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April 26, 2019 11:00 AM, EDT

Dealers Tackle Parts Shortage

Truck Dealerships, Fleets Add Inventory to Keep Rigs Rolling
A Bosselman's parts shop A Bosselman's shop. if an item has been on back order, Bosselman's changes its ordering requirements. (Bosselman Enterprises)

Dealerships and fleets are changing stocking patterns for replacement parts and adding inventory as they work to minimize truck downtime amid widespread shortages of some truck parts.

“Because production is at record levels at the factory, most inventory is going to production to build the new trucks, leaving little for replacement and warranty repair situations,” said George Crawford, director of operations for River States Truck & Trailer Inc., based in La Crosse, Wis. He said he’s seeing shortages of engine and aftertreatment exhaust parts that are unique to newer model-year vehicles.

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Paul Rosa, senior vice president of procurement and fleet planning for Penske Truck Leasing, which operates 750 locations throughout the United States, said there is a parts-shortage challenge across the network.

“The industry is doing whatever it can to keep up with the unprecedented volume, and this is taxing suppliers at all levels,” Rosa said. “This is an industrywide issue.”

Kenworth Sales Co., a dealership based in West Valley City, Utah, said it, too, has experienced parts shortages this year. Ryan Colby, corporate parts director, said he’s had “extreme difficulty” finding radiators, air-to-air coolers and wiring harnesses. The dealership changed stocking patterns on its fast-moving parts inventory at its 22 locations.

“If there is a stocking part with zero on hand, we consider that to be a problem,” Colby said.

Turning to aftermarket parts is one option to help get customers back on the road when it is an option, he said.

“In the warranty situation, we’re at the suppliers’ mercy,” Colby said. “If the customer wants the OE part, we have truck-down orders and we’re waiting for parts.”

Southeastern Freight Lines is experiencing shortages on certain items, including seats, engine components and wiring harnesses, said Bradley Cribb, fleet services purchasing manager at the Lexington, S.C.-based fleet.

“The ETAs for national back-order parts have drastically increased over the last three to six months,” he said. “It is not unusual to be told a part has a four- to eight-week lead time.”

Southeastern Freight Lines, which ranks No. 30 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, has changed stocking patterns to minimize downtime, especially on items that are not VIN-specific, and increased how many diesel particulate filter gaskets it stocks.

Clerk at Southeastern Freight Lines

A parts clerk at Southeastern Freight Lines restocks. (Southeastern Freight Lines)

“One of our highest volume shop locations typically stocks three of this particular gasket, but due to the recent shortage on this particular part we are now stocking 12 in this location,” Cribb said. “When we begin to see trends with extended ETAs on particular parts, we utilize these supplier relationships and ensure we have dealers that are stocking these parts for us.”

Kirk Altrichter, vice president of fleet services for North Canton, Ohio-based Kenan Advantage Group, said he also has had trouble finding wiring harnesses and radiators, and is stocking more parts with significant lead times in central locations.

“We continually review what we stock and how much stock we may need,” he said. “Part of managing inventory is watching how parts are trending, ensuring that minimums and maximums are established, reorder points are established, safety stock is established and obsolete inventory is managed.”

Kenan Advantage Group Inc. ranks No. 24 on TT’s Top 100 list of for-hire carriers.

Ryder System Inc., which operates 800 service center locations, also has upped its inventory levels.

“We have our challenges, like the industry does, with the aftertreatment devices for the exhaust but we also make sure we have over two months’ supply of filters,” said Ray Cote, manager of field supply management for Miami-based Ryder.

Having a security stock of fuel and air filters ensures Ryder can conduct preventive maintenance even if the industry has a supply challenge in some areas, Cote said. Inventory models at each Ryder location are different based on the surrounding customer base.

Ryder has had OEMs pull parts off of production lines and take them out of kits to get the company what it needs, Cote said. Ryder also established its own company that provides supplies that the shop needs, including a mix of OEM and aftermarket parts.

Meanwhile, Penske Trucking Leasing has implemented maintenance processes designed to help solve critical parts needs, said Gregg Mangione, the company’s senior vice president of maintenance. With proactive repairs, the company uses statistics to prioritize parts replacements on units closer to their calculated risk of failure, he said.

Penske’s Rosa said the OEMs are responding to high-volume shortages by proactively working with parts suppliers to keep pace.

Tina Harrow, vice president of parts operation for TEC Equipment, said OEMs are doing a better job of filling parts orders, even with truck production at capacity. At the end of 2018 and into the beginning of this year, they were struggling to feed the aftermarket, she said, adding that certain engine components, as well as clutches and batteries, were consistent issues.

“The best way to streamline our supply chains is constant communication with our key vendors,” Harrow said. “We are measuring inventory levels, turns and stock order fill rates daily to ensure we are able to react to any supply issue.”

Bosselman Enterprises, which operates 44 shops in 22 states, is used to parts shortages, said Randy Haines, the company’s service center director. A certain brand of tensioner, for example, “goes through a few cycles,” Haines said. “It will be on back order for several months then we’re able to get some stocked back in.” A certain brand of starters and alternators has its “ups and downs as well, but we can always find them,” he said. Filters in the new engines also seem to go in and out of stock, Haines said.

“We’re at the mercy of the OEM dealers,” he said. “That is the only place we can get these filters from because the other filter manufacturers don’t have rights to copy those.”

If a popular item has been on back order, Bosselman changes its ordering requirements.

“If we overstock one location we can transfer them around to our other location,” Haines said, adding that he does the same thing with tires, which also go on back order. “I will stock up ahead of time and play that betting game.”

River States Truck & Trailer, a certified Freightliner, Detroit, Cummins and ­Sprinter dealer, turns to its broader dealer network when shortages occur. Because the network is large, “many times other dealers have stock they are willing to transfer to help our customers,” Crawford said.

River States also uses Freightliner’s inventory control program to help manage parts inventories.

“It reads our inventory levels each night and generates orders and stock levels based on the data it receives,” Crawford said. “If there is a forecast for a shortage, we would possibly put in an excess stock order before the part has sold out at the distribution centers, given the situation.”

Kenworth sales lot in West Valley City, Utah

Kenworth Sales Co. in West Valley City, Utah. (Kenworth Sales Co.)

To try to manage inventory carrying costs, Kenworth Sales Co. sets targets for key performance indicators and inventory turns.

“You want 97% availability based on the usage but not have more than you need,” Colby said, adding that the dealership can usually get a part if the customer is willing to purchase aftermarket parts. But if the part is under warranty, that doesn’t work. “If the part is under warranty, it has to be like for like,” he said.

Colby said one of the benefits of being part of a dealership network is the ability to contact other dealers for help.

“If the amount of product they have on their shelf isn’t minimal, we’re going to buy those parts even if it costs us more money to get the customer back on the road,” he said, adding that the true challenge comes when everyone is experiencing supply constraints.

“If we’re having the problem with a shortage, I can tell you other dealers are going to be experiencing shortages as well, and they’re going to be reluctant to sell a part,” Colby said.