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Podcast

The Generational Transformation of the Heavy-Duty Parts Industry

Learn what it takes to stand out among the crowd in the industry’s ever-changing environment.

Episode 280: Get ready to explore the evolution of the heavy-duty parts industry with guest Chris Bischoff, President, Global Sales of United Pacific. In the first half of our conversation, he shares his insights from years of experience steering a leading company and helping countless distributors, dealers, retailers, and e-commerce sellers.

We take a look at the advent of drop shipping, once considered taboo, now a crucial aspect of the business. Chris emphasizes the role of heightened customer expectations, warning that dealers who neglect customer experience may risk becoming obsolete.

The second half of our conversation turns toward the future, discussing how modern technology equips dealers to create a seamless customer experience, outpacing competitors and boosting user confidence. Chris gives a behind-the-scenes glimpse into how his company uses technology, automating processes to augment production and expand product range.

With a younger generation stepping into the arena and competition intensifying, the future of the industry depends on suppliers keeping up with changing customer needs.

Chris Bischoff, president global sales of United Pacific. In this episode, learn what it takes to stand out among the crowd in the industry’s ever-changing environment.

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Transcript of Episode

Jamie Irvine:

You are listening to The Heavy Duty Parts Report. I’m your host, Jamie Irvine, and this is the place where we have conversations that empower heavy-duty people.

We’ve seen a lot of changes in the way heavy-duty parts are distributed for decades now. The traditional distribution model has been the way that manufacturers got their products into the hands of end users through distributors and dealership groups.

But technology is changing the game, and we’re going to talk more about that today. I’m very happy to have my guest today. His name is Chris Bischoff. He’s the President Global Sales of United Pacific. Now, Chris has been in the heavy-duty industry for over 16 years.

He’s helped thousands of distributors, dealers, and retailers and e-commerce sellers experience sustained double digit growth. I think when we’re trying to put a digital sales channel together as a company, we’re looking to sell more product of course, but we’re also looking to make it a great experience for our customers and give them what they actually need.

So let’s talk to Chris about exactly how to do that. Chris, welcome to The Heavy Duty Parts Report. So very glad to have you here, sir.

Chris Bischoff:

Good morning, Jamie. Thank you for the invite. Looking forward to our conversation today.

Jamie Irvine:

So I wanted to talk to you about the trend of drop shipping. Let’s kind of start with the history of it. When did drop shipping even become something that was a reality for the heavy-duty industry? How far back do we have to go before we can find a time when drop shipping was possible?

Chris Bischoff:

Well, it’s always been possible. It just historically, if you go back even 10 years in heavy-duty, there weren’t many vendors or manufacturers that really focused on providing that as a service. Drop shipping used to almost be taboo in that dealers were expected years ago to have an AOR area of responsibility or some protection.

Let’s say you’re in Atlanta, then you might be given a 50 mile radius in terms of that was your area. And there might’ve been secondary and tertiary dealer setup. But one of the things to kind of protect dealers, it was kind of like, well, we can drop ship, but we really don’t want to. Why don’t you want to?

Well, because often the dealer would sell to a customer outside of his AOR, and that created conflict. So the guy in Atlanta had protection. Well, he might be drop shipping or want us to drop ship to a customer in Columbus, Ohio, and the Columbus, Ohio guy may find out about that.

So years ago, drop shipping was kind of taboo. It was offered as well, we can kind maybe help you, but it really wasn’t mainstream. And that was kind of the old school thinking back then. And as you mentioned in the onset, the way people access and source products, both wholesale and retail, it’s completely changed and entirely the web is exposing more and more people to products.

So history they say always repeats itself. Well, in this case, I don’t think this one’s going to, I don’t think we’re going to go back to traditional distribution.

We’re going to have to grow and adapt to what’s being done. And because of the wonderful thing, some people say, it’s not so wonderful, but the wonderful thing of the worldwide web, so that’s a little of the history for you.

Jamie Irvine:

And as you were discussing or describing the dealer situation, it made me think of the aftermarket side.

So twice in my career I was a sales account manager for national distributors, and we had our corporate stores and we also had our associate stores, and we all had our territories, and it caused a lot of conflict if all of a sudden one of those associate members started dumping brake shoes or a transmission or something into our area because that was viewed as taking a sale away from the corporate store.

