Business to Business) lagging behind, especially in the heavy duty truck parts market? Is it just because companies have purchasing processes in place and don’t want to explore other channels? Is it because B2B offerings are limited?

Our research tells us that there are some significant differences between B2B and B2C which require another level of capability to successfully manage online B2B sales. These differences are challenges, but ones that present real opportunity to companies that manage them. Here is a brief list. I will address each of these in more detail in future blogs.

• Part number search – Unlike buying a sweater on a consumer website, truck parts buyers need a correct part number. A B2B website must offer a part number search that can handle partial part numbers, imbedded part numbers (part numbers that have prefixes and suffixes).
• Cross reference parts - There is typically more than one part number for a specific part. The component manufacturer number, the OE number, several aftermarket numbers. It is important that a site has this cross-reference information as part of its search.
• Quote requests – Companies often require multiple bids prior to buying to ensure that they are getting the best price for the truck part. They need to be able to request quotes from multiple part sellers.
• Find local sellers – Unlike B2C where buyers may have no idea nor do they care where their new sweater is coming from, truck parts buyers often need the part very quickly and need to buy the part locally.
• Geographic coverage – Some Parts sellers, such as dealers have specific geographical responsibilities and want to limit their sales to this market area.
• Purchase orders – Many companies must issue purchase orders, both for individual orders and for blanket orders or annual contracts.
• Sales tax exemption – B2C sales are almost always taxable. Many B2B purchases are tax exempt. There may be taxable and non-taxable items on a single order.
• Custom pricing – Truck parts sellers offer customer specific pricing based on contracts, quantity discounts, and annual purchases. They don’t necessarily offer a ‘published’ or ‘list’ price.
• Approved product, manufacturer, supplier – Fleets often have approved products and do not allow purchases of other brands. Buyers often must buy from approved suppliers.
• Price breaks – Price breaks are offered for higher quantity purchases. Online part ordering must calculate pricing based on these criteria.

These conditions are not trivial and present a challenge for B2B online sales, but they can be dealt with. As online sites become more sophisticated and manage these requirements, B2B will start catching up to B2C.

My next blogs will dive deeper into the specific requirements and how they can be handled. In the meantime, I welcome any comments or thoughts that you have.

Expanding sales geography can move a company into a new level of revenue but along with it will come a new level of operational and infrastructure challenges. For many companies that sell heavy duty truck parts to a local market, they are seeing the growth of a new way of doing business: online parts sales. Most of us have purchased a consumer product online, however, online truck parts sales are just beginning to take advantage of this new channel. As a result many parts sellers are wrestling with developing a strategy that services their local customers and offers an online store to service both local and a larger geographical market. If done right, a seller can see a significant increase in sales; however, they experience growing pains to accommodate this new business.

What are some of the “Nuts and Bolts” things to consider when developing a “bricks and clicks” strategy? Here are a few that are critical for success.

• Shipping – If much of your business is delivered by your company, you may need to beef up your shipping infrastructure and processes. These include physical space, packaging that will withstand shipping, and training employees. This may also be the time to invest in equipment such as bar code readers, electronic scales, and other efficiency equipment. Much of it will integrate seamlessly with your ERP system. For heavier shipments, there are some online freight sites that will provide shipping quotes and process a shipping order.
• Shipping costs – You will need to calculate shipping costs at the time of order, not at time of shipping because many online customers will be paying for the product as they complete the online order. This will require building product weight into the catalog so your e-Commerce store can calculate the shipping cost.
• Customer service for online customers – Having good, knowledgeable customer service people available to help online buyers is critical. Buying commercial truck parts is more complicated than buying consumer goods or automotive parts. Customer service people need to be knowledgeable about parts and how your online store works.
• Online catalog management – An online catalog is a dynamic product and resources must be committed to keep it up-to-date. Parts will added, deleted, superseded, discontinued and so on and you will need a process to ensure that the catalog is continually updated. Buyers will keep coming back to online stores that have accurate information including pricing and availability.
• Descriptions – Part descriptions must be accurate and thorough. So many descriptions, even from the manufacturer are terrible and don’t help identify a product.
• Pricing – Create an ‘online’ price strategy that won’t undermine your existing customer base.

These are just a few of the things that need to be done. They will cost resources to complete and put in place, but once done, they can help you develop new markets. To do a cost – benefit analysis is fairly straight forward. Once you figure out the costs of putting these things in place, you can figure out how much gross margin you will need to pay for them. Some are onetime expenses and some are ongoing.

The exercise is worth the effort since online selling will experience very significant growth in commercial trucking over the next few years. Those companies that make the effort to do it right will be the winners.

Cross-referencing heavy duty truck parts is a dynamic process with some critical rules that should be followed to maintain integrity and currency. For fleets that have supplier contracts, “off contract” spot buying can be very expensive both because of prices paid and the potential liability of buying the incorrect alternate part.

