Defining a Tire Strategy - Tire Review Magazine

Defining a Tire Strategy

Researching, designing and implementing a “strategic plan” sounds pretty impressive, but I’ve always been a bit confused about such vague terms.

In hopes of some clearer understanding, I consulted my dusty college dictionary and quickly learned that the primary definitions of “strategic” are related to warfare, military planning and the like. Further down the list, however, is another definition: “the skillful planning and management of anything.”

The most common usage seems to refer to strategic mergers, alliances or purchases of businesses that involve some type of vertical integration of components or services that “touch,” or complement, one another. Truck manufacturers that are also in the engine, axle or transmission business tout the advantages of integrated engineering and one-stop shopping.

The tire industry also provides some excellent examples, such as new-tire manufacturers that provide servicing, repairing and/or retreading for those tires. Wheel manufacturers that offer refinishing, polishing or other maintenance and enhancement services. And tire or wheel manufacturers that offer mounted assemblies, balancing, dedicated inventory control and other such services.

From a fleet viewpoint, these strategic offerings may, or may not, be attractive. One component of analysis would be to ask the question: “Who does the offering benefit?” If the supplier is able to take advantage of shared development costs, reduced overhead, common facilities, more reliable raw materials supply or other efficiencies, these benefits should result in higher quality, reduced prices or perhaps both. On the other hand, the delivered product might well contain true added customer value.

A new-tire manufacturer that also offered retreading and repairing and was successful in quickly transferring new-tire technology might provide a key to creating a competitive operating-cost advantage for fleets. Using more modern rubber compounds in retreading might enhance fuel efficiency, and high-tech tread patterns might reduce irregular wear and noise levels, which deliver extended takeoff mileages. In addition, sophisticated inspection and repair techniques might extend the service life of many casings.

A potential “strategic” supplier of replacement tires or wheels should also be considered from an OE perspective. Standardization of OE and replacement components for particular power units and/or trailers can lead to lower maintenance, training and inventory costs.

Administrative costs – billing, crediting and warranty accounting – might also be affected by the number of suppliers used by your fleet customer. “Finger pointing” in complex performance shortfalls involving related components might also be reduced.

One approach is to look at related products, such as tires and wheels, as full lifecycle cost items, with the obvious goal being to minimize this expense for the fleet. Transportation, supply point locations needed, consigned or guaranteed available inventory and, ultimately, end-of-life disposal costs should all be considered.

Another consideration is whether or not changes in “strategic” relationships have shifted significant responsibilities with accompanying costs. An example might be early versions of just-in-time (JIT) manufacturing operations, in which reduced inventories were touted as efficiency enhancements, when the only real changes were a greater number of loaded trailers sitting in plant parking lots.

Later, JIT was successful because of improvements in scheduling, communication and technology coordination that truly took costs out of the total system.

An often-overlooked opportunity is detailed reporting of product status, performance, inventory and out-of-service analysis that can become more accurate and timely if the data are captured at the point of generation.

So, the next time someone begins an oration about “strategic plans,” remember the basic definition – skillful planning and management of anything – and listen closely to identify who benefits from the strategies and how those benefits might be quantified to fit your fleet customer’s business plan.

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