So I think that that culture has been, or that viewpoint rather, has been present in both the dealer side, the OE side and the aftermarket side.

Chris Bischoff:

And further the wholesale sellers like ourselves. We would always come up with excuses. I can remember years ago we’d get drop ship orders and it was painful. We were used to pulling pallets, shipping pallets, shipping pallets on one drop ship order to come in. It changed the whole way we had to respond.

We had to stop the train. We had to let the guy out to go pick one product, manually put it in a little box. How do we price it on shipping? It was just, we were so against it that we just discouraged it almost. And of course dealers would say, well, I really need to drop ship this.

And I can remember our CSR saying, well, we’re going to have to charge you all kinds of freight and we’re going to charge you all kinds of fees. So were disincentivizing a dealer to do that. Of course, now if you think that way, you’re going to be 10 or 15 years behind in everything, not how you got to look at it now.

Jamie Irvine:

Well, and I can understand. I mean, I used to work at a manufacturing company and I understand that you have things set up to ship in bulk and to ship to your customers who have warehouse distribution centers, and then they’re responsible for breaking that order up and sending it out to their locations. The whole idea was let’s get the inventory on the ground near the customer.

But it’s impossible to get the complete inventory for an area. You’re always going to have about 20% of the orders coming through, stuff that you don’t have in stock at the local level. And when we think about things from terms of like, well, it’s inconvenient for us or it’s more expensive for us, what we’re not doing is we’re not thinking about the actual customer and their experience and situation.

If they’ve got a truck down and they’re relying on that truck to feed their family, they don’t really care about your inconvenience. They just need the damn part.

Chris Bischoff:

That’s it. And we’ve always worked through dealers. That’s the way that we want to continue to work in the future. That truck parts business, were not retail, we don’t sell direct. So as we were seeing more and more requests from our dealers to drop ship, we had to make a decision.

Do we stay with the old way and kind of push back? Or do we try to figure out how to be a front runner coming up with a new way to service that type of transaction we get with our dealers? So we started thinking about this about seven years ago, and what it really meant was we had to modernize a lot in our fulfillment, not just an attitude change, that’s where it started.

But we had to be able to say almost like, what if our entire business was one or two lines and what would that look like instead of X number of transactions a day, now it’s tens of thousands.

We had to think about what would the infrastructure look like to support something. We’re not there today, but as we are a leader in new products, we wanted to be a leader in fulfillment and certainly, and then with this program we call assured one day drop shipment. And that meant a lot of money out. It meant equipment, it meant a lot of time.

And what we learned, and through Covid especially, was people loved to shop on the internet. Now they’re forced to be at home. So the internet sales for a lot of industries blew up. But if we hadn’t made that leap in our thinking in our investment infrastructure and automation, we would’ve not been able to capture the business in Covid that came in.

And we certainly wouldn’t be in a position for the future now to give our dealers what I believe is something that not too many people in heavy- duty can is one day assured drop shipping, when they send an order in.

Jamie Irvine:

Bear with me on this. Let’s talk this through. I’ve got this idea and thinking something through, really thinking something through all the way through, it’s actually a lot harder than it looks on the surface. So here’s something I’ve been working on, and you tell me if you think this is right.

We have the largest group of people in our population, the baby boomers, the youngest baby boomers are going to be exiting the workforce basically by 2030. There’s less younger people than there are baby boomers. Baby boomers have 30 to 40 years of experience plus, and they’re going to take that experience with them.

So when they exit, especially this trend’s going to accelerate over the next few years. The people left behind the Gen Xers like me, the millennials, the Gen Zs, we don’t have as much experience as they do, and there’s going to be less of us.

And what does that mean? Well, that means that we’re going to have to try to get the same amount of work or even more work done with less people. My theory then, or my hypothesis is that productivity is going to be the competitive landscape of the future.

The company, the supplier that makes their customers and their customer’s customers, because guess what? End users are in this exact same position. Technician shortage, driver shortage, et cetera. The supplier that makes their customers more productive is going to win in the near future.

And so any company that invests in that, in making their customers more productive, they’re going to be in a position of strength going forward. Now, I haven’t thought that a hundred percent through, I’m still mulling that over. I’m still working on that idea. But does that resonate with you? Do you think I’m on the right track?

