A Behind-the-Scenes Look at Dealer Purchasing, Work Truck Week, and MATS 2023
Get a behind the scenes of what it’s like for large dealerships to purchase parts right now in the current market.
Episode 263: Parts purchasing has always been a key factor in keeping trucks and trailers on the road. In this episode, we start by getting behind the scenes at what it’s like for large dealerships to purchase parts right now in the current market. After that, we had the opportunity to interview industry experts at Work Truck Week and MATS about the solutions they are providing to the industry.
Daniel Wessels is a parts manager at a large dealership and is a returning guest. Listen to Episode 226.
Guests from Work Truck Week 2023 and MATS 2023
- Justin Lu, Founder and CEO, Ezpapel
- Jason Mullican, Senior Vice President of Sales & Channel Marketing at Triumph
- Hans Galland, CEO / Founder, BeyondTrucks
- Natasha Martinez, Head of Carrier Success, BeyondTrucks
- Bruce Townsend, Chief of Employer Engagement at ESGR
Watch the Video Version
Disclaimer: This content and description may contain affiliate links, which means that if you click on one of the product links, The Heavy-Duty Parts Report may receive a small commission.
Sponsors of this Episode:
- Want to look up parts but don’t have a part number or the VIN? Download Diesel Parts for free on Desktop or on your Apple or Android device.
- Looking for high-quality fuel injection for heavy-duty applications? Buy now from AMBACInternational.com/Aftermarket
- Looking for suspension, steering, and 5th wheel parts? Buy now from SAMPA.com
- Looking for OEM genuine parts? Buy now from AlliantPower.com
Are you looking to purchase heavy-duty parts and get your commercial vehicle repaired? Get access to one of HDA Truck Pride’s 750 locations across the United States and Canada. Visit HeavyDutyPartsReport.com/BuyParts.
Transcript of Episode:
You are listening to The Heavy-Duty Parts Report. I’m your host, Jamie Irvine and this is the show where you get expert advice about heavy-duty parts that keeps trucks and trailers on the road longer while lowering cost per mile.
My guest today is Daniel Wessels. He is a returning guest. Daniel has worked at dealership since 2005. He has a perspective that is going to be really great for us today because he’s going to really give us a bit of a behind the scenes look at parts purchasing.
Daniel is as a returning guest as I mentioned, if you want to listen to his first episode on The Heavy-Duty Parts Report, go back to Episode 226. Links are in the show notes. That’s where we talked about how to be bold in uncertain economic times. That episode is probably more relevant today than it was the day that we recorded it. Daniel, welcome back to The Heavy-Duty Parts Report. So glad to have you here.
Thank you. Thanks for having me.
So last time we talked you were on the road. Today, you are incognito in your warehouse, so a very authentic location to be recording from. Before we get into a conversation about parts purchasing and you’re going to really pull the curtain back for us on the perspective of what it’s like to be in parts from a dealership perspective. I think it’s going to be really interesting for our audience to listen to.
But before we talk about that, I’d like to get a feeling of what’s going on at the date of recording, it’s the end of Q1. By the time people are listening to this, it’ll be midway through Q2. So what has been some of the overarching trends right now this year? Let’s talk about truck sales. What have you seen things up, things down, what’s happening in 2023? How is it different than in 2022?
Truck sales on the new truck side, it’s still going to be significant lead time before those trucks can be delivered. Manufacturing is still quite a ways behind. It looks like 2024 is going to be a lot more open for new truck sales, but as far as the rest of 2023, if you don’t have your orders in so far this year, I don’t know how you’re going to have a truck delivered by the end of the year. As far as the used trucks go, that market is falling fast. The price of used trucks is down very significantly. I mean the pricing started to drop, inventory started to rise about this time last year and inventory’s way up.
Unfortunately, some repossessions are a little bit higher, so more of those trucks are becoming available. Interest rates are rising as also, so if you’re in the market for some good late model used equipment, it may be time to start looking to buying or buying those because it looks like some deals are coming up.
Especially since you can’t get new trucks anyway, so that’s probably a good move. So what about from the parts perspective? What are you guys seeing at your dealership? Are sales up, sales down? What’s the demand for replacement parts?
So I think this probably has to do with the overall market. It looks like freight rates are down a little bit. There are a lot of parts that are still back order supply issues. Maybe it’s electrical switches, door switches, some different NOx sensors, hoses or OEM hoses that just can’t, the suppliers just can’t keep ordering.
