Keeping customers stocked with parts is a balancing act
By Carroll McCormick
May 20, 2016
By Carroll McCormick
How hard can it be to be a parts supplier? Draw up spares lists with customers, order a year’s worth at a time, ship some to be stocked on site and hold onto the rest to be doled out as needed. The reality, however, is not so neat and tidy.
“What we are trying to do is sit with a customer and see what they have been through in terms of wear parts. We usually try to get an annual purchase order from them. With customers who don’t want everything in one shipment, we keep the stock and ship to them,” says Guillaume Paquet, vice-president, operations with Manuquip, a distributor for crushing, screening, washing, conveying, demolition and recycling equipment for the aggregate industry.
The company has a branch in Candiac, just south of Montreal, and another in Quebec City. It sells, and supplies parts for around 50 brands of equipment, including bruisers like crusher plants, jaw crushers, blademills, cyclones and bucket wheels made by manufacturers such as KPI-JCI-AMS and KPI-JCI-Astec.
There are many ponderables when deciding what spares to order and where best to keep them. Manuquip considers what it calls critical, maintenance and emergency parts, some customers’ desire to have as little paid-for inventory as possible, where they are working, the cost to fly heavy parts to remote areas, Arctic shipping schedules …
“Pretty much wherever there has been mining activity in Quebec, our equipment is there,” says Richard Paquette, CEO and majority owner, Manuquip. Many locations are hundreds of kilometres from even the nearest goat trail.
Manuquip has made a study of what is faster, sometimes cheaper, but which delivers the parts as quickly as possible. “We have everything covered,” Paquette says. Its transportation bag of tricks includes its own half-tonne truck mobile units, transport trucks, couriers, ships and even a military C-17, used once to fly jaw crushers to Meadowbank, Manitoba.
In theory, the more serious the consequences of a part failure, the more reason to keep spares on site. At one end of the panic spectrum are wear parts and maintenance part. A wear part could be extremely worn, but still be working. An oil filter could be dirty, but the equipment still run. At the other end are critical and emergency parts. They include everything that could stop the machinery from operating and interrupt production.
That said, wear parts are more likely to be stored at the work site, precisely because it is a certainty that they will need replacing. “That is what we are targeting, the wear parts, and a few obvious failure parts, like springs and bearings,” Paquet says.
Manuquip works with its customers to set min/max quantities, which depends on the customer’s history and the number of units in the field. Reordering is triggered manually, on an on-demand basis, or by the calendar.
“Historically, we can set min/max … the customer knows that every 10,000 tonnes an impactor will need replacing. But we never take chances on wear parts. Customers keep some and we keep some. I can’t think of a time we have had to fly in wear parts,” Paquette says. Paquet adds, “Spares quantities depend on the working conditions. It is a mix of our experience, and the customer and suppliers experience.”
This sounds straightforward, but a customer with a new piece of equipment may have no experience with the number of spares he should buy. And some occasionally have unrealistic expectations of the tonnage of production they can expect with a set of wear parts. Throw in the fact that customers sometimes worry that the supplier will sell them too many spares. Add in things like cost, weight, transportation options, and the possibility of catastrophic failures, and making the right decision requires experience and good judgment.
Take blow hammers for impact crushers. They can weigh 900 pounds apiece and cost $10,000 for a set or four. Two thousand-kilogram jaw dies may run $8,000 to $9,000 a set. A mantle and liner for a cone may weigh 5,000 pounds for a set, depending on the model, and cost $15,000 a pop. Moving them by truck is no problem, but what if the only transportation option is by ship?
Ordering these big parts is usually done in the fall, Paquette says. “We do a phone blitz, come up with the number of spares. We know which parts might be required. We also contact people with competitors’ equipment and offer them parts. We identify this potential and try to come up with good pricing for customers.”
To do this well takes advanced planning, especially for Arctic shipments, where northern waters may only be ice-free for three or four months a year. Customers that delay too long in placing their parts orders, and some do wait till the last minute, can literally miss the boat.
“It may take 10-12 weeks to get an order, and when we finally get the go-ahead, the [time available for delivery may be] shorter than the manufacturing time. Even experienced customers don’t always get it when we tell them ‘if you don’t place the order now, you won’t get it in time.’ They think it is a sales gimmick,” Paquette says. The delivery time from a supplier can also slip, which is all the more reason to order early.
As for trying to discourage customers from waiting till the last minute to order, Paquette smiles, “We haven’t won that battle yet.”
Manuquip evens out the bumps in the supply chain by keeping lots of spares in its warehouses, particularly those from its suppliers in the far corners of the continent. Manuquip uses a customs agent to smooth the passage of parts across the border.
As for payment options, Paquette says, “In some cases we keep inventory and the customer pays when he gets the stock. But if the customer does not pay for it [to be stored] he runs the risk of it being sold to someone else. If he pays, the part is reserved for him.”
As nice at it would be for Manuquip to stock everything, it simply isn’t possible, for all machines, for all model years. Manuquip might sell a part once every five years, or sell three of them in one month. A customer might hit something with a backhoe. “It is always a balance, what to keep or not keep in stock,” Paquette comments.
If a customer suffers a catastrophic part failure, Manuquip will bend over backward to get in a replacement. “I remember one, for a competitor’s machine,” Paquet recalls. “A customer was having trouble getting parts from his supplier. He called us. I was 500 kilometres from the office. There were 20 parts in the order. By ten that night I was able to get the parts supply confirmed with my supplier, who was not normally in. We booked a plane in Oregon, it left Saturday night and [the shipment] was in Quebec City at my door on Monday morning.”
Planes are an expensive shipping option, but they can be a customer’s salvation. “It is not so much the weight, but if [a part] is small enough to go through the doors. Sometimes they can go to 500-600 pounds, even 1000 pounds,” Paquet says.
Advance planning and expert counsel is the key, but when things do go sideways, Paquette says, “The customer calls us and we usually will have the part to the customer’s door within 24 hours.”
This article is published in the April 2016 issue of Machinery and Equipment MRO.
Montreal-based Carroll McCormick is the award-winning senior contributing editor for Machinery and Equipment MRO.