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November 01, 2002  |   Comments (0)   |   Post a comment

Parts Sales Pinches by Budget Shortfalls

School bus parts dealers say customers are reducing inventory because of shoestring budgets. With an increasing number of older buses on the road, however, demand for parts could rise.

by Louis Hale


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To what degree is the weak economy affecting school transportation department's purchase of bus parts? How are schools coping? And to what degree are they using computerization to buy more cost effectively?

About the first question there is little disagreement.

"We do business nationally, and the trend is consistent — school districts everywhere are tightening expenses," says Richard Denison, president of Bus Parts Warehouse in Syracuse, N.Y. "Garages are directly impacted. They are reducing the inventory that they have, and are ordering more often in smaller quantities."

Denison also says that many garages have lost mechanics and have not replaced them. Garages are understaffed, and supervisors are often put in the position of turning a wrench or driving a bus. This means that buses are often not monitored as closely as they usually are in terms of wear and tear, meaning parts now tend to be ordered more on an emergency rather than planned basis.

Curt Tiebel, general manager of Northland School Bus Parts in Rogers, Minn., has a slightly different perspective. "Lighting has always been good, and some items are doing very well," he says, adding, however, that other areas are dropping off. "What's really fallen off is seat repair," he says. "It might be because garages are just focusing on the necessary mechanical repairs, as opposed to aesthetics."

In agreement is Ed Mastry, president of Unity School Bus Parts Inc. in Marine, Mich. "Before, schools would order two or three dozen of a part to get a deal," he says. "Now they want one part, and one for the shelf, and they still want a deal." Mastry can understand why. "In the last 24 months in the state of Michigan, the general funds were cut more than 33 percent, which certainly influences the transportation budget."

Schools are cutting back
At Tulsa (Okla.) Public Schools, Bill Darling, fleet maintenance, operations, agrees with the parts distributors' perspective. "All of the school districts in Oklahoma are hurting," he says. "We had about 900 stops, but had to restructure and cut back to about 350. We're looking at every avenue we can to trim the budget. Initially, the district as a whole had to cut almost $6 million starting July 1, and I've just heard we now have additional cuts. We're on a shoestring."

Darling says the garage is six to seven people short, and they're even trying to cut down on bus idling time to conserve fuel. "In the past we maintained a large inventory of drums, brake shoes and other parts. But now we don't. We get just what we have to have."

A silver lining?
Isn't there an upside to this, at least for the parts suppliers? After all, if school budgets are so tight, doesn't this mean that schools will buy fewer buses and thus have to buy more parts for aging buses?

Richard Davis, sales manager at Chalk's Truck Parts in Houston, thinks so. "If districts are not purchasing buses because of dollar constraints, it looks like the parts business should be good for the next two to three years." Adds Tiebel, "We're kind of hoping that because schools are not buying buses, they'll be needing new parts. We are twiddling our thumbs and waiting for it to happen."

Other factors are at work that are aimed at helping schools save money, but don't offer much help to the parts suppliers. For instance, one complaint that Mastry has is that "more and more manufacturers are making deals with the bus body dealers, so instead of parts being sold through aftermarket distributors like us, they are going to the non-stocking dealers at the best price. The dealer is jumping into the aftermarket business and so competing at an unfair price."

The implication is that schools, insofar as this trend continues, can bypass the aftermarket distributors and go back to their dealers for parts, presumably for a better price. Mastry acknowledges this: "Right now we're offering a service presentation for free on harnesses for the Indiana state Head Start organization. We do this all of the time, as well as deliver if the school needs it and a host of other services." Mastry maintains that by bypassing the traditional distribution channels, the schools would eventually lose out.

Another trend Tiebel is observing is that a large private school bus operator has moved into his area, purchasing a number of small ones, and is buying direct for a better price. Presumably this will lower the cost of the districts contracting these private buses as opposed to having their own. "It used to be that a school would contract with a private bus company for a time until it could build its own fleet," Tiebel says. "But now we're seeing a reverse trend. Schools are looking for ways to cut costs, and one decision that some of them are making is doing away with their own fleets and contracting with private companies to provide the buses."