But on the aftermarket side, especially on the commodities like brake drums and batteries, shockingly prices are way down on those and if you were go to order a trailer load of break drums at this time last year, you’re looking at 20 to 28 weeks lead time this year, one week. So not only are prices down, I don’t know 30% on some of those commodity items, even batteries are down 5, 10, 15%, but the lead times are significantly lower.
If you’re a purchaser who’s paying attention to your parts inventory, you’ve really got to stay tuned and stay in contact with those suppliers so you’re not badly over buying and so that you can kind of plan three to six months out because planning three to six months out versus this time last year, those were two completely different things, but still lots and lots of back ordered items too.
So it seems like when one group of parts becomes available, a different group of parts goes on back order. So it seems like a never ending cycle.
And the supply chain challenges at one time everything was on back order. We couldn’t get anything and now there is this strange period of time where inventory is just all over the place.
Last week we talked to a manufacturer and Find it Parts about how they are working to redistribute inventory around the country because sometimes you can’t get it from the manufacturer, but there’s another dealership 400 miles away, they’ve got it in stock, you don’t, and it’s a big challenge right now. It’s affecting our ability to get the right parts to the right people who actually need them because where the heck is the inventory. So dynamic times for sure.
Thank you Daniel for giving us a bit of an overarching look at some of the trends that are going on. I find it interesting what’s happening with no new trucks available and yet used trucks are prices are falling, parts are still all over the place. Unfortunately the supply chain issues continue, but they look very different today than they did a year ago.
So I appreciate you giving us that. Now we’re going to talk about parts purchasing from a dealership perspective. You’re going to give us a little bit of a behind the scenes, but let’s just start. I mentioned you’ve been in the business since oh five. What is your current role in the dealership that you work for? Just so people understand where you’re coming from.
So I’m a Parts Manager at a pretty large dealership group and I do lot of the purchasing for my branch and a little bit for the company too.
Okay, great. So you’re seeing it firsthand, you’re in the trenches. That’s perfect. So let’s talk about some of the fundamentals. First of all, what’s the role of someone in purchasing? Just describe what they are actually responsible for.
Right, so a good purchaser should be looking to always maximize the overall potential sales within a given product group and doing so should help to maximize the gross profit allowed by a given market.
So that’s a great overall description of a parts purchaser’s role, kind of what the outcomes that they’re looking to accomplish. I did purchasing at one time when I worked at a manufacturer and a lot of times you’ve got things like minimums and maximums set up in your inventory. Is the job once that’s all set up, is it just to hit the reorder button or is there more to it than that?
Well hopefully there’s a lot more to it than that. Unfortunately, some people think it’s just to hit the reorder button on a schedule, but there’s a lot more that goes into it. Any time you’re looking into direct ship product group, maybe it’s Delco, Remy Starters, maybe it’s whatever the case, MGM brake chambers, you want to make sure that you’re buying all of that, that you possibly can direct through the program instead of out the PDC when you change those parts from the PDC to the direct ship program.
But first of all helps to meet your prepaid minimums and just by default you’re going to be paying lower costs for those items versus getting out of the PDC.
So just for those who maybe don’t understand what you’re talking about is we’re buying from a manufacturer, there’s two ways for us at the dealership level to get the inventory. One, it can go to our company’s PDC or parts distribution center and then we draw it from there. But that’s extra handling. That’s extra shipping, there’s extra cost associated with that or there are some direct ship to the dealer’s location from directly from the manufacturer. Do I have that correct?
Yeah, that’s correct. Typically from the PDC, you pay five to 20% higher markups just for the convenience of getting out of the PDC.
It’s interesting, I worked on the independent side for a very long time and there were many times where at the retail level on the street, our branches on some product lines couldn’t be competitive unless they basically sold at their cost or at a little bit below cost. But because like the Fleet Pride or the truck or the Traction Heavy Duty up here in Canada owned the PDC, they were making margin from the manufacturer to the PDC and then they were making margin from the PDC to the retail.
So if we sold that, let’s say at cost, they were still making that 17 points between let’s say the PDC and the aftermarket retail store and the company owned both of them. So almost becomes a function of accounting as to what someone would normally think. So there’s lots of things going on behind the scenes there with all of that and it’s interesting to see that the overall structure is very similar from the dealership to the aftermarket. Let’s talk about the way that sales and purchasing interact with one another.