Chris Bischoff:

Well, obviously I think that’s a really good insight that you have, and it kind of parallels how we’ve been thinking the last few years is everybody can sell on price and everybody can sell on relationship. And I’m not saying those aren’t important.

They’re very important, especially in a wholesale pass through dealer model. But nobody ever talked about fulfillment. Nobody ever talked about the value proposition when you sell, including how quick I can get it to you, or nobody even ever said how quick I can get it to your house. Jamie,

I’m a baby boomer, and the way we used to go to work was to get things done and we’d roll up our sleeves, go grab everybody, and we would just apply what we knew to managing the business and so on. And today, you’re exactly right, there’s less people coming in that have got that experience, kind of the old school way of running the business.

But what they do have is some great technical insights, great training and software they grew up around automations and so on, even though there’s less of them, they’re going to bring this different skillset, which I think aligns very, very well to creating productivity and then going to the dealers and explaining to them what you now have as a service.

A modern day service, if you will, kind of sounds funny, but is the ability to be their service arm to take their order and to deliver it on their behalf. And the second of part of that, of course, is now you can sell, instead of 2000 of my items, all they could stock, they could sell 12,000 because I’m going to help ’em ship the other 10,000 that they don’t have room to stock.

So really, you’re exactly right. It’s not about price or relationship as much, even though those are key in any business transaction, but it’s about fulfillment. And I can be a productive service arm for your business all behind the scenes. I’m not trying to be you.

I’m not trying to take your brand or take business. I’m here to service your customer in a way that you would expect one day delivery. You get the tracking number, customer gets this package, two or three days later, your dealership gets a great reputation and everybody wins.

Jamie Irvine:

What do you think about this, Chris? I also have this idea that in order to be competitive in this business and actually have a value proposition, you can’t put forward what I call barriers to entry into the business as if that in some way differentiates you. So let me explain.

If you come to someone and say, hey, we have experience, meaning we know what we’re talking about, we’ve got a wide range of inventory sold at competitive prices, and we’ve got great people that give good customer service, if that’s your value proposition, well guess what?

That’s everybody’s pitch. And that actually isn’t anything differentiated at all because those are the barriers to entry in the business. Try being in the business and not having a competitive price, or not having inventory or not having good customer service or not having experienced people, guess what? You won’t be in the business very long.

So those are the barriers to entry. So what I hear you saying is that this is an opportunity to leverage technology, make people more productive, and get more of the parts that the end users need to keep their equipment running and making money and keeping this great country going. Because guess what, trucking’s the backbone of society.

This is a method where we can take the best parts of the traditional distribution model, keep those, add technology, and put forward a better experience for the customer, for the end user, which at the end of the day should be the name of the game for everybody. Do I got that right?

Chris Bischoff:

Yeah, you’re hitting it spot on for sure. I mean, think of simple transaction. A driver goes to a dealer, whether it’s a brand dealer or an aftermarket chrome shop. In our business we call standalone retailers, Chrome shops, and he really wants X, Y, Z product from United Pacific. The dealer used to say, oh, I have to call them in first, see if they have it in stock, and then how much is shipping? And I need to get back to you on that.

Well, today’s world, the guy’s going to leave. He’s going to go out, get on his cell phone, look on the internet, and he’s going to start to find it in probably a dozen places. So we had to be able to kind of say to the dealer, you’ve had that happen before, right? Yeah, I have. What if we could give you a program that would not only just ship that product, but you could have online access to whether we had it in stock that day.

How cool is that? Because now with confidence, you could say to the guy he’s ready to buy, but instead of say, hold on, I got to call and check, you’re right there. You dial up our dealer portal, you check online, you see your price. So you know that, sometimes you got to look at the price tape, you see we have it in stock, and now you can confidently say, yes, sir, let me take your credit card.

We’ll get that directly to your house. It’ll ship out tomorrow, should have it in two or three days. So the whole, as you talked about, differentiating yourself becomes truly a unique experience for the end user. It becomes a catalyst to capture higher sales and grow end user confidence.

And often if you’re doing that and somebody else in town isn’t, you might be taking that guy’s customer. So really, I’m all about competition. Set somebody up next to me is going to give me more fuel and more fire, but give me tools to run.

So we want to give the dealer tools, we want to guarantee this one day shipment. And you’re right, productivity and shipment and how fast. Those are the first words out of my mouth when I sell. It used to be, hey, I’ve been selling for 30 years, you’ve been buying from 30 years, let’s go to lunch and talk purchase order.