But if managed correctly, cross-referencing can have a very significant impact on overall parts spend. Essentially, a parts buyer can find an acceptable alternative truck part, at an acceptable price when a primary part is unavailable. And the buyer will be able to avoid buying an unacceptable part and/or an unacceptable price. Lastly, the fleet management can run analytics reports that include “off contract” purchases.

Here are a couple of definitions so we can be on the same page going forward. A valid Cross-Reference is a part that crosses to a Component Manufacturer part number. A valid Alternate Part is one that a buyer can purchase instead of the approved contract part.

So, what is the proper process to manage cross-references? PartsRiver has been working with cross-references for many years and has developed some points that are important if a fleet is going to maximize the benefits.

• Cross-references must begin with the component manufacturer. Each supplier part that is accepted as a cross-reference must be valid cross-reference to the actual component manufacturer. For example, Mack part number 8235-R615002 and Volvo part number TDAR615002 both cross to Arvin Meritor part number R615002. Therefore the Mack and Volvo parts are valid cross-references to each other.
• Each valid alternate part must be associated with a price. To run meaningful analytics, it is important that you can compare prices among the alternate parts. Using our previous example, if the Mack part 8235-R615002 is the contract price at $25.00 and the Volvo part can be purchased for $35.00, you will be able to determine ‘overspend’ even though the part numbers are different.
• Superseded parts must be identified and crossed to the replacement part. Managing superseded parts will not only provide useful pricing analytics, it will also help fleets manage part inventory.
• VMRS coding provides useful categories. Although not essential, assigning VMRS (Vehicle Maintenance Reporting Standard) codes provide very useful categories for parts that are industry standards. These codes have been developed by ATA (American Trucking Association) and are being adopted by fleets and the major OE’s
• Cross-reference management is ongoing. A fleet’s Item Master or Parts Catalog is continually changing as new parts are added and others become superseded or obsolete. Not every part needs to be included, but if managed properly, the benefits can be significant to the company’s bottom line.

These are some of the important points for effective cross-referencing. It may seem like a daunting task at first, but once your company develops a process, managing cross-references becomes another part of inventory control and auto component procurement that can deliver big benefits.

Truckload Carriers Association and CarriersEdge announced the annual results for the 20 best fleets to drive for in 2013. The article was published in www.truckinginfo.com and I think it warrants some attention not just because the voting was done by truck drivers and owner operators but also because of some of the criteria that was used.

There were the expected criteria such as Total Compensation (base pay, bonuses, vacation, and sick day allotment), health and benefit plans. Without solid overall compensation and benefits packages, no fleet would make the grade. But just as important was the criteria that measured less tangible factors which include training, coaching, advancement opportunities, commitment to personal growth, family support, and team building.

This tells me several things that I think more companies should be aware of no matter what business they are in. Years ago I was attending a technology conference and heard a talk by a man who founded and ran a very successful company. His talk was about motivating and retaining people. His message was simple: challenge and recognition were the foundations of building great teams. Challenge creates the environment to excel and recognition on many levels, not money, is what retains people. He gave a quick but powerful illustration. At an awards dinner, he handed out bonus checks, each with a bottle of very good champagne. Later in the year he discovered that the recipients remembered the champagne more than the money; the visible recognition for their great work.

Drivers have a tough job and two of the trucking industry’s most important challenges are driver retention and driver safety. You can bet that these top 20 companies have the lowest driver turnover and best safety records because they know that it is not only money but family support, training, coaching, and other factors that recognize the driver as an important part of the company’s success.

Another interesting thing is that there is very little relationship to the size of the fleet and the ranking. In other words, many of the important factors for success don’t cost much. This is one competitive advantage that large fleets can’t dominate. Great companies, large or small have great leaders at the top and it is clear that all of these companies’ leaders understand the importance of recognizing the drivers and knowing what motivates them and retains them.

Congratulations to these fine fleets.

In my last blog, I talked about understanding buying trends in the heavy duty truck parts market. It’s clear that although this industry is behind others in its adoption of online buying, there are a few factors that are beginning to shape the trend. First, even though there are not many true “e-Stores” where you can see price, availability, and place an order, there are more and more truck part seller websites. Second, some software providers and OE’s are providing a platform for independent sellers to have an online presence. And third, the younger parts buyers are beginning to demand the ability to buy online. They are more used to “multi-tasking” and shopping online and it is only a matter of time until they get what they want. But this industry is ripe for companies who commit to understanding what makes a successful online truck part store and then committing the effort to make it happen.