So when I was in sales on the aftermarket side, both as a sales account manager and as a manager, I very rarely, if ever talk to what we call procurement or purchasing. Why is that and what disadvantages are created? Does that carry over to the dealership world as well?
Absolutely. I always get this complaint from outside salesmen, our price is too high and we never have stock and it’s like, well how about you do this? Tell me what your market potential is for this given product and give me some competitive information that I can take back and go buy differently.
For me, I started at a small dealership where I was heavily involved with sales and I did at the time a hundred percent of the purchasing or close to a hundred percent of the purchasing. So if there was ever an opportunity for me to quote on a customer, I could then directly go back to my supplier and say, this is what my potential is.
If you can get me to this price, I will then buy that quantity and if we’re doing your research properly on the street and get a real idea of your market potential, you can buy properly so that you’re not putting in an eight or 10 month supply. You can maximize your discount from the supplier and go to the street with number one, a competitive price but also a profit margin that’s acceptable for the company.
Yeah, let’s talk about profit because otherwise we get into this race to the bottom on price. I know from the aftermarket side is we would buy stuff at X price and then we had multiples off of that, so we had a list price generated, then we had five discount levels. I’m sure it’s pretty similar in the dealer world.
The problem with that of course is that sometimes we give away profit unnecessarily and that’s where that communication with parts and sales has to be there because let’s say you can go and do a discount buy, well, we don’t want to just give away all of that discount if we don’t have to. We want to try to make some money as well. So I’m sure that this two-way communication is absolutely essential. Why is it not happening more? Like what’s going on there?
You have to always be willing, if there’s a customer that’s looking for 20 starters on a one stock order, you don’t want to walk away from that deal because that always allows you to continue your buying schedule to buy even deeper or higher quantities for a deeper discount. And it also allows you to do more frequent stock orders so that you’re not loading up your, so that your warehouse guys aren’t coming to you when the order arrives saying there’s not even close to enough shelf space to put this on the shelf.
So you want to be able to make those deals for the guys that buy big quantities, but you also want to use those big quantity sales to influence your acquisition costs so that the guys who are buying less frequently, you can also discount those guys a little bit and make sure they’re not going to your competitors, but also keep a couple points in your own pocket because everybody has an average gross profit that they need to stay at, but everybody has sales numbers that they need to hit too.
And if you can merge those two things together, you can get the best of both worlds. You can really have your cake and eat it too. You can meet all of your sales numbers but also hold onto to an acceptable gross profit.
Yeah, makes perfect sense. One of the things that used to happen that was very frustrating for salespeople and parts people actually at the local level was depending on the size of the organization, a lot of times procurement is being done somewhere else and I was personally in situations where I would get to my customer’s door and my customer had been emailed like a promotional email and he’s asking me about product and we don’t even know that it was purchased. We didn’t even know that it was coming.
That kind of lack of communication, that breakdown of communication between procurement, purchasing and sales and the local stores. It didn’t happen too often, but it did happen enough that it was a frustration and when I talked to my counterparts at that level, they all said that it happened to them too.
That’s one of the disadvantages too, when you don’t have this two-way communication between these departments, your go-to-market strategy gets messed up and that looks bad on the company, looks bad on the individual people because you think you’d say to yourself, well as a sales guy shouldn’t you know and it’s like, well, I should, but if nobody tells me how am I supposed to know what I mean?
Have you ever seen stuff like that happen on the dealership side? Come on, be honest. Be honest.
Happens all the time. I wish it didn’t happen as often as it does, but if somebody puts PTO on a sales flyer, then maybe they got a great deal several counties away and they got a market for that PTO or something like that that not everybody’s an expert at and some guy calls you for a PTO that you have on sale and you don’t even know who the supplier is.
You don’t even know what the source to add the part number into your system is you don’t even know where to buy it. Maybe you got it from a secondary supplier, something like that. So it happens all the time and it really makes people look bad.
Good. So it’s not just an aftermarket thing, it’s dealership too. Hey, give us an idea for those who don’t know, talk about general product group discounting. Let’s say if you’re buying from Bendix or Delco, what is that? How does it work? Just give us a little bit of insight into that.