Or if you buy a 500 instead of a thousand, the price is this. But if you buy a thousand, the price is that. I’m not saying those don’t come up. That’s not the lead in for us anymore. We have to lead in a different way.

Jamie Irvine:

Yeah, no, this is absolutely right. And to your point, it’s not just the loss of a sale on one part, but the minute that they go to somebody else, chances are they’re going to buy other parts from that person too. Because if they have a great experience and it goes really well and they get the part really fast, where are they going to go next time? Right.

Productivity, again, time is a sweet, precious resource for everybody, and they’re going to hit that easy button every time. We’re going to take a quick break, we’re going to hear from our sponsors, and when we get back, we’re going to learn more about your company and what you’ve been doing. So we’ll be right back.

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We’re back from our break. Chris, great conversation with you.

Before the break, we were talking about the trend of drop shipping using technology, improving your customers buying experience, and differentiating yourself in the market. That’s a really great conversation from a high level, but let’s get down to some of the details. First of all, what kinds of products does United Pacific sell?

Chris Bischoff:

Yeah, we are known in the heavy-duty market as the chrome guys, if you will. It’s all the fancy bling bling, the fancy lights that you see. If you open up some of the trucker’s cab, you’ll see everything’s got chrome on it.

The toggles, the gauges, there’s trim on steering wheel columns, there’s colored steering wheels, there’s all kinds of fancy shift knobs. There’s little party lights that a guy can hang in his sleeper if he wants. There’s exterior trims, stainless trims to make the truck look more hot rod-ish or put stainless on it. I mean, it’s kind of a subculture, if you will. I liken it to what Harvey Davidson guys do.

They like to individualize and personalize their bikes. Well, truckers, especially over road guys, the owner operator guys, they want to individualize and personalize that. I mean, their truck is perhaps a place they spend more time in than their house and they want it to feel maybe like their second house.

Heck, for some of ’em, it might be their first house. And that’s what we’ve been doing for 40 years is really focusing on chrome accessories. The last few years we focused on bringing other things like collision replacement parts and more practical need items like mud flap hangers, replacement bumpers, those types of things.

Because once you build a base of dealers and you build a brand and you have a reputation for service and having 95% fill rates, then that dealer wants to reach out and maybe source other things from you.

So we just were able to leverage that relationship and this huge network of dealers adding more stuff. And that’s kind of what we do year after year, add more stuff, fulfill faster, add more stuff, fill faster. And now with drop ship, it’s filled faster on onesies and twosies, right?

Jamie Irvine:

So I think people who aren’t familiar with the trucking industry, they don’t really realize, especially from the owner operator’s perspective, how much pride people take in working in this industry. And if you’re not part of the industry, maybe that’s invisible to you, but I know so many people in the industry, they take a great deal of pride in what they do.

And if they’re a trucker, they want to make their truck, like you said, feel like home, and they want it to be an expression of who they are. And so I think that’s what draws people to your product category. Let me ask you something. We talked to owner operators. They would probably be your most ideal customer because they’re ones that have complete control over their truck.

When it comes to the steps that you took over the last few years to shift your business model, you mentioned automation and stuff like that. Could you tell us a little bit about what steps you practically took to change your operation? And just give us a little window into what it actually felt like to go through that process.

Chris Bischoff:

Well, it felt very overwhelming at first. We weren’t sure, it felt often, are we doing the right thing, investing more money in the fulfillment. I mean, warehousing never used to be fancy. Warehousing, never used to be something you worked on. Warehousing was just necessary.

Jamie Irvine:

Four walls, pallet, racking, shelving, and a forklift, right? That’s all you needed.

Chris Bischoff:

You didn’t have a lot of min max, you didn’t have a lot of cycle times for picking. It was like if you got busy, you just throw more people at it. And it was never looked at as like if you’re building the next jet engine, you wouldn’t just throw aluminum and some wiring and some whatever at it.

You would look at it from a truly a scientific standpoint, how do I make this work and have measurables on performance, measurables people can be held accountable to some of the things that we do in other aspects of our business. We weren’t really doing in warehousing.

So we had to really think about how do we get this done? Well, the first thing we had to realize is we’re not going to do it on our own. We need to bring in some professionals. We need to bring in engineering people that focus on this.

