Biggest challenge for lift truck OEM's? Make 'em then manage 'em.

Material Handling Management recently had the opportunity to tour the lean manufacturing operations of Crown Equipment Corporation, one of the leading providers of electric lift trucks. As part of our tour, MHM talked to Jim Moran, Crown’s Senior Vice President, and Tim Quellhorst, Vice President of Engineering. Moran is also the current president of the Industrial Truck Association (ITA). Mr.Moran and Mr. Quellhorst talked to us about Fleet Management, customer service trends and lift truck standards. ---Tom Andel, Chief Editor.

MHM: Jim, as current president of ITA, you know that many of the organizations OEM members are looking at fleet management services as a way to compete, over and above equipment. Talk a little bit about Crown’s approach to fleet management.

Moran: Tom, it’s interesting to see all of the publicity around the subject of “Fleet Management” recently because it’s really been around for the past several years in various forms. You may remember that in years past lift truck manufacturers promoted and, still do today, long term rental, lease with maintenance, others called it TM & R (Total Maintenance and Repairs) or guaranteed maintenance. All of these programs and others were or are elements or forms of what today falls under the umbrella of “fleet maintenance”. Crown’s dealers and branches have been supporting users at the local level for years with a variety of different types of maintenance programs. Many of our fleet users that provide their own labor for repairs have Crown dealer owned parts consignments to insure high off the shelf availability. For us, it always been a routine part of responding to the users needs in a way that makes business sense and promotes long term relationships. A key element for Crown in being able to do this is having a committed distribution channel and then give them the tools they need to service the customer.

What’s changed or is changing in recent times is that customers with multiple locations now want to get a handle on their fleets and cost of ownership from a central point or corporate headquarters perspective. Keep in mind that in recent history, many companies’ growth is the result of acquisition so in addition to multiple locations they’re dealing with multiple business cultures and processes. Often times they really aren’t sure how many lift trucks they own or operate corporate wide, the condition of the fleet, let alone what their true maintenance costs are. So as a result, lift truck manufacturers are being brought in to compete for the fleet business, including all planned and repair labor, parts, operator training, financing, and disposition of used equipment.

Our process often starts with understanding the customer’s fleet from an age, condition perspective, past maintenance processes, and the customers long- term goals. All of this can be an expensive process for the OEM so understanding that there is a commitment on the customer’s part is a key element to this working for both parties long term. If, from the customer’s view it’s all about discounting labor rates and parts pricing then the math usually doesn’t really work and the customer ends up with inaccurate expectations and is quickly disappointed. We do our best to be very up front in these situations so that expectations on both sides are accurate…this is sometimes a challenge as all of us are challenged today to cut costs. Like other competitors, Crown offers centralized invoicing and maintenance review processes that position us to help users to focus on trouble spots within their network; all with the goal of managing overall costs of ownership. Fleet management will continue to evolve as more customer consolidations occur. In fact, Tom, I read a recent article that I believe you wrote where a competitive lift truck manufacturer is looking at cellular telemetry, which will provide the ability to access remote data from a lift truck. This will address the issue of fleet utilization, operator error, etc. This is an interesting concept as it could address the issue with customers that continue to spend money maintaining under- utilized equipment. They often focus on cost per hour, which in some situations looks good until they realize that the truck is working very few hours. It also could identify operator training needs with specific operators as well.

MHM: Don’t operators get nervous about being so closely monitored?

Moran: Oh, I’m sure some do; especially if the information is used continuously in a punitive way; but over time it could make their lives easier because it will help insure that the trucks they’re driving have the latest in driver ergonomic design, and performance. Over time it could have a positive influence on the operator.

MHM: What about mixed fleets?

Moran: Crown’s distribution channel can service mixed fleets. Of course, we’re naturally better supporting our own products. The up-front goal with any fleet management partnership is to continuously pair down the number of different brands until we’re only working on our own brand.

MHM: Is that the major challenge for a fleet management service provider?