So if I’m going to buy, let’s say Bendix or Delco, first of all, I do my due diligence and make sure that none of those part numbers are set up to buy from the PDC, right? I had an example of this last week where we’re selling an OEM starter and there and we were selling 40 a year and all I did was type in the direct ship number versus the OEM part number and it was like 12% savings just right off the bat, even without an extra discount.
So I mean that was my mistake, probably got a little bit busy as we’ve been over the last couple years that I wasn’t doing my research, but I want to make sure that all those part parts are grouped.
Next thing I want to do is take a look and maybe I’ll take my, if you’re looking at a source Bendix where you maybe take your top 15 parts or top 20 parts and look for additional discount from whoever your supplier is on those, maybe you’ll tell them that, Hey, if I’m able to X discount, I’ll commit to buying X amount per year.
You can do the same with something like Delco Remi, where the group of parts that you’re looking for a discount is a little bit smaller now with all the proprietary engines that’s actually expanding versus where it was 10 years ago. But you can also work with those guys and say, Hey, this is a common Freightliner starter for a DD15 engine.
There’s a million of those trucks in my OR and if I can get to this price then I can sell X amount per year. And most of the time, especially with a little bit of a slow start here in 2023, suppliers are willing to work with you on price, especially if you can show them that you’ve got the volume in sales to back it up.
Yeah, that makes sense. I think it’s obvious to people that if you don’t have enough inventory, you can’t supply a part to a customer who needs it, that’s bad. But what about overstocking? Because overstocking is bad as well. Why and how do you avoid it?
Is a major problem. First of all, ties up company cash that they could and should be using elsewhere. At my dealership, my warehouse is we only have so much space and there’s been times where we’ve had to put stuff outside. Then it becomes, whether it’s for a week or a couple weeks or even for a night, then you expose it to the elements. Just having a product come out with a layer of dust on it eight or nine months from now.
Or the box is wet and then you know, go to pick up a compressor and it falls up the bottom of the box because the box is soaking wet. Stuff like that.
It’s really bad that you know this because it’s, it’s not a daily occurrence, but it does happen. It’s really what we’re going back to earlier. It’s a lack of communication between the sales staff and the buying staff I guess is you have to be able to judge your market and you have to be able to plan to sell an order before you even make the buy.
I always say to the people higher up, I would never buy a product that I didn’t already have a plan to sell. And when you stretch those out and you make them make what should be a 2, 3, 4 month supply into an 8,9 month supply, your leash is going to get a lot shorter as far as what your freedom is going to be able to do to buy in the future. And you certainly don’t want that.
You certainly want to be able to always be working with your today sales staff is hey, this is supposed to be a three to four month supply and it’s not moving what’s going on, and you can get some answers that way, but it’s also a thing where you can come up with some great sales ideas of stuff that you bought and product that’s on the shelf that’s not moving.
Yeah, no, that makes total sense to me. And this is also going back to last week’s episode where we talked about redistribution, the need for it right now and going back to what you said about where right now we have some product lines that are on back order, other ones are overstocked.
There is only so much inventory in the ecosystem here in North America and it needs to be distributed correctly so that the trucking outfits wherever they are can get access to what they need. The worst thing that can happen is to have a truck that’s down 200 miles from here because you’ve got six things in stock that you don’t need and you don’t know about that truck 400 miles away or 200 miles away.
It’s like you got to try to connect the dots somehow and get this inventory in the hands of the people who need it to avoid downtime. So yeah, this is really important. Okay, let’s talk about KPIs, key performance indicators that should be looked at when analyzing stock orders. So when you’re looking at I want to put a stock order in, what are you kind of focused on the most that’s what I really want to know.
For me when I’m looking at a stock order, I want to know about sales potential. So I want to be able to say if I’m looking at a buying some airbags, do I know what those airbags go to? Do my outside salesmen know what those airbags go to and what is a realistic expectation on sales before I make this? So yes, I’m always looking to acquire a lower price if I can get whatever percentage off from my supplier, but I’m also looking to buy so that as rarely as possible, we lose sales on that specific product group.
As rarely as possible. We don’t want to ever lose sales.
And it’s a great deal for scheduling too. If you know that your discounts are right, if the parts within that product group are moving, it’s a great thing to be able to schedule your direct ship purchases so that every six weeks I order this supplier, every eight weeks, I order that supplier. Being able to put it on your calendar so that you’re not dropping the ball and completely running out of a product group.
