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Letter to the Editor

New & Notable:

Ford's Truckload Program Steps into the Future

This month in New and Notable we are going to take a close look at a program Ford has developed to pass lower pricing on selected crash parts on to those dealers that will step up and buy larger quantities of individual parts at one time. The cost savings are a function of a combination of manufacturing lot size, improved inventory control, and savings in the actual distribution of the parts through the Ford system.

In this highly competitive collision parts market, all OEMs are finding innovative ways to deliver their replacement parts to customers at the lowest possible cost to remain competitive with aftermarket product. "In the case of Ford product, we want this savings passed on to collision repairers," according to George Gilbert, Crash Parts Merchandising Manager, Ford Customer Service Division (FCSD). "The more parts we can include in ‘truckload’ program pricing, the more we can pass on to the repairer. Our latest program addition of steel bumpers to the program allowed us to lower the average cost by ten percent, keeping us competitive. That’s significant. And our goal is to keep adding more fast-moving parts to keep the momentum."

FCSD reports that they are having significant success with this "Truckload" Program for wholesaling dealers. The program encourages dealers to order in quantity, but typically not so large a quantity as to actually fill a semi trailer. With greater order quantities comes lower pricing so that dealers can be both competitive and cover the costs associated with expanded inventories.

The original program was launched in November 1997, featuring 41 high-volume bumper fascias. Fascias have been the crash parts area most impacted by aftermarket suppliers, both U.S. and offshore. By offering dealers the option of purchasing bulk "truckload" quantities of bumper fascias FCSD was able to take significant costs from the parts delivery system.

The average price reduction on those first 41 fascias was 29 percent, a move that was applauded by both independent repairers who preferred OEM fascias for their customers’ repairs and dealers with their own body shops. The success of the Truckload Program encouraged FCSD to subsequently add more bumper fascias, car and light truck radiators, and steel bumpers for bulk purchases.

Building on what was learned during the first years of the program, FCSD soon will convert the program for participating dealers to a new dollar-based ordering system, replacing the minimum unit order requirements. Dealers will have the flexibility of ordering the Truckload parts in any quantity and variety to meet the minimum dollar requirement. This allows them to select the parts they want, when they need them, adding more ability to better meet the needs of their customers.

The new "Mix & Match" order requirement releases dealers from the old order restriction. "By eliminating the minimum order requirement of 72 bumper fascias, we hope to boost dealer participation and order frequency," said Gilbert. "The dollar minimum will allow dealers to place an order for more radiators and steel bumpers when their inventory can’t accommodate 72 more bumper fascias."

The program’s success is measured by its popularity in terms of the number of participating wholesale dealers and by its effectiveness in recapturing OE market share through lowering the overall cost of high-volume collision repair parts. As the collision parts market changes, so has the program. FCSD’s upcoming Mix & Match ordering requirements and new online ordering process are aimed at making the program even more popular, by making it both broader in coverage and easier to use.

With this latest round of changes new popular bumper fascias will be added to the lineup. But, more importantly, as the collision parts business moves toward the Internet, the program will be moving to a web-based online ordering system for dealers, through Ford’s dealer information site QCdealer.com. The benefits are many, including increased speed, efficiency, and accuracy of parts orders. Expect full rollout of the online parts ordering system in early 2001.

"We believe the online ordering system is a template for where the industry is moving," said Gilbert. "It’s part of our continuing effort to make crash parts available to Ford, Lincoln, and Mercury vehicle owners by having adequate dealer inventories available for body shops," he continued. "Changing the ordering process to an online ordering system is just another way to increase consumer satisfaction at the shop level."

Leading the way in the company’s goal of better utilizing the benefits of the Internet, the program goes online next year. Dealers will have the luxury of entering collision parts orders on a real-time interactive program that will show them how full their truckload order is as they calculate their purchase. As a dealer meets the minimum dollar requirement for an order, the on-screen graphics will show if the truck is full based on the order, or if more parts may be ordered to further maximize savings.

"Both shops and insurers are telling us that cycle time is becoming more and more central both to improve customer satisfaction and to reduce severity by having less car rental days and lower parts prices. The combination of the Truckload Program and parts number consolidation will make it easier for our dealers to maintain the kinds of inventory levels that will help reduce cycle time," according to Gilbert.

The program has also led to other parts process and inventory control improvements for Ford and its dealers. The original addition of car radiators to the program brought with it a consolidation of part numbers. Car radiator part numbers were reduced from 65 to only 25 numbers for popular car lines. Similarly, a review of 106 truck radiators ultimately led to the creation of 43 new part numbers for truck radiators that fit nearly every Ford application.

It is our suggestion here at INSIGHT that as a shop owner or manager you talk to your wholesaling Ford dealer parts manager and make sure you are getting your best pricing, based on these new programs.

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