When FedEx Freight received an invitation from the Technology & Maintenance Council (TMC) to help develop new Recommended Practices (RP) for parts purchasing and inventory management, the company happily answered the call. If you've developed a system to efficiently distribute parts for over 9,500...
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Today Billings has access to a monthly report for fill rate and for total spending, a weekly report for product availability, and timely reports for raw material shortcomings, surcharges, and price increases coming in the future. "I can't stress enough the communication part," he says.
Billings reports that his requirements for RFQs haven't been affected by his work with the TMC Parts Task Forces, but he feels that other Task Force members may have learned from FedEx Freight?s experiences.
"I feel we brought some to the attention of some of the members of the TMC panels, to let them digest it and make their own decisions, and their own conclusions," he says. "It was just areas that we had identified to work with compliance, being able to manage our warranty and cut parts purchases, and to build a long-term relationship with our vendors, where they would be willing to listen to us, and we also would listen to them, and build a good partnership where we could each learn and grow from the experience.
"I think the main point that we had identified and were working to build a process to improve on was, through the billing process when we purchase a part, the local dealer would charge one price, and then it would be audited as our negotiated price and we would be billed the negotiated price," Billings says. "I believe that was our largest opportunity."
Once the parts are purchased and delivered, their costs start to rise with every second they're not used on a truck. Perhaps more importantly, costs rise for every part that's not on the shelves.
FedEx Freight's goal is to have 100 percent in-house availability across the board. Their maintenance facilities average about 92 or 93 percent now, and Billings and his colleagues are focusing their efforts on closing the gap.
In a perfect world, the parts managers at every maintenance location would be able to predict every part they'll need every day, every week, every month, and maintain their stock accordingly. With the help of Dan Umphress, FedEx Freight's managing director of maintenance solutions, that kind of predictability may one day be possible. "We're trying to try to improve that predictability of what parts we're going," says Umphress. "We're beginning to study the reliability of the components on the vehicles, to try to get a predictability formula that will improve that number.
"It's a big effort in our group, because we feel it's important," he says. "It's critical to us to move that number; our goal is 100 percent, and we're going to get there."
Unfortunately, Umphress has found that the sort of system-wide reliability data his team needs simply does not exist in the transportation industry, and so FedEx Freight must start from scratch. His group is currently developing a reliability/predictability program that will be applied to every part on every piece of equipment in FedEx Freight's fleet.
"One of the things we've found is that we spend a lot of time in warranty studying what fails, and we've not really been good at studying what's working," he explains. "So one of the things we're doing is we're going into the engineering field, to work with the calculations that manufacturers use, to take our reliability information of what's working in the fleet and study that, put a number to it."
"Understand, we're not interested in what the manufacturer says," Dennis Beal interjects. "We're interested in what works in our fleet."
"Our primary objective is having the part for the technician when he needs it to keep the equipment up and running to haul freight," says Billings. "That's what we're in business for: to satisfy our customers."
To that end FedEx Freight inventories parts on a weekly basis. "We do a weekly cyclical inventory that is computer-generated, and it?s at random," Billings says. "Each part will be counted a minimum of twice per year, and we run a report that checks the last fiscal inventory update per part, to ensure that each part is counted."
"We have just made a recent change in our order frequency," Billing continues. "We went from weekly stock orders to daily stock orders. We found an efficiency in that method to provide the parts in a timely fashion."