Pulling it Together

Farmer Iron

Parts logistics is big business for major equipment makers, but the customer rules.

Published on: May 6, 2011

There's that great scene at the end of the movie Raiders of the Lost Ark where the Ark pf the Covenant has been turned over to the Army and they insist it's been put in a safe place. The scene ends with a janitor-like person pushing the crate with the Ark of the Covenant into a super-giant warehouse in amongst thousands more just like it. I always wondered how they'd find it when needed.

That same giant-warehouse feel will greet any visitor to a farm equipment maker's parts support facility. I had the chance to visit the Agco Batavia facility for my in-print FarmerIron column for this month, and as promised, I will share in the next couple of weeks, more information about this sprawling operation.

I've covered farm equipment for awhile and parts logistics has been top-of-mind at different meetings I've attended for years. Consider the challenge, tens of thousands of individual part numbers shipped to several hundred dealer locations to be on hand when you - the farmer in need - arrive to buy said part for a repair. Add in seasonal factors - combine parts don't sell all year long. Mixed with the fact that different dealers have different capital requirements which can alter parts management strategies - which means some dealers keep less on hand than others. And the final product could be a mish-mash of waiting and wondering when parts will come in.

However, the truth looks a little different. "We're working to provide that right part when the customer needs it," says Joe DiPietro, Agco senior manager, strategy and performance improvement. That includes expanding the parts distribution system to include the new Stockton, Calif. operation (not so new, but greatly expanded). And Agco is working with some dealers to become in-between stocking locations to enhance logistics as well.

One change Agco made for dealers is the "stocking" order. Depending on their supplier, dealers can make a "stocking order" purchase of parts on a specific schedule. It could be once a week, twice a week, or more. Agco recently fired up a daily stocking order program allowing dealers to refill with parts every day.

The parts will arrive at the dealership within two or three days and there is no shipping charge for that kind of order. But what does that mean to the customer? It should add up to enhanced delivery of parts as needed, and it should encourage the dealer to stock a wider variety of parts so they're less likely to need an "emergency" order - which can incur express shipping charges which are often passed on to the customer.

"When a customer is down, we want to help them get that machine back in the field," DiPietro says. This is no platitude aimed at making you feel better. The folks that work in parts distribution for the farm equipment industry know that equipment fails - even the best stuff does - and they want to get farmers going as fast as possible. Farmers are a forgiving bunch, provided companies stand by the product.

So consider the part order. The dealer tries to have what you need on hand based on factors they've built up over the years - planter parts in spring, combine parts in summer and fall, tractor parts all the time. Meanwhile the folks in parts logistics, such as our friends at Agco are constantly tweaking stock order models, looking at what they can have on hand without tying up too much money in parts that don't move. It's a mathematical dance that makes my head spin.

For you the question remains: Do you have what I need when I need it, and if not, how fast can I get it? Every major manufacturer is working hard these days to make sure the answer to the first part of that question is "yes."

Next time we'll look at some key ways one manufacturer is making sure employees understand your needs.