Less control?
Another trend that Davis observes: "We see more and more purchasing departments controlling the transportation, as opposed to the transportation departments. I feel this is a bad sign. For when purchasing controls the dollar, they are simply going to look for the bottom dollar, and that does away with product knowledge, service, and quality, which the transportation department is in a position to understand."

How widespread is this trend? Darling says it isn't happening in that absolute a manner in the Tulsa district. Still, he says, "We do have to work very closely with purchasing. They're the bean counters." For big-ticket items, there are contracts with specific parts suppliers, those approved by purchasing. "For every purchase over $1,000 we have to have two to three quotes, and purchasing requires that specifications be written in a certain away."

However, at Corpus Christi (Texas) Independent School District, the transportation department is not so constrained by the purchasing people. "We know there are some districts where the purchasing department purchases for everybody, but not here," says Transportation Director Don Davenport. "We are the selecting officials. We tell the suppliers what we want, and purchasing may go out on the bid, but we are in control of our department."

Electronic options
This brings us to the issue of computerization of parts ordering. All four of the parts suppliers interviewed say that the use of computerized ordering is gradually on the increase, but mainly for the larger districts. It's moving at a slower rate for medium-sized operations, and smaller ones not very much at all. Many school transportation departments are not very sophisticated in terms of computerization, and the cost for a system is not one they want to deal with, at least at this time.

But one large district that is the exception is Corpus Christi. Davenport reports he uses the Complete Vehicle Maintenance Management System offered by Ron Turley Associates (RTA) in Phoenix.

"When parts available dip to a pre-determined level, the system automatically reorders," Davenport explains. "From the time the requisition order goes in, the system then calculates the number of days until we get the order, maintaining the stockage level at all times. If we see the demand is likely to be greater than we anticipated, we can easily adjust the process."

Davenport says the system also provides all work orders and cost data and keeps track of all expenses on a vehicle from "inception to grave." Bar coding is used, which can also provide tire tracking, a module not utilized at this time. "If you really use this to the maximum, you keep all your necessary parts used on a routine basis in stock, without a lot of dollar inventories.

"A good thing about the program is the yearly regional conferences, and the constant changes being made to the system to make it very user friendly. When I came here six years ago, our parts ordering automation was very limited. Now our entire department is 100 percent automated. And I don't think you'll find any person here who would want to go back to the way it was before," Davenport says.

E-procurement explored by DirectBus.com
Parts buying in the school bus industry is still very much a bricks-and-mortar enterprise, but one company — DirectBus.com — hasn't shied away from trying to create a Web portal that offers visitors the opportunity to order parts via the Internet and to absorb educational content such as instruction for school bus mechanics in a section called Shop Talk and roadeo results and tips in Roadeo Wrap.

DirectBus.com is an extension of Heavy Duty Bus Parts (HDBP), a national school bus parts dealer headquartered in Willis, Texas. But the goal, says Brandon Billingsley of DirectBus.com, is for the Website eventually to become the parent company of HDBP.

Billingsley says DirectBus.com carries the same inventory as HDBP but offers some additional products such as surveillance cameras and school bus training aids. "We've been able to integrate the sale of other people's products that we wouldn't normally carry," he says.

The DirectBus.com site has been active for a couple of years, but only in the past six months has it been operating in its current form.

Billingsley says visitors can search a comprehensive catalog of bus parts and place orders online. The only call that's necessary is to a toll-free number to set up the account.

Orders are starting to roll in through the Website, Billingsley says. But for customers who need more human interaction, DirectBus.com is staffed with sales representatives to answer questions and take orders.

"There's always going to be a need for human beings," Billingsley says. "Let's face it, a computer can't answer diagnostic questions the way a human can. And it can't establish a rapport either. But when the customer knows what he needs, the online catalog can save him time and money."

Louis Hale is a freelance writer in Washington state.


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