Yeah, yeah, makes sense. Let me ask you about this whole thing around what products fit on because from the aftermarket world, of course we don’t have the VIN lookups like you do, but as soon as you step outside of your particular badge and you go all makes neither, how do you correlate the inventory I’m buying with the equipment in my given region?
Working at the dealership you kind of have an idea what fits your OEM product, so you kind of have an idea how that’s going to work out. And then once you find that this common air disc brake pad is common on steer axles for Freightliners, then you have to take a look at your customer. How many of my guys are independent repair shops that are working on that truck? How many of my fleets are either mixed or even a hundred percent Freightliner that’s working on the same thing?
And just because you can’t look up a product by the VIN number, you can many, many times find products that’ll fit and not just fit may even be OEM products for that particular truck. And as long as you’re taking a realistic look and you have real pricing competitive information on the street, there’s no reason that you can’t continue to buy those and even sell, buy and sell ’em in large quantities too.
And this is again, another emphasis on the need for parts and sales to work together, right? Because the salespeople are instrumental in getting those fleet surveys done and understanding what equipment is in the marketplace, not just that understanding what the equipment as it’s changing because I know for example, when I was selling parts back in 2016 in my area, there was a commodity crash on the price of oil. We work in an oil field province, so all of a sudden fleets were out of business and so they didn’t want to go broke, so they started rigging up their trucks for logging.
So all of a sudden trucks were getting sold, new trucks were being bought, new trucks were being rigged, and the whole complexion of the local fleet was changing and as a salesperson, it was my job to bring this information back to our company and say, look, the mix is changing, we got to update our inventory. But without that communication, purchasing can be a little blind to what’s going on in the marketplace.
And that’s a great example of maybe the downside of some really bad things that can happen and that’s if you have maybe a small group of customers or even one customer that you rely on for a sales of a certain product, you can really leave yourself holding the bag of inventory that not only do you not want anymore, you have no use for at all anymore. But it goes on the opposite side too.
I bring this up sometimes to my sales staff and I still have a certain amount to do with selling too, but I have kind of a strategy called inventory pressure where maybe it’s a air disc brake pad, Hey guys, I got this awesome price, I’m bringing in 300 and I don’t want these sitting here four months from now, I’m giving you an awesome deal.
You guys always complain to me when we’re out of stock or the price is too high. Now I’ve got you a great deal that you can go out and sell to lots and lots of customers and nobody can beat our price. It’s up to you guys to move the product too. So it really goes in both directions.
So it’s you, when I was selling at aftermarket, it was people like you that were sending dealership salespeople into my territory, dumping mass amounts of product and messing things up for the aftermarket. Okay, yeah. Now I understand how that game is played. Yeah. Well every now and again we do that back to you. So the ebb and flow of dealerships at aftermarket, right?
Yeah, it makes it fun.
You’ve been listening to The Heavy-Duty Parts Report. I’m your host, Jamie Irvine. We’ve been speaking with Daniel Wessels, he’s a Parts Manager. He’s been in the business since 2005 giving us a behind the scenes look at what it’s like to be a parts purchaser at a dealership level, A lot of correlations between the dealership and aftermarket. We even at one point had a candid conversation about how those two entities will go to war on the street.
This was a great conversation. Really appreciate Daniel taking the time and giving us his point of view, his perspective and his expertise. You can connect with Daniel on LinkedIn. I’ve included links in the show notes so you can connect with him directly and it was great to be able to hear from the dealership side. So Daniel, thank you so much for being on the show.
Thanks a lot, Jamie. Thanks for having me back on.
We’re going to take a quick break to hear from our sponsors. We’ll be right back.
Don’t have a heavy-duty part number and need to look up a part? Go to parts.diesellaptops.com or download the app on Apple or Android to create your free account.
Looking for high-quality fuel injection for heavy-duty applications? Having one supplier for fuel injection allows you to better serve customers by providing them with a complete line which increases your sales and profitability. Learn more at ambacinternational.com/aftermarket.
Parts availability and quality have a big influence on fleets and owner operators’ total cost of operation. If they can’t find a part, it means more downtime. If they install a low quality part and it fails, it means even more costs like tow bills, hotels, meals for the driver and lost revenue. That’s why we recommend Sampa. They manufacture a wide range of advanced parts for commercial vehicles. Their website has an intelligent product search engine and broad coverage of suspension, steering and fifth wheel components. Expect More. Expect Sampa. Visit sampa.com today.
