MIAMI-When you think Ryder, what comes to mind? ``Ryder road-ready''?
The rented yellow trucks that venture out in force onto the nation's highways every weekend for various family moving projects?
That's only a small-very small-part of what Ryder System Inc. is all about.
The real bread and butter for the Miami-based conglomerate is its business that leases some 203,000 trucks to a long list of major U.S. corporations with such well-known names as Pizza Hut and General Motors Corp. Nary a yellow truck in the bunch, those vehicles don't say Ryder on their sides, but they move tons of products and components daily, often for just-in-time deliveries.
What helps keep that massive fleet rolling are the original equipment, new replacement and retreaded tires the company purchases for some 700,000 wheel positions-an annual tire bill totalling approximately $90 million.
The tire maker that most benefits from that business is Nashville, Tenn.-based Bridgestone/Firestone Inc., which counts Ryder among its biggest national accounts.
The two firms have a relationship that, from at least Ryder's standpoint, is a prime reason it can remain rolling and profitable.
While the national account program with BFS covers static issues like warranties and technical support, it is all-inclusive to the point that BFS person-nel-including tire engineers-have been vertically integrated into and move freely within Ryder's corporate structure. They work solely on-site at Ryder.
In turn, Ryder has employees within Bridgestone/Firestone's walls, to reinforce Ryder's standards and tire needs.
Ryder's criteria for its BFS national account must include the tire maker providing on-site, physical support not only at Ryder's Miami corporate headquarters but, when called upon, at the 1,146 service depots the company operates in the U.S. and Canada. That is essential, according to Vincent E. Fortuna, vice president of maintenance for Ryder Commercial Leasing & Services, a business unit of Ryder System.
``Obviously, geography and blanket coverage (by BFS) for our organization is very critical,'' he said. ``The concept with Bridgestone is total tire management.''
BFS must also provide on-site training and technical tire engineering support, development of Ryder personnel, problem solving, and responsiveness to product development, he said.
Ryder has developed and is testing a system it calls EDI-``Elec-tronic Data Interchange''-enabling it to link with suppliers and customers. So rather than carry a large tire inventory, Ryder can automatically relay its replenishment needs to BFS via EDI.
With many of its manufacturer customers, like GM or Whirlpool, needing just-in-time deliveries, ``if we have tire problems, we need quick solutions,'' he said.
``Vertical integration with our business partners, such as Bridgestone, allows us to do a lot of things together. We have a tire strategy with them to help lower our costs internally. National accounts have a lot more positives than negatives.''
He described the BFS arrangement as continual ``rolling R*&*D'' (research and development).
Although Ryder has a ``corporate parts master system'' that allows the company ``to measure our buying power across all our business units,'' Mr. Fortuna said the purchasing process is decentralized.
Its people in the field can make purchasing decisions-but within parameters set by the corporation. Those are based on the national purchasing/service agreements and casing guarantees it has negotiated with BFS and its secondary new-tire supplier, Goodyear.
Mr. Fortuna said Ryder also has a similarly-styled ``vertical integration'' program and national agreement with Bandag Inc. for the retreads Ryder purchases.
The selection of commercial tire dealers to service Ryder's fleet, he said, is left up to BFS, though ``if our people in the field are comfortable with a certain dealer, that's fine with us. We just put him into the process.'' However, Ryder handles at least 60 percent of all on-road service calls itself.
Until it began its partnership with Bridgestone/Firestone in 1991, Mr. Fortuna admitted ``we had more problems when we were working independently with tire dealers. A lot more problems because billing was inconsistent and delivery to our branches was a hit-and-miss type of thing.
``The national account program has virtually eliminated all that.''
In fact, since Ryder does all of its own truck maintenance, including tires, the only time a tire dealer in the BFS network may handle a Ryder truck is for an on-road breakdown-if a Ryder service truck is unavailable.
Tire management can be an exercise in futility, he said, unless a company has adequate data outlining every expense. Ryder's key to success is meticulous tracking of virtually every aspect of each vehicle.
Aided by its EDI system, the company's future strategy, Mr. Fortuna said, is to handle all tire warranty claims electronically, although Ryder is also looking at eventually eliminating warranties. It would instead take all the costs involved and remove them up front from the price of the tire, with a clause negotiated in its contract with a tire maker to cover ``unusual circumstances.''
Pressed to come up with a problem with its national account programs, Mr. Fortuna said ``the only downside of working with a national account is you become very comfortable because it's so good.''
Ryder's is ``strictly a negotiated, straight-forward contract'' with BFS, he said, with no incentives of which he's aware. It covers areas such as support services, availability and performance standards.
``And naturally,'' he added, ``our buying power allows us to buy tires at a very good price.''