Don’t Be Shorted - Tire Review Magazine

Don’t Be Shorted

The old axiom of “supply and demand” is a long established and proven part of our free enterprise economy. The principle typically refers to pricing pressures, but there’s another, more basic, issue of product supply. Shortages – or in extreme cases, non-availability – of everyday components needed to replace worn or damaged parts can cripple a fleet’s ability to maintain uptime standards and impair freight delivery schedules.

Temporary shortages of items like anti-freeze, wheels, tires, axles, brakes and other critical components have come to the forefront over the past several decades. Some shortages have been short-lived; others have altered distribution channels for years.

Generally, these shortages can be a supplier’s worst nightmare. Most first-tier suppliers service OE truck and trailer manufacturers via direct sales and shipping programs, in which a consistent supply is critical to ensure truck and trailer production lines do not shut down due to lack of components. Many OEM plants are serviced with direct ship, just-in-time logistics programs (implemented, in large part, by the trucking industry). Most of these supply relationships are contracted, streamlined and geared for efficiency and high volume to contain costs.

Supply Lines Tightening
Aftermarket supply lines, though, typically involve local servicing dealers and a more multi-tiered distribution system. Generally, this is a more complex system that sometimes suffers when demand at the OEM level escalates beyond the production capabilities of component suppliers.

Most industry gurus are now predicting a strong surge in new-truck build rates from mid-2004 through at least 2005 and the first part of 2006. Several reasons are being cited for this strong OE build: significant pre-buying of current model power units to avoid the anticipated added cost and possible lower fuel economy of mandated lower-emission diesel engines for 2007 models, for example. Don’t overlook the effect this may have on aftermarket availability of essential components.

Most truck parts suppliers have worked diligently to match manufacturing capacity to overall demand to improve efficiency and reduce costs. But this can also cause temporary shortages when market demand changes rapidly. Commercial fleets, and their servicing dealer networks, should develop a plan to deal with such shortages.

Ensuring Adequate Supply
Long-standing supplier-customer relationships can be strained or destroyed by supply problems that extend beyond the short term.

There are steps commercial dealers can take to assure an adequate supply of desirable replacement components – particularly tires. “Desirable” is a key word that should include the following:

• Brands/models with known and acceptable performance levels

• Products from manufacturers and/or suppliers with whom you have an existing relationship (preferably)

• Usage compatibility with first-choice brands/models

• Warranty and pricing comparable to preferred tires

• Tires that will progress through your system – including retreading, rotation, repair and disposal – with minimum disruption

Many of these issues cannot be addressed on a moment’s notice. Normal product development cycles may result in alternate short-term suppliers having newer product models with which you have no experience. Following new product news releases and keeping an open ear to peer experience can help.

Alternate suppliers may also have different geographic availability for on-the-road purchases. Warranty terms and procedures may be different. Some suppliers offer both first-line and second-line product models, and it may be more expedient to purchase a second-line product from an existing supplier rather than demanding another brand from a new supplier.

Sometimes, well-timed discussions with valued customers can result in changes to their regular maintenance or replacement programs to help get through critical supply periods. Increased use of retreads or delayed rotations of power unit tires to trailer positions may help.

Unpleasant surprises may await both dealers and their customers who fail to research product performance and prioritize their alternatives.

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