Yes, you’re still listening to The Heavy-Duty Parts Report. I’m Diana Cudmore, Chief Marketing Officer, and while Jamie was off jet setting to HDAW and TMC, I got to check out a few trade shows here in the Midwest. First up was Work Truck week, which kicked off with a keynote address from Cummins, CEO, Jennifer Rumsey.
How do we see the technology transition playing out in the coming decades? We really view this in three phases of driving towards zero carbon future. In our first phase, which we’re in now, we need to really focus on advancing a range of solutions. We must start today by reducing CO2 from diesel solutions. It’s not always popular to say diesel plays a role in decarbonization and our view is it does. If we can reduce CO2 from diesel engine solutions today Cummins sold 1.2 million engines diesel engines year, it will matter.
Those engines will be out on the road for many years. Second, we do need to invest in innovation and advancing lower and zero carbon technologies, whether it’s alternate fuels that will burn in diesel engines or it’s the solutions that can get us all the way to zero like battery, electric powertrains and fuel cell electric powertrains and start to drive adoption in the applications that makes sense.
Begin to build up infrastructure to support those applications, decarbonize that infrastructure and by doing that, we’ll drive innovation and we’ll drive scale and we’ll begin to bring the cost of those solutions down and build out the infrastructure.
Then I stop by the Kenworth booth to celebrate their 100 year anniversary.
Hi, I’m Shawn Henbury with Kenworth Truck Company. I’m our Powertrain Marketing Manager. We’re here in the booth today at Work Truck Week 2023 and it’s Kenworths hundred year anniversary. So we have some vintage trucks in the booth, one from 1926 and then we have our full line of new medium duty trucks as well as a Kenworth K 370 E, all electric Class 6 truck.
Not long after work truck week, I drove down to Louisville, Kentucky to the MidAmerica Trucking Show where I met up with Justin. Let’s see what he has to say.
Well, my name is Justin and our company is called Ezpapel. So we are a AI power cloud operating system to help trucking companies start and scale their business by leveraging AI to automate the daily repetitive and manual tasks. The biggest pain point is converting trucking company to become a technology company, but also we’re able to connect trucking companies with direct freight. The biggest pain a lot of trucking companies are suffering right now is not having access to high paying freight.
So we’re able to leverage technology to connect trucking companies by knowing their capacity and ensuring them to loads that they may not have access to. We target company bigger than 10. It could be as companies that work with us have trucks as many as 250, so anywhere between 10 plus trucks we’re we’re able to help. And that doesn’t mean we don’t help any company smaller than 10.
If you have less than 10, feel free to use our platform as well and we can help you to scale at a faster pace. I have a degree in mathematics, but I never did anything related to math. I was working for Amazon as an ops manager after college, stayed there for about a year and that’s when my dad asked me, Hey, you want to help me? I’m like, sure. I help him scale from 3 trucks to 50 trucks. I couldn’t find a tool to really do what I wanted to do.
So what I did was being a problem solver myself, I created a tool myself, but leveraging the tool would became not just a trucking company but a technology company and leveraging that, we’re able to grow very quickly from 3 to 50, and now my goal is to help other company companies try to do the same thing that I did for my dad.
A lot of trucking companies owners are spending their time doing the repetitive task. I often categorize them in two categories. The data entry type, if you put those a $10 task, right? The important task is finding customers as a hundred dollars. In the first 90 days, we can help owners to not focus on a $10 task so our system can automate those for them so that they can focus on a hundred dollars task by funding carriers, by doing things that matter to the growth of a company.
So I think that’s what we can help the most in 90 days for them. For any trucking company that’s looking to grow, scale their business, even if they’re not looking for a software at the moment, feel free to reach out to us. We’re more than happy to share tips are a goal to help you grow. When you grow to the point where you need us, then we can come here.
Then I met up with Jason at the Triumph Booth to talk about the economic state of the trucking industry in 2023.
My name is Jason Mullican. I work for Triumph, the factoring division, and I lead our sales team. We are at the MidAmerica Truck show, the mecca of the transportation industry and just excited to be here. It’s no surprise, it’s been a very tough year. It’s last 12 months, and I think a lot of it has to do, it’s a trickle down effect. I mean, you start with inflation. Inflation has affected purchasing power. Purchasing power has driven down demand. Demand has really led to lower supply levels, so less freight is actually moving right now.
