ACHRNEWS

Keep an Inventory of Parts for Truck Stock

August 21, 2006

With the changing landscape of the parts distribution market, can some things remain constant and dependable? Of course. Distributors and contractors across the United States have fine-tuned their parts distribution system to a point where having all of the necessary parts for a job, delivered on time, with a foolproof restocking plan has become the norm.

If it isn't the norm now, it might be in the near future.

In this article, The NEWS' Distributor Consultants discuss the pros and cons of building and maintaining a truck parts inventory system. While not all distributors admit to getting involved in stocking and restocking programs, the people interviewed for this article agree that having a truck stock program in place is necessary for HVAC contractors to remain competitive and profitable.

For many companies, truck stocking can be a time-consuming proposition. Distributors now offer some customers a variety of options to expedite inventory control. (Photo by Scott Turner.)

TRUCK STOCKING DEFINED

One consultant, Tom Boutette of Boutette & Barnett Trade Distribution Centre, London, Ontario, said that although his company does not have a formal truck stocking program he has an idea of how one should be set up.

"First you have to define the necessary inventory for the nature of service," he said. "This would vary dramatically between contractors. Once your inventory and service levels are identified then make sure all items have bar code labels and have a location on the truck.

"When the mechanic uses a part he scans it with a bar code scanning gun. When the gun is downloaded at the end of the day, an invoice is created for the customers, accounts are updated, and a replenishment order is sent directly to the wholesaler. The order is picked and shipped by courier to the contractor truck during the night. When the mechanic gets in the truck in the morning his inventory stock has been replenished and away he goes. It's a perfect world."

But for some contractors, particularly customers of Mike Michel of R.E. Michel Co. Inc., Baltimore, the perfect world isn't that far off. "We offer a direct-to-truck inventory replenishment program," he said. "Our Exclusive Supplier Partnership (ESP) direct-to-truck materials replenishment program essentially takes the contractor out of the inventory business with 100 percent replacement of truck inventory daily usage."

A specific truck-restocking program is not a cookie-cutter solution for everyone. For example, the Habegger Corp., Cincinnati, is a Carrier/Payne distributor for western Ohio, southeastern Indiana, and northern Kentucky. It is also a Bryant/Payne distributor for a major portion of Ohio, Kentucky, Indiana, central Illinois, and eastern Iowa. Habegger is an approximately $151 million distributor with 23 branches, which vary in size based on the communities each serves.

"Our repair parts truck stocking program is flexible and designed to meet the needs of individual HVAC contractors," Habegger's Joe Rettig said. "We serve contractors from the one-man shops to large mechanical contractors."

Habegger's Inventory Replenishment Program is used extensively throughout the company. Rettig said his company strives to keep the process and the program simple and easily managed by people with all levels of inventory management experience. The program works as follows:

  • Meet with the dealer with a suggested inventory list for summer and winter.

  • Listen to the dealer's specific needs and incorporate them into the program.

  • Send a team to help the dealer organize his stock room and clean out his trucks.

  • Provide bins and help the dealers set up the stock room and trucks.

  • Take a weekly inventory and write up replenishment orders.

    "The dealer purchasing agent reviews and approves the replenishment order," said Rettig. "We deliver the parts the next day and help the dealer stock their shelves. We take care of any warranty issues. At the end of the season we rotate the inventory, so that the dealer is not stuck with slow moving items in his inventory.

    "In some cases, the dealers ask us to help them set up the program and then they prefer to take the physical inventory and reorder with our Habegger online order system. In larger markets, we prefer to have parts sales specialists calling on our dealers along with an equipment territory manager. In smaller markets, the territory manager takes care of both parts and equipment sales."

    Ken Connell of the Gemaire Group, Deerfield Beach, Fla., said that although his company, does not have a standard restocking program, his company will work on a customer-by-customer basis.

    "Upon request we run a history going back 24 months on items our customers have purchased and compare to their invoice/usage," he said. "We then develop A, B, C, D items and seasonal usage. We also recommend key OEM parts of equipment they buy along with aftermarket GemTech products. We also run spring and fall truck stocking programs with GemTech and aftermarket products."

    Kent Kendrick of the Dale Supply Co., Nashville, Tenn., said that his company does not offer a restocking program but his company provides a list of the most common parts. "The dealers that do the best job have storage bins replace the parts as used," he said. "The better companies keep an inventory sheet by truck. Most dealers stock only common and universal parts since space is limited."

    CUSTOMIZED ORDER FULFILLMENT

    Besides a standard restocking program, distributors go the extra mile to see that dealers get exactly what they ordered for replacement or new installation work. Bouttete said his company has a specific program set up.

    "We palletize job specific orders for customers and deliver to their shop or in some cases direct to the jobsite," he said. "We are also looking at kits for residential HVAC in-stallations. For example, a No. 1 Kit could include: 90+ AFUE 70,0000 Btu modulating furnace, humidifier, air cleaner, HEPA filter, 2-ton 13 SEER a/c, and an A-coil, etc.

    "The only problem with kits is they create havoc with inventory counts. We are trying to work our way around that."

    Distributors know that trying to stock special order or custom parts can be a nightmare, as contractors do not want to keep an inventory of parts that have very slow turnover. Connell said there needs to be a collaborative effort on everyone's part.

    "Distributors should stock proper quantities of parts at service centers and utilize salesmen to share and relay information," he said. "We are developing a partnership with key customers, having them enter their service tickets by trucks on our online ordering Website. We are also developing minimums and maximums by customer/truck to generate a recommended purchase order for the customer."

    Michel believes his company needs to maintain a "do whatever it takes" attitude to parts replenishment, regardless of the type of part. "As a distributor, we need to understand, contractor by contractor, what those replacement needs are," he said. "Then it is our job to maintain sufficient inventories to provide daily replenishment. Even so called hard-to-find items can often be covered in advance. But when that's not possible, we do whatever it takes to locate and supply that particular item.

    "With some 200 sales locations and inventories tuned to each location's particular market, we can very often come up with it in our system and overnight the required item to the customer."

    Boutette didn't think any contractor wanted to stock hard-to-find items. His company writes off hard-to-find items every year.

    "The reality is, wholesalers are in the business of managing inventory and contractors are in the business of servicing equipment," he said. "The contractor usually thinks it is easier to call the distributor when they need a part than to try and keep track of their own inventory."

    Publication date: 08/21/2006