Bang The Drum – Loudly

To Stay in the OTR Tire Game, Dealers Need to Sell Themselves

A few years ago, a construction fleet manager told a group of Bridgestone/Firestone Off Road Tire Co. (BFOR) dealers that he didn’t feel dealers added any value to his operation. The manager, speaking at BFOR’s dealer meeting at the company’s request, issued a challenge to the dealers, saying that he didn’t know what his dealer really did for his company. “Unless you can explain it to me, I don’t need you,” the fleet manager said in all honesty.

Unfortunately, that construction fleet manager isn’t alone. Dozens of other operations across all tire disciplines have the same attitude. With the close tabs operations maintain on costs, if they don’t clearly recognize and place value on what a supplier does for them, they want to cut that expense.

And as tire buying responsibility shifts from the local level to a corporate approach even to national direct contracts with tire manufacturers there is even greater pressure on dealers to hold their position in the product and service delivery chain.

Every OTR tire dealer knows that service is the key thing they bring to the table. The last thing any heavy equipment fleet wants to do is worry about tires. They have literally bigger things to worry about. But industry experts agree that dealers need to be proactive, work to find new ways to help the fleet lower their tires costs, and be energetic in telling the fleet exactly what they do and how it contributes to the bottom line.

“The dealers have to do a more consistently thorough job. It can’t be hit or miss. They really have to take tire service away from mines,” said Tom Ford, general manager of Goodyear’s Global OTR Tires division. “If the customer still has to ask his dealer about the tires, and the customer is still tracking tire performance, then the customer isn’t really getting out of the tire business.”

“The dealer has to take the initiative, and take a position of saying ‘Sign this requisition so we can get these tires in because our tire tracking system says they’re going to wear out, and we need to get two more tires in here next month. Let’s not have big piles of inventory lying around that you’re paying cash flow on. These other tires here can be repaired which will lower your overall costs.’”

“In all segments of the OTR business, there’s a drive to lower costs and improve profitability,” said Dave Cionek, vice president of sales in North America for Michelin’s Earthmover Group. “One of their major expenses is tires, and they’re focused on tires and the overall cost per mile or hour.

“The key is to improve, that is through good service from the dealer and good products. In terms of correct mounting and demounting, tire tracking. Get the right tire for the application. Keep good tabs on tire performance.”

It sounds simple, but can be hard to implement. An OTR tire dealer must repeat must be committed to his fleets and to giving all the value he can. A 150% commitment. Anything short of that and business will be lost.

“If the dealers take the business for granted, they’ll lose. They have got to be aggressive,” Ford said. “We can see the difference in the dealers across our organization. The more aggressive dealers who really deliver value generally get paid better than those that try to reduce their services.”

It can be easy for a dealer to get lulled into the trap of complacency. He’s been providing quality service to local customers for years even decades and things have been running smoothly. But sooner or later, the dealer starts letting his guard down. He no longer thinks of the added benefits he can provide, he just thinks of what immediately needs to be done.

“There’s a danger for the dealers if they can’t demonstrate their value,” said Cionek. “There is a trend away from using the dealer, and it will reach down into the other segments. The big mines are forcing the manufacturers to bid on the service, separate from the tires. They want to get totally out of the tire business, so they want to get contracts that make the manufacturer responsible for the service. And that’s something we don’t want to get into.”

A good dealer has already understood that the face of the OTR equipment industry has changed. Consolidation is a major factor, and customer needs have changed from those of just a few years ago. An adaptive dealer will be able to stay in the game much longer.

“Mines and quarries are becoming more and more cost-conscious, and they’re requiring the dealer to do more and more,” said Cionek. “They’re getting more into tire tracking to determine exact tire costs. Some are even getting into haul road maintenance. And in some cases, they’re asking the dealer to take total responsibility for the tires. Almost like a lease where they’ll only pay a monthly fee.”

As with every changing industry, new things get phased in and old things get phased out. Old things in the form of dealer service. Mine conglomerates don’t necessarily care about the individual dealer on the local level. All the more reason to keep screaming at the top of your lungs how superior you really are.

“Large portions of the mining segment – this isn’t true with all customers, but its starting to go in this direction are global mining companies,” said Cionek. “I think with the commodity prices being depressed as they have been in recent years, the mines looking for greater efficiencies. You have global companies that tend to do their own service. They don’t see the value of the dealer in that equation. They don’t see the value of the dealer’s service,”
Ford concurs. “With the mergers going on over the past few years, the purchasing people have been put together and are buying on the basis of cost.

The purchasing people leave the dealers out of the process and decide they’ll mount the tires themselves. They don’t see all the other things the dealers do in the process, and they don’t understand what it really takes.
“And when it’s all said and done, the mine people are upset because it costs them more money to get the service they expected,” Ford said.

“The more tire purchasing gets centralized, its more important that the dealer speaks up and makes himself well known throughout the organization and not just with the guys in the shop,” he said. ®Even if they’re on a multiple year contract, dealers need to get out of the shop and meet with upper executives at least once a year, if not more, and let them know what his company has done that help the customer.”

“Mines, quarries and construction fleets – really any OTR tire customer – has bigger fish to fry, and they are not interested in tire problems. The dealer has to go in and toot his own horn, and say, ‘Here, this is how much I have brought your costs down, this is how your tires are performing today,’” Ford said. “Make an argument in every case for the value you bring. You have to spend some time selling yourself.”

Quite honestly, dealers are the only ones that can sell themselves. Some dealers may rely on manufacturers and suppliers to push their good name through the door, but the manufacturer is only as good as the dealer.

“We’re there selling the dealer services when we get the opportunity. But I don’t know if we’re the ones that can point out what dealers are doing or what they should be doing,” Ford said. “It’s up to the dealer day to day at the working level, and it’s up to the dealer as the owner to occasionally go in and make sure the upper management knows his company’s contribution.”

The ways in which OTR tire dealers can cement business has changed. The way your father did things won’t cut it anymore in this “what-have-you-done-for-me-lately” day and age.

“The days of bringing a dozen donuts for the tire shop once a week is a thing of the past,” said Ford. “These big mines and quarries are buying each other up, and they’re rotating purchasing responsibility or changing the purchasing guys all the time. The dealer has to have a solid business-to-business relationship because the customer is constantly fighting to stay alive.”