I ended my last blog with the question of what are some essential things to know and do to be able to sell online so you can take advantage of this new, but growing opportunity. There are some things that you can do that will set your company apart from all the rest:

• Accurate inventory – if your site says you have part in stock, the buyer needs to be able to trust that. Since they are paying for the part online, it’s critical that you have it to ship.
• Accurate part numbers and descriptions – online buyers rely on you to provide them with accurate part numbers and good descriptions. It is an effort to audit part numbers and enrich descriptions, but it will pay off in customer loyalty.
• Pictures – I won’t say it. Oh, yes, I will. Pictures are worth 1000 words. Good pictures, even from different angles will bring buyers back again and again. Some truck parts look alike with small differences. Multiple pictures can make the difference between a sale or not.
• Alternate part numbers – You may not have the part number the buyer is looking for, but you might have the same part stocked under a different number. Giving the buyer an alternate choice will lead to more sales and repeat customers.
• Direct, fast access to a real person – No matter how good your site is, people still want to talk to a knowledgeable person when they have a question. Have a clear phone number or a “push-to-talk” that gets them directly to customer service.

If you have spent any time at all searching the web for truck parts you have seen a wide range of sites from good to ones you will never return to no matter what. Some are clean, easy to navigate, and the information is readily available. Others are cluttered with specials, impossible to navigate and have very little useful information. It is worth some time to write down what you like and don’t like about different sites. Remember, truck parts sales are B2B, Business to Business. Buyers are looking to buy something now for a reasonable price from a reputable seller.

If there was ever a time to become an online leader in the heavy duty truck parts market, this is it. It doesn’t matter what size company you are to develop a loyal following online if you understand what is really important to the online market.

The title of this article may seem a bit confusing and perhaps it should be called, “Understanding Customer Buying Trends is an Opportunity. Not Understanding them is a Threat”, but that is a bit too long.

If you are like me, you are having a difficult time figuring out trends in the fast changing world of procurement. As a seller of heavy duty truck parts, you have built up a great company, whether it is a local independent store or a national chain. You have built a loyal customer base by providing quality products, excellent service, and fair pricing. Sounds great so far. But the sands are shifting a bit, even in the heavy duty truck parts market. Understanding how things are shifting will be the critical difference between continued success and growth, and being able to hold on the local or national truck part market share that you currently enjoy.

The difficulty in following these trends is that the change is subtle and happens quietly and before you know it, your market has change dramatically. For example, just two years ago, eBooks represented a small fraction of the overall book market. Last year, the eBook market, caught and passed the paper book market and now accounts for 80% of new book sales. Companies like Borders missed the trend and are now a part of history.

How did that happen and can it happen to the heavy duty truck parts market? First, eBooks got traction because tablets like the iPad, the Kindle, and the Nook, became affordable and more and more titles became available. But even before that, the internet became as common as the television in every household and the younger generation adopted it with a vengeance. Game over.

But something else much more subtle was taking place that clinched the deal; analytics. The eBook sellers like Amazon and Apple track searching and buying trends down to the smallest detail. What books are they searching for, from what zip code, by whom. How old, what gender, what income level and so on. You get the idea. The result is a very smart e-Commerce world. Game over.

The smart book sellers adopted the eBook market and brought new customers into their stores so that both eBook and paper book shoppers were taken care of. These companies sold “rich content” and one-stop shopping and succeeded where “print only” stores have struggled.

Back to our world, heavy duty truck parts. Truck parts, unlike books, are not discretionary, are much more complex, and are critical to the operation of any fleet. Getting the right part at the right price from a reputable seller is fundamental to the industry. To date, most fleets rely on local suppliers who know their business, know parts, and provide high value services like inventory, pickup and delivery, part exchanges, and fair pricing. But as I write this, more parts buyers are spending more time on the internet sourcing hard-to-find parts, looking for better pricing, and even better information. And as websites get smarter by tracking all the searches and purchases, they will become more like the local supplier; they will know the customer, tell them when a part has been superseded or obsoleted or what alternate might work if the primary part is unavailable.

And, like the online consumer market, the young parts buyers are very comfortable with shopping online.

So what does the independent truck parts seller do to stay in the game? Like the smart book sellers, do both. Use your already excellent business as a platform to add to your market. Your local parts buyers will have a choice to buy from you online or on the phone. Buyers from outside your market may buy that hard-to-find part that you have on your shelf.

Sounds good you say, but how do you know what is the best way to get started?

More on that later.

Buying trends in the consumer world have changed dramatically as more and more people buy goods and services online. Each year the percentage of total consumer dollars spent online more than doubles as younger internet savvy shoppers move into the mainstream. Many older folks like the “touch and feel” and the relationships of traditional shopping. But the younger generation is completely comfortable with the kind of 'social' community that has become the internet world.

How is this trend going to impact the very traditional world of the commercial trucking where supply channels have been established over many decades and local, personal service is highly valued? The short answer is that online buying is gaining traction and that there will be a significant impact. The longer answer is that there are pros and cons to buying online and it is going to take some time for this industry to figure out the balance.

