Surviving the Supply Chain Crisis

By now everyone on the planet is feeling the impact of supply chain disruptions. And, for the machinery dealer, this becomes both a problem as well as an opportunity. But, to survive, the dealer needs to strategically work around these challenges.

The problem with manufacturers extending lead times from weeks to months, makes timely end-of-lifecycle machine replacements and emergency unit purchases appear almost impossible.

Difficulty in getting spare parts has also challenged end users. A prolonged continuation of this condition could lead to a scenario where customers are forced to take drastic measures such as cannibalizing sidelined, disabled units for parts. Because fewer units are working, this would have an extremely negative impact on overall uptime and productivity.

This problem is heightened for customers who have a mixed fleet of several brands. This greatly increases the complexity of maintenance practices. As a result, once efficient maintenance processes at multiple customer plant locations have now deteriorated into a condition of higher costs, lower uptime, and less productivity, plus challenges to safe operating procedures.

The more failed parts are needed, the higher likelihood the machine will be down for an extended period which impacts uptime, productivity, and end-user profitability. And, this is a great opportunity for your dealership to demonstrate foresight and leadership.

This is where your dealership can step up to a respected advisory position and partner with your key accounts to help them through these challenges. Some of the steps we’ve seen that have a major positive impact include:

  1. Train your sales and product support team on how to best utilize customer fleet management information in both large and smaller accounts. A strong fleet management program enables the dealer to really push proactive machine and customer support.:
    • Technology and predictive processes like oil analysis and telematics help predict component failures.
    • Proactive or preventive maintenance can help avoid catastrophic failures.
    • With extended lead times, dealers can utilize fleet management information to improve decisions, in counsel with the customer, whether to increase maintenance frequency or advance orders for replacement parts for machines to extend the life of the fleet or to place replacement orders for new machines.
  2. Help the customer measure the actual cost of downtime.
  3. Assist the customer to analyze the cause of downtime.
    • Operator error
    • Failed part
    • Normal wear and tear
    • Technician error

A different remedial action is required for each cause. Structure a joint improvement project. The customer works on operator error, dealer works on technician error. Review progress monthly.

  1. Encourage the customer to standardize their fleet.
  2. Advise the customer on how to structure accurate fleet digital maintenance records including age, maintenance history, and expected replacement date.
  3. Show the customer how to set up consignment parts inventory in a secure location.
    • Put each part in a plastic baggie with an appropriate identification label. As the customer uses each part, the baggies are sent to your dealership for replacement. Then, the Product Support Rep takes physical inventory every month or as needed.
  4. Work with the customer to determine which maintenance procedures can be performed by the customer and which should best be performed by your dealership.
  5. Collaborate with your dealer sales team to help the customer more accurately pre-order new machines based on projected equipment needs and current lead times.
  6. Strengthen customer-scheduled maintenance procedures, possibly by providing technical consultation for a fee. Or, by taking over maintenance of various categories of their equipment.
  7. Scheduled Maintenance discussions with the customer should include an OEM representative. This is a great way to have shared responsibility for issues. And, it structures collaborative follow-up.
  8. Team up with your sales force to help sell full maintenance leases to new accounts.
  9. Carefully review the reorder lead time and safety stock calculation algorithms in your dealer Parts Management Software. These lead times for various categories of parts could be obsolete.

If you have a success story on surviving the supply chain challenge, sent it to me (walt@mcdonaldgroupinc.com) and we will include your comments in next month’s issue of Machinery Dealer Management.