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Cut the Fat Out of Wholesale Delivery Costs

Cut the Fat Out of Wholesale Delivery Costs

Any Parts Manager worth his salt knows that expense management is hyper-critical in the low-margin, high-overhead business of wholesale parts.

As a technology supplier to the largest, most efficient automotive original equipment parts wholesalers nationwide, OEC has the unique opportunity to witness innovative cost-cutting ideas every day.  We see firsthand as parts managers find and implement new ways of better serving their wholesale customers while still satisfying their dealer principal’s profit goals.

Timely Parts Delivery

One major expense and challenge for OEM wholesale parts suppliers has to do with getting parts to customers on a timely basis.  Delivery costs have skyrocketed in recent years and according to AAA, it’s not getting any better.  The average price of gas will increase to a record high of $5 a gallon by Summer, 2013.  While you can’t do anything about the gas prices, you can change other delivery variables to better manage your expenses.

Best Practices

A leading Wholesale Parts Manager in theSeattle, Washington, area recommends the following cost saving tips:

  1. Join a delivery co-op where trucks, drivers and expenses are shared. This particular wholesale operation shares no less than 30 trucks that cover a 70,000 square foot territory daily while still ensuring service levels of twice a day delivery for crash parts.
  2. Hire contract drivers with their own trucks, insurance and benefits.  This strategy solves multiple problems.  Our Seattle parts manager said not only has the move helped him trim labor, overtime and truck maintenance expenses, he’s also assured that the delivery will always take place regardless of a “down” truck or a “sick” employee.
  3. Match the vehicle to the delivery.  Crash parts still represent the overwhelming majority of wholesale business but mechanical parts are picking up steam.   Given their hot shot” service level demands, smart parts managers use smaller, more fuel efficient vehicles for mechanical parts delivery.  They also hire part-time drivers to keep labor costs low.

How does your wholesale parts business balance your customer’s need for fast service with rising delivery costs?   Are you using any tech tools to streamline delivery and keep costs low?  Let’s hear from you!