Moran: No, I think it’s just one of them. Perhaps a bigger one is setting expectations with the customer. Often times, the early conversations include a long list of expectations that, while perhaps ideal, are not practical near term. To really accomplish fleet management takes time, resources, and a long-term commitment between both parties. There has to be value for the customer, obviously, but there also has to be something in it for the provider; it’s pretty simple math really.

MHM: Do you see your national accounts relationships growing?

Moran: Working with large accounts has been a big part of our marketing strategy for several years and I see this continuing to grow. Our goal is to insure that the promises we make as part of our business relationships are met or exceeded which places a great deal of responsibility on our distribution channel because where the equipment is being used is where the service support part of our brand promise occurs. One area where Crown is different from others is that we own 30 of our own Dealerships most of which are located in major markets. This gives us a great deal of flexibility when supporting customers.

MHM: On the West Coast I’m sure some of your accounts will be affected by the California Air Resources Board’s (CARB) proposal to eliminate internal combustion (IC) engine lift trucks below 8,000 pounds capacity. Is the link between the capabilities of an electric vs. an IC truck getting finer in some fleets?

Moran: I doubt that there are as many applications where current electric trucks can replace IC, as the CARB folks might believe. When you look at what IC trucks do, the fact that you can call up horsepower when you need to either to get the truck out of a depression in the yard, or call upon increased lift speeds or simply chiseling under or pushing a load; peak horsepower is a big issue in my mind and one that CARB has perhaps not considered deeply enough. Electric truck development will continue to close the gap with higher voltages, larger more efficient components, but I doubt that we’ll eliminate the need for IC trucks in the foreseeable future.

MHM: Tim, you’re an active participant in the ITA’s engineering committee meetings. One of the topics that always comes up in those meetings is the state of international standards. What’s your take on the desire for global standards?

Quellhorst: For the past few years, members of ITA’s engineering committee have been actively participating in the process of reviewing some proposed changes to the international (ISO) standards. Working with our counterparts overseas, a few areas of common ground have been reached, and that is good. With all the different cultures involved, many different kinds of unique challenges and misunderstandings have surfaced along the way. Let me try and explain.

“Global” fork lift truck manufacturers, like Crown, have been successfully building product on one continent and exporting into another for many, many years. Building and selling product that has to adhere to different, local standards really doesn’t present as many hurdles as market differences do. Two good examples of these market differences are pallets and batteries. Both can be significantly different between North America and, for example, the European markets. As a result, almost every vehicle class usually ends of being different in each market because it must meet the needs of the market it is being sold into. The reality is that we’ll likely have product differences and, therefore, standard differences as long as these market differences remain.

So what started the recent ISO discussions? The recent push within the standards community to update the “global” (ISO) fork lift truck standard didn’t originate from a customer or market need, nor did it originate from the OEM’s. It is really a spin-off from how European product standards relate to the European law that governs trade within and into the EU community. Because of some procedural deadlines, there is a specified time in the future whereby the current European (EN) forklift standards must be replaced by the appropriate international (ISO) standards. From a European point of view, the ISO standard is not up-to-date because it differs from the current EN standards. The US is involved because it has one vote within the ISO organization. As one would expect, the group responsible for our US standards, ANSI, ultimately casts that vote.

Another interesting difference between the continents is the membership of a standards committee. In the US, each ANSI committee must, by design, have “balanced” representation. What that means is that besides OEM’s, other interested parties like customer groups, governmental agencies, etc. must be represented and no one group can comprise more than 1/3 of the entire committee’s membership. This balanced organization structure ensures that every group either interested in or impacted by our national standards will have a vote during the process of forming or changing our national standards. Other standards organizations like ISO don’t have similar rules.

So, all of the current ISO talk is really a result of some procedural time limits originating within the European community, and since the US is part of ISO, we are involved. This did not originate from some US market, customer, or OEM need and, in the foreseeable future, will likely have little impact on our national standards or OSHA law.

MHM: How do you determine the features your customers need?

Tim: Simply put, we spend a lot of time studying their operations and talking to them so we can understand their needs. In doing so, we use a variety of unique tools and methods that we consider to be quite confidential.

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