Aftersales Attitudes

Part Three of the School of Business series, published in the November edition of Prime Mover magazine, brought the process behind prime mover procurement into the spotlight. Highlighted as an integral facet to the method, the article touched on the importance of after sales support when investing in a significant asset.

Purchasing a prime mover is not a casual decision, as it can tie up significant capital that must bring more money back into the business than it costs to own and operate – also known as Return on Investment (ROI). In his 2012 bestselling book, The Personal MBA, Author, Josh Kaufman says that part of calculating ROI of an expensive asset – like a new fleet of prime movers – is amortisation. “Amortisation is the process of spreading the cost of a resource investment over its estimated useful life. Amortisation can help you determine if a potential investment is worth it,” Josh writes.
Further explaining the idea, Duane Hughes from South Australia-based construction and transport firm, GE Hughes Construction Co, says he calculates the whole of life costs of prime movers before making a decision. “Of course, you have to work on running and maintenance costs and resale value,” he says. “A big thing for me is business partnerships. If I’m investing millions of dollars into a particular brand for its trucks, I want to know that it has my back. It’s a big investment, so to win my business you have to stand by your product.”

Starting to expand from its building and construction roots in the 1990s, Duane says he has worked with a number of different truck suppliers as the company grew. However, Duane says he has experienced ‘disappointing’ efforts of after sales support from his suppliers in the past, which weakened the relationships between his company and the suppliers. “We’ve had a few suppliers  drop the ball with us because of their inflexibility to work with us after the sale,” Duane says. “Some just hand over the keys then it’s ‘see you later’.”

Duane explains that his South Australian facility boasts a state-of-the-art repairs and maintenance workshop featuring its own brake tester and shaker, which allows him to schedule service at night to mazimise fleet utilisation. “We wanted to develop a partnership with our suppliers to use the workshop for servicing and repairs, and Scania was the only brand that offered the flexibility to work together with us.”

According to Duane, Scania representatives came to the GE Hughes workshop to investigate the business set up and work practices, and were impressed enough to form a unique agreement. “Another company was too rigid and complicated to work with, but Scania said it would train our mechanics, supply the parts and provide a program for us to schedule maintenance for the prime movers,” Duane says. “That was a real turning point for us, and we purchased a number of Scania R 560s and G 480s.”

The R 560s are used in truck and dog combinations travelling in South Australia. Duane says the 560s are the ideal truck for the local topography as the retarder can handle the infamous descent on the South Eastern Freeway into Adelaide without trouble. “The Scania product is fantastic,” Duane says. “The truck is heavier but the retarder is exceptional. It does what it is meant to do and protects the brakes perfectly. At this stage we’ll be able to run the trucks for five years without needing a brake change.”

The G 480s are being used on a collaborative project in Sydney with Qube and Railroad Transport, he adds. “The G 480s are a perfect little town truck for the city in terms of accessibility,” Duane says. “This job didn’t need the horsepower, it needed the fuel efficiency. You always have to make sure you’re buying something that is practical to the application.”

Though the vehicles running in South Australia can come through GE Hughes’ workshop, the Sydney-based vehicles have a different arrangement with Scania, which is where Duane says the Swedish truck maker’s flexibility was key. “What was suitable for our South Australian fleet is impractical for the trucks in Sydney, so we have those on a full contract service and maintenance package with Scania,” Duane says. “Scania was very flexible in putting together different levels of coverage for the different vehicles. There was no way pre-set packages were going to suit the diverse needs of our business, but Scania was happy to work in partnership with us to figure it out.”

The benefit of the full contract maintenance on the Sydney fleet is that it offers Duane a set maintenance cost per month that provides him with a bottom line to work towards, and comprehension of the full costs over time to predict the amortisation. As Author, Josh Kaufman, explains in The Personal MBA, “Amortisation doesn’t work well if you don’t sell what you produce or your equipment wears out more quickly than expected. Predictions are a tricky business – if you’re wrong in your estimate, your investment may cost a lot more…than you originally assumed.”
The full maintenance program is crucial in that regard, Duane says. “We specified the trucks to make them the optimum combinations, with the highest quality components we could,” he says. “Then, we gave Scania the responsibility to maintain the complete truck and trailer from start to finish. It gives me peace of mind that I only have to worry about the fuel, tyres and the driver as the other costs are fixed.”

When it comes to worrying about the driver, Duane adds that he keeps an eye on their performance through the Scania telematics system. “I can’t be there to monitor the drivers personally, but Scania telematics gives us the reports to know how they’re going, reward good behavior or encourage improvement where required,” Duane says. “The Scania driver trainers have also been a big help, providing valuable advice on how to use the retarders effectively and how to drive the truck to its full potential with the technology it possesses. ”The service and maintenance and driver training were crucial to GE Hughes investing in nearly 20 Scania prime movers this year, Duane says. “The relationship doesn’t stop when the product is delivered,” he says. “Working with GE Hughes is an ongoing process and a lot of the sale actually happens after the deal is done.”

Fast Fact

GE Hughes Construction Co has begun upgrading its fleet under the high productivity Performance-Based Standards (PBS) scheme over the last four years, says Duane Hughes. “Around 75 per cent of the vehicles we run in South Australia and New South Wales are PBS, and we’re adding more in South Australia as the laws change,” he says. “SA is not as advanced as other states yet, but if you’re not building them now, then you miss the boat when the time comes.”

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