We had excess capacity in the market with the influx of all the new entrants in the last couple of years, and now we have additional excess capacity, which is leading to some failures in the transportation space. The number one thing a trucking company needs to know are what are my costs? What are my fixed costs? What are my operating costs? Because that’s going to come into play, especially as the freight rates are trying to find the bottom and starting to pull up just a little bit. How can you weather the storm? Do you have a little nest egg for a rainy, rainy day?
The transportation industry goes through these cycles every seven or eight, nine years, and we’re in one of those down cycles right now. And so hopefully just learn from your past and what mistakes did you make? What right moves did you make? And kind of build upon your own experience. And then when you’re out there looking for solutions, look for someone who’s been around a while.
Look for a company that is a solutions provider. Be strategic, intentional, know your costs, know what your operating costs are, and pick a partner that’s been there, done that, that’s been in this market for some time because you’re going to need a partner to navigate these choppy waters. Triumph has mostly been known as a factoring company, but really for the last 10 years, we’ve also offered insurance solutions, equipment finance, fuel discounts, banking and treasury services. So we’re much more than that.
Next I headed back to the MATS stage to hear Hans and Natasha talk about cutting hidden operational costs.
Hi, I’m Hans Gallen, CEO and founder at BeyondTrucks.
I’m Natasha Martinez, head of Customer Success.
We are at MATS in Louisville, Kentucky, woo, yay. Beyond Trucks is the first fully integrated process automation platform for medium size and large fleets. We replace traditional transportation management systems.
Ideally, we are looking for carriers within anywhere from about 75 to maybe even up to 500 drivers.
And we specialize in general freight, refrigerated freight, and we’ve become more and more specialized in liquid and dried bulks. So what we find with many medium sized and large fleets is that the data they have in their business is very fragmented and the tools they have are very fragmented. This results in their workflows, their processes being broken, and as a result of that, the information flows being broken.
That creates a lot of hidden costs in the operations of a trucking company. That could be the cost of continuously or repeatedly, manually entering data can be the cost of making many human mistakes, and we all make mistakes, but because of the tools many trucking companies use, they make more mistakes than just the average human. Many cases, and it could be in the form of driver turnover or customer turnover.
When the customer is unhappy about your service your delivery times or any other of your KPIs, you get scorecarded on. So in some broken workflows result in broken data flows, result in a lot of cost for trucking companies, and by building a fully integrated process automation platform to replace old tools, including the TMS, we make carriers much more efficient, cutting out on average about $10,000 per driver per year in hidden costs.
The issue today with the fleet management systems is that they’re very old and they worked very great 20 years ago when they first came out, when there was no actual automation at all there. Today the problem seems to be is that you’re having to add additional manual work on top of that to be able to continue to grow and maintain what you’ve got going on today.
So for instance, Excel spreadsheets, whiteboards, magnets still printing out paper because your current transportation management system can’t help you and can’t help you grow and get to where you need to. And the unfortunate part about that is there’s not one source of the truth, and because of that broken system, you’re having to add more people behind your current processes.
So the first 90 days working with a fleet actually starts before someone signs a contract. It starts with us spending sometimes a day, sometimes three, sometimes five or seven days in their operations, mapping the processes and workflows that the company uses and having conversations with people who do the work on an everyday basis. Natasha does all this early work in implementation and she can talk more about what it means during the first 30, 60, and 90 days to go live with us.
Sure, so the biggest important part about starting with that, the actual individual doing the work is that starts there with their buy-in, and that’s part of the change management. So it’s not just putting in a whole new process and I’m getting brand new software. You’re actually starting with change management because it is change for the good. They’ve already got a different feel. They realize that we’re not there to take their jobs away, we’re there to make their jobs easier, to make it more efficient. They actually leave super excited and happy.
Everybody is part of the process. So it’s not like I go in, I see everything, I walk away, I come back and here you go, this nice new shiny object. It’s actually a process that we work together as a team and ultimately our goal is to make their lives easier, get them to save money, make the implementation super easy, and by the time it’s ready to go live, everybody already understands. Everybody knows, they feel it, and we are basically part of their team.
How do you pick your provider is find out where they generate value with you, and especially with a transportation management software provider. You need to be comfortable with the people, the team, and you need to make sure that this is going to be not just not just going to be a credit card transaction. It is going to be a relationship over the next years, sometimes decades.
