OEM vs. Aftermarket Parts – Part II
Last week we talked about the differences between OE and aftermarket parts. Now for the money question – what’s my optimum mix between them? Like a good economist once said “it all depends”. Like many things, the least expensive option rarely is the best one. You also don’t want to just go with the most expensive option, unless you have done your homework and determined if it brings you the most value and the overall best total cost of ownership. Make sure you start with a relatively small number of your high volume and high dollar value parts. Going with too many will bog down your efforts.
Most of us are bombarded with flyers from suppliers with their deal of the month. One inGauge subscriber recently received a flyer from a dealership pushing their private label brand of brake drums. It was a great deal, limited time, beat the coming price increase and, oh yes, it’s only available in skid lots of 16 drums. Our client thought it was worthwhile and took a skid. Imagine the sour taste when they found out that another dealership was offering a better quality drum for a lower price, and you even get that price if you only ordered one. The point of this story is spend some time with your suppliers and know what the market price is on those items you go through every day.
Next, invite those reps onto your shop floor to look at your operations and what your equipment is like. Would you quote on business blind? Why would you expect your suppliers to provide a high level of value if they aren’t familiar with your business? Two things are in play here – they see your actual equipment (if they didn’t sell it to you) and can get a real feel for your applications. Give them an idea of what your common lanes are so they can look at availability if something breaks on the road. An added bonus of a good supplier is they should come up with possible training that they can often get you for free. You get potentially more efficient technicians, and your employees see that you are investing in them. Yes it will cost you a couple of hours off the shop floor, but if your employees learn a better way to do a job that cuts 10 minutes off a job you do everyday, your payback period can be less than a month. How many investments get that type of return? Finally talk with some customers of that supplier to see how well they will support you in terms of delivery, having stock when you need it, providing support when your techs are having problems and what their warranty procedures are really like. You don’t want to have the rep tell you how great they are with warranty, when in reality you need to follow a protracted and cumbersome procedure.
Now that you have a stable of potential partners, how do you pick individual parts to use as your standards? This is a mix of art and science. Don’t just take your rep’s recommendation blindly as they may be pushing the products that they make the best commissions on. To get some outside opinions, reach out to a local or regional group that focuses on maintenance operations and get involved (if you aren’t already). If there is another carrier with similar operations to yours, find out what they use, and more importantly why they made that choice. Find out how often their preferred option fails and what sort of warranty coverage they get. This will give you a good set of data to guide your decisions.
So now you have decided on a supplier, a manufacturer and which specific part you are going with, how do you determine if you got it right? Depending on the part it might be a year or two before you really know. It’s only through properly tracking use and working life that you will have the ability to evaluate how well that part is standing up. Look at your real life mean times to failure against what you were led to expect. Are you taking longer to install that part than your supplier is saying it should take? Are you having to adjust that component more than similar units with a different model? Expect that this will be a continually evolving process and that the “right” answer is going to change over time as manufacturers evolve or change their designs. Yes it is going to be work but even a relatively small improvement is going to go directly to the bottom line.
Next week, Full Service Leases vs. Regular Lease/Finance – Part I