The transportation industry has always been an active merger/acquisition industry because it is an excellent way for a company to expand its market and to achieve operating economies. You hope that the good stuff survives like good customer service, good pricing, and customer loyalty because in the end, that is what determines whether a company succeeds or fails.
But behind the scenes there is a lot of ‘blocking and tackling’ that needs to happen to put two companies together; the one that PartsRiver gets involved with is putting two parts masters together so the merged company can trim its inventory and start purchasing heavy duty truck parts without duplicating purchases.
There are a couple of things that can make integrating parts masters tricky. First, is if the companies have Class 8 fleets made up of different name plates; one company may have primarily Peterbilt and Kenworth trucks and the other may have International and Volvo. This guarantees a challenge. Second, the larger the number of maintenance locations, the more likely there will be duplicate numbers.
So what to do? There are several important steps that should be taken to minimize duplicate inventory. First, a central parts master should be created that incorporates both companies and, if necessary, all the parts masters of the various locations. This requires a dedicated effort to cross-reference as many non-proprietary truck parts as possible. Once it’s done, however, the company can achieve some amazing cost advantages and keep inventory levels as low as possible for its replacement and aftermarket truck parts.
Second, identify the categories of truck parts that can be integrated most easily. For example, filters, belts, hoses, lights and other commodities can be cross referenced to each other and a preferred brand selected. If this information is loaded into the fleet management system, the parts buyers will see what the preferred part is and the company can get preferred pricing. If done right, the merged company can negotiate some excellent pricing from the primary suppliers.
Cross-referencing is the secret sauce and if you happen to be the lucky person whose job it is to manage the parts master for a merger, the key will be to locate a deep cross-reference database.
Anything else? I would love to hear your thoughts.