So we engaged a company, it really helped give us options. They studied what we were doing and they made recommendations. And that was almost a year process in and of itself. And then that allowed us to develop kind of a budget, phase one, phase two, phase three, and all in mind with how are we ultimately going to go from X number of transactions or lines to tens of thousands of lines? How are we going to do that?

Now, here’s the catch. All within the confines of the warehouse that we currently have, and in California, you just don’t go out and find warehouse space to build. It’s not there. If we were in the middle of Indiana, we could just hire Joe Guy to build a pole barn to keep building our warehouse, but we had to do this all within the four walls that we were operating in.

So we had to be really smart because to grow, we needed to figure out how to get faster, better, have measurables to judge ourselves, but to know it was working. So that’s kind of how we get it. It took about a year of planning, took about another year and a half to get the automation put in. Special software had to be written with WMS. We had to adapt.

That was a nightmare right there, the WMS. But we got through that, and as it turned out, it’s in one of our videos on YouTube, so I could talk about it. But we call it a vending machine. It’s a self pick automation machine. It’s 330 feet long, 35 feet high. It has potential 30,000 pick bins in it, and it’s got 13 robots inside of it that are all timed with the WMS and the software.

It allows one operator to pick four different orders simultaneously. Usually one operator would be able to traditionally only pick one order at one time. And then the operator doesn’t have to move.

So you can remember even to pick one order, they got to go up and down these huge traditional pick aisles, right? And then look for the tag on the bin and hope that the stuff never got moved, and then put it in there, register it and go down. So in the time it takes six people to pick one line, we have one person that could do that same amount of work and not move.

Literally, they stand there at their station, the robots are delivering, delivering, and all they’re doing is taking the item here, touching the light, boom, and then four boxes hit the conveyor when that’s filled, and then it goes over to consolidation and over to pack and then out. But yeah, it was a good project.

Jamie Irvine:

Tell me a story of how once you got this up and running, it had a positive impact on one of your customers.

Chris Bischoff:

I’ll tell you a customer that wasn’t quite a customer, and this is a cool story. We had been talking to this customer and they even brought up that if we did business together, they would want to know how we would handle drop ship. And we weren’t quite to the point with the automation that we are today.

I think we just had got it going, but we weren’t ready to go out and blab a big story about, hey, come join with us because look at this. We were still kind of getting the bugs out of it, so to speak.

Jamie Irvine:

You were still in the crawl, you mentioned a crawl, walk, run. So you’re still at that crawl or maybe just at the walk stage, you weren’t running yet.

Chris Bischoff:

Right. But we told the customer, Hey, we’re all primed for this. If you’re ready to go, we’re ready to go. And in my mind I thought, okay, well if he does it and puts all of our products up on his website, what’s he going to send a couple orders a day? All right, we’ve been doing a couple a day the old fashioned way, and even if he send 10, we’ll be okay, right?

So he decided to literally turn us on. And I think something crazy in the first couple hours, 22 orders came into his website, something like that. I forget what it was. And I think on Sunday he messaged us or messaged the rep and said, you better call United Pacific. I don’t know if they’re going to be ready for this. And luckily, all of that work we had done prepared us and we handled that and we continue to handle that business today. Of course, we have adapted.

We could do a whole lot more than that. But that was kind of just like a, you go outside and it’s a gloomy day and you’re wondering what’s going to happen. All of a sudden the clouds breaking, the sun shine’s on you, and it’s an aha moment. That was a real aha moment for us that we were on track to be doing the right thing for the future.

Jamie Irvine:

You got to be good to be lucky and lucky to be good sometimes.

Chris Bischoff:

That’s a good way of saying it.

Jamie Irvine:

Well, you’ve been listening to The Heavy Duty Parts Report. I’m your host, Jamie Irvine. We’ve been speaking with our guest today, Chris Bischoff, the President of Global Sales at United Pacific. If you want to learn more about United Pacific, visit upauto.com. Links will be in the show notes. Chris, it’s been a fascinating conversation. Thank you so much for being on the show, love having you with us today.

Chris Bischoff:

Well, thanks for your time and maybe we could do this again, another few months, but appreciate it. And everybody out there, thank you for your support on the brand. Make sure you ask your local dealer about United Pacific. I’m sure he can help you out. So thanks, Jamie.

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