Some of the challenges of online buying are due to the fact that in the heavy duty truck parts industry, there is more complexity than consumer shopping because of the importance of part numbers. When you buy a shirt online, you don’t care about the part number; you care about the size, the style, and the color. But when you buy a D2 Governor, it is essential that you have a correct part number, or that the seller can identify the correct part from your VIN (Vehicle Identification Number). Also, parts can have many part numbers since the same part can be sold by OE’s and aftermarket sellers, each with its own part number. Successful e-Commerce for heavy duty trucking must be able to manage this complexity and provide the appropriate choices for the buyer to ensure that he or she gets the right truck part.

Fleets depend on local part suppliers to provide those important services that add so much value to fleet operations and maintenance. The expertise of the customer service people and the personal knowledge they have of their customers is invaluable to the efficiency of their customers’ operations. However, knowledgeable customer service folks are becoming a rarer breed as their replacements are harder to come by. e-Commerce sites are getting smarter and are able provide the expertise that the customer service person does. As online sites get smarter, they will know what equipment you have, what your buying trends are and what companies you have pricing agreements with. They will also show you suitable alternate parts if the primary part is not available. And they can get competitive quotes for you.

Another challenge of online ordering is that unless the seller is local, the parts will have to be shipped rather than delivered. So you may not be able to get it same day. The same is true for returns; you will need to send them back rather than have them picked up by your local supplier. The B2B (Business to Business) world is learning from the B2C (Business to Consumer) world that in many cases, but not all, the advantages of online shopping outweigh the advantages of local delivery. For regular stock items, buyers may be able to get a price advantage buying online. And for hard-to-find parts, buyers can search the whole country quickly and efficiently on some web sites. Good sites can have Make-Model-Year information, excellent pictures, and specifications that are not available from local suppliers.

The bottom line is this: local part suppliers will continue to provide the high value services that they are so good at. And online buying will grow more and more quickly as websites get smarter and buyers get used to buying online. So the question I ask myself is, why can’t they be one and the same? Why can’t local sellers have really smart websites to service their local customer base for everyday parts and a larger market for truck parts they have that a buyer in another part of the country is looking for?

More on that later…

VMRS (Vehicle Maintenance Reporting Standards) has been around quite a while now and is gaining traction as the primary method for integrating information within a fleet from the shop into the fleet management system and to management reporting. Now VMRS is being adopted by the OEM’s and suppliers which is going to have a very beneficial impact on the Heavy Duty Trucking industry as a whole.

Just a quick overview of VMRS classifications for those of you who are not familiar with it; we get many calls from folks who have heard of it but aren’t quite sure how it works and how it will help them in fleet management. VMRS Code Key 34 codes parts to three levels, with 3 digits each.

Here’s an example (a complete list of codes is available from ATA):
013 Brakes
013-002 Rear Brakes and Drums
013-002-003 Actuating Link – Self Adjuster, Rear Brake

One of the key pieces of information that VMRS provides is about the application in which the part is used. For example, a brake pad can be used in more than one location on the truck and it can be extremely valuable to know the frequency of replacement at each application. Are pads being replaced at one location more than the others? With VMRS each location has a different component code even though it may be the exact same part.

Now that the OEM’s are adopting VMRS, this information can be reported to them which can lead to improved truck part designs. If they collect this kind of information from fleets across the country, they can develop much more effective failure analysis and product improvements.

If your heavy duty truck parts are coded to all three levels and parts used for maintenance are tracked in a fleet management system, the information that can be gathered can be extremely valuable. You can now find out which parts are being replaced too frequently and which parts are being replaced in unscheduled maintenance.

With a VMRS code system, your fleet management system can do the reporting for you and eliminate the need to prepare written reports (which may or may not get read). Now you will know what part, at what location, on what piece of equipment, and how often.

VMRS has been adding equipment types over the years as well and now covers most equipment for diverse fleets. PartsRiver has been involved in providing codes for industries such as buses, ground support equipment, fork lifts, and heavy/off road equipment. All codes are assigned by ATA. Some organizations are now requiring suppliers to provide the VMRS code as part of an RFP.

Adding VMRS codes to a parts master and management system is usually well within a fleet’s capability. Here are a couple of things that can help the VMRS project go smoothly.

• Assign one person to be responsible the project who is familiar with parts and has some familiarity with your fleet management system. Give him or her resources needed like access to TMC and to your fleet management software provider.
• Contact Jack Poster at TMC and let him know you are starting the project. Jack can provide valuable help, training, and advice for getting the project done right.
• Contact your fleet management service provider about integrating the codes into the parts master.
• It may make sense to add codes to those parts that are used most frequently.
• Set a timeline to get the job done.

With rising costs and the need for increased efficiency, VMRS can help you achieve your goals.

If you have done a VMRS project, we would love to share your experiences with our readers.