I think we pride ourselves in our team specifically. We’re very diverse in the team that we have. We are not just a technology company trying to sell, and then the next widget, we pride ourselves in making sure that we can understand the business so we can help make the right decisions for them. And again, it’s like a partnership. It’s a team. It is not a transaction for us.
Finally, I headed over to the veterans section of the show and met Bruce. Let’s hear about his mission.
Hi, I’m Bruce Townsend and I’m from Employer Support of the Garden Reserve. ESGR is an office within the Department of Defense, and our job is to advocate for all the reserve component service members in the United States military. That’s the Army Reserve, the Navy Reserve, the Air Force Reserve, the Marine Corps Reserve, the Coast Guard Reserve, and the National Guard of the Army and the Air Force. We call those the seven seals.
The reason ESGR exists, and we’ve been around since 1972. We were formed at that time. It’s just about the same time that the United States went away from a draft military to the all volunteer force that exists today. And at that time, the reserve component of the military was what we called a strategic force, meaning that they would be called up in time of national emergency or combat. But 50 years on our reserve component is no longer what we call a strategic force.
We’re an operational force, and pardon me for saying we, I’m retired from the Army Reserve, so I still consider myself one of the team, but the operational reserve component means that our reserves and our National Guard members are constantly being called upon for training, for deployment, for help with domestic disasters.
In the case of the National Guard, like forest fires and floods and the reserve components train with the active component all over the world, both for combat support and humanitarian service missions around the globe.
The reason we’re here at MATS, the MidAmerica Truck Show, I got invited to come here last year as part of a panel of speakers talking about hiring veterans into the trucking and transportation industry.
And I realized that ESGR needed to be here this year because a great deal of our reserve component service members, their civilian job is in the transportation industry, whether they’re driving a truck or they’re loading trucks or they’re working for a logistics company that helps move things all around. The great country that we have here, and of course a lot of them help our military people move from one place to another as well.
So it’s an amazingly patriotic industry. We absolutely love the truckers and the trucking industry, and a couple of large trucking firms here represented here this year have won our highest award that the Department of Defense gives out every year to the civilian employers. It’s called the Employer Support Freedom Award from the Secretary of Defense. Every company that wins it gets a letter signed by the Secretary of Defense.
We give out 15 a year out of anywhere from 1500 to 3000 nominations we get from across the country every year, only 15 winners. So they really, really are great patriotic supportive companies. The trucking companies that hire our Reserve component service members and keep them on the payroll when they have to go away for their training or for a deployment, whether it’s two weeks, six months or longer.
We love those companies because they keep our reserve component people employed that job security. The way we help out the trucking company, of course, is because we also work in the veterans arena, the trucking industry, transportation industry loves to hire veterans. And of course, all of our serving Garden reserve members, they are veterans in and of themselves and their family members work in the industry as well. It’s a really symbiotic relationship. We love the trucking and transportation industry.
They love us. Everybody’s happy. If you own a company and you want to hire more veterans, there’s a couple of different ways to do that. Now, ESGR we are actually not an organization that helps people in hiring that is actually belongs to the Department of Labor, and the Department of Labor does a wonderful job with that. However, we can assist in helping a company steer in the right direction to the other organizations that are constantly looking to hire veterans.
And the best way to hire veterans, if you’re watching and listening to this, is a veteran who already works for you, especially a newly hired one, and ask him or her to refer you to their friends in those other organizations. Because we’re a brotherhood and his sisterhood, we take care of our own, and it’s always, always best to come from within. That’s the best way to do it. I’m honored to be here at MATS. It’s our first year ESGR is exhibiting at MATS.
We’re going to be back again next year, and we love the opportunity to come out and meet with private industry, especially industry that is so supportive of Garden Reserve members of our active component and our veterans, and very, very importantly their families. So thanks for letting us be here and speak to you today.
Thank you to the guests who are interviewed on this episode, and thank you to the organizers of Work Truck Week and MidAmerica Trucking Show for letting The Heavy-Duty Parts Report attend.
If you haven’t already, make sure you head over to heavydutypartsreport.com and hit that follow button. You’ll be signed up to our weekly email. You’ll never miss out on any content. Also, if you’d like to watch the video version of these interviews, then head over to YouTube and hit that subscribe button and of course, follow us for free wherever you get your podcast. Thank you so much for listening today, and as always, Be Heavy Duty.