There are several advantages to buying at least some of your replacement truck parts from local suppliers. For example, you can usually get delivery the same day which allows you to keep fewer parts in stock in your shop—saving room and freeing up funds. Also, local suppliers know your buyers personally, which can make for quicker, easier transactions.
While this may save you time on repairs and money on inventory—which is always a good thing for the bottom line—buying from local suppliers may also be preventing corporate from negotiating better purchase agreements with suppliers. Since local suppliers often use their own part numbers, it becomes impossible to know what each shop is paying for the same part, or how many of those parts it is buying. And now, because corporate can’t get the contract pricing negotiated from their preferred suppliers, that ultimately ends up costing the company money in the long run.
Here’s an example: John, the parts buyer in Dallas, buys an air filter from his local supplier and pays $76. But other locations in the fleet are buying the same part from their suppliers for $66. That doesn’t mean John didn’t do his homework. Do a little research and you’ll see that this particular filter can be purchased from various local suppliers under at least 16 different part numbers at 16 different prices. There’s no way John could have known they were all the identical part and gotten himself—and the company—a better deal. Or the contract pricing corporate already negotiated with the preferred supplier.
So here’s the dilemma: How do you keep your relationship with your local suppliers while at the same time comply with a corporate target price?
There is a solution. And it will let your shops continue to buy from their local suppliers using whatever part numbers that local supplier uses and still comply with the contract pricing. The key is having your purchasing system know which part numbers represent the same part so that it can point the parts buyer to the right part number and keep track of all the purchases. No matter what part number they were bought under.
Here’s a real life example of how a large fleet solved this problem: Each of their over 700 repair locations was buying parts from local suppliers. Because of all those different suppliers and different part numbers, corporate had no visibility on the parts spend, so they were unable to establish a target price for all their shops.
To manage this situation, they created a central parts master with all of the local parts cross-referenced to the single master part number. Now all purchases are first fed into their central system and cross-referenced to the master. As a result, they now have a clear picture of the quantity for each part they are buying, what they should be paying and they can feed price targets back to all the shops. Their parts buyers now have a target price they can use to negotiate with their local suppliers. And the savings—not just in money, but in time saved searching and sourcing—is substantial.
You don’t need 700 locations to put a system like this to work for you. But trying to put a system like this into place from scratch is incredibly daunting. Not only are there a seemingly endless amount of numbers to manage, but those numbers keep changing as parts are superseded, obsoleted, etc. So they turned to PartsRiver to handle it for them, and they were able to get the new system up much quicker than trying to building their own. PartsRiver created their parts master, and then cross-referenced it to their database of over 20 million parts. Then a custom system was put in place to help manage how the purchase information was passed from the shops to their central system. Every month, PartsRiver provides the company with all newly added part numbers, along with superseded and obsolete part numbers, so the central system stays accurate.
The bottom line? Now all their buyers can get contract pricing from local suppliers, acquire the parts quickly with less sourcing and research and corporate has complete transparency on part spends. And that all adds up to big savings.