SAN JUAN, Puerto Rico—``Only the strong survive'' is an old expression that doesn't quite cut the mustard anymore. At least not in this era of price cutting to the bone while customers demand more and more bang for their bucks. You've got to be more than just strong.
``You need to be smart, caring, agile, affordable, fast and indispensable to the success of your customers.''
Earlier this year, Scott H. Kress, senior vice president of Mack Trucks Inc., issued that challenge to commercial tire dealers attending Continental General Tire Inc.'s annual dealer meeting, held in Puerto Rico.
``Remember, if you're not the lead dog,'' he warned, in deference to Mack Truck's bulldog mascot, ``the view is always the same!''
What he was saying, in no uncertain terms, is the trucking industry is moving at such a fast pace that, to stay competitive, every link in the trucking chain needs to be able to adapt quickly to those rapid-fire changes.
Does a tire dealer turn tail and run? Or just plod along, preferring the hind view?
To be successful or, for that matter, to remain viable in the commercial tire business, Mr. Kress instead suggested dealers not only must understand their customer, but also understand their customer's customer.
``Find ways of cutting your costs,'' he recommended. ``Pass some of the savings on to your customers. Help your customers save money. Help them be more productive, efficient, profitable.''
He reminded dealers—whom he said are ``on the front lines, day in and day out, helping to serve the trucking industry''—that they are ``an integral part of the supply chain'' and, consequently, need to take care of their customers.
``Get them on the road as quickly as possible, because the stakes these days are very high.''
Just how high was illustrated by the 44-year-old executive as he depicted a trucking industry in transition that will affect related businesses and continue evolving over the next five years.
The outlook continues to be bright for trucking, coming off three very big years that have dramatically increased the number of trucks on the road.
``If you took the average year for U.S. Class 8 retail units, the number of deliveries would be 134,000 units,'' he said. However, ``in 1994, we had set a record of over 186,000 deliveries. In 1995, we were all astounded when we went over 200,000 deliveries.
``We all thought the bottom would fall out in 1996, but as it turned out, we delivered 170,000 units.''
Despite continued encroachment by the rail industry, trucking should continue to gain share over other methods of transportation, including railroads, he noted.
As for Allentown-based Mack, the 97-year-old company maintains its third position among other nameplate manufacturers and, according to Mr. Kress, is in its fourth consecutive year of retail market share growth.
``We all know how important it is for us to understand our customers,'' he told dealers. ``For Mack, we find that while it was important to totally understand our customer—the for-hire carrier or private fleet—it was our customer's customer, the shipper, who was driving change in the trucking industry.''
While the deregulation of the industry in 1980 has enabled trucking to reduce its inventory-to-sales ratio by millions of dollars, he said, shippers won't let the carriers sit back and relax.
Those shippers ``are not satisfied with the status quo. They want it better, faster, cheaper.''
They expect further inventory level reductions in the supply chain, knowing it will benefit their company's bottom-line cost, he continued. ``The result will be more pressure placed on motor carriers to continue to improve their performance.''
And ``if the truck's not there when it's supposed to be, we can't have continuous logistics improvements to further reduce inventory levels,'' he added.
Like the tire industry, which has often been on a first-name basis with overcapacity, trucking is currently in that predicament.
There's ``too many trucks chasing the freight,'' Mr. Kress said, ``and we do not see that changing in the future.
``This situation gives the shipper the hammer, because if that carrier can't do it, 10 others will. For Mack, this means building more reliable trucks backed by strong service support.''
Another thing with which tire dealers are familiar is the just-in-time (J-I-T) concept, begun in the 1980s by manufacturing plants.
Mr. Kress forecast that by the year 2000, one out of two shippers will be into J-I-T. In 1990, 19 percent of shipments were J-I-T. By 1994 that percentage grew to 31, and is expected to grow by an additional 10 percent this year.
He expects increased pressure from further tightening of delivery schedules in the 21st century, further reduction of carrier transit times, and greater supply chain management to reduce cycle times.
The customer service race enveloping trucking almost mirrors that facing most tire dealerships.
Customers want to know, ``What can you do to help me better than your competitor?'' Mr. Kress said. That includes faster delivery, J-I-T, and electronic data interchange—``all at the same low price.''
National LTL (less-than-truckload) carriers, for example, have had to revolutionize very quickly and change their business practices drastically to please their customers. ``Because they had to change, we need to change with them,'' he said, ``right down to the tires they use on their trucks.''
Meanwhile, to improve efficiencies, trucking, including small 25-to 50-truck carriers, have gone from ``heavy intensive paper'' to a paperless operation—even in the cab, Mr. Kress said.
To enhance that environment, Mack has been developing ``intelligent'' vehicles. ``Through transponders, satellite and cellular, we can communicate with sensors on our chassis and drive train that monitor various operation parameters,'' he revealed.
``Think of it! Even the smallest fleet can manage the performance of their equipment right from their desk-top computer, and monitor things like fluid levels, electronic problems and mechanical malfunction'' to prevent unexpected failure and downtime.
In the near future, intelligent vehicles will be running on intelligent highways, he predicted, to facilitate the continuous movement of freight.
Through the use of inexpensive transponders, vehicles can keep moving past customs stations, weight stations and inspection areas without stopping. The result: a reduction in transit time and big cost savings.
What, in turn, must service providers do to support carriers? Cooperation is essential in order to continue transportation cost reductions and improve performance, reliability and value, Mr. Kress told dealers.