The 5th Element
Our guest blog post, The 5th Element, has been written by a new guest to our website: Patrick Fisher. Over the past two decades Patrick Fisher has been primarily focused on distribution development of large complex agriculture and construction equipment dealerships. Patrick was the Vice President, from March 2013 – October 2021, of Sonsray Machinery, Inc. with P & L responsibilities for Construction Equipment locations with Sales and Service Area (SSA) of 15+ locations within five contiguous states on the west coast. Patrick was the former Vice President, until March 2013, of the Construction Division at Titan Machinery, Inc. with P & L responsibilities for Construction Equipment locations with Sales and Service Area (SSA) of 40+ locations within eleven contiguous states in U.S. While in this role he successfully developed and launched Titan Rentals, a Rent-to-Rent business unit within the construction stores. Mr. Fisher also served as Director of Operations for Titan Machinery responsible for all parts and service operations for all of the Titan Machinery locations.
He was additionally Planting and Seeding Platform Engineering Manager for CNH Global until May 2003. Prior to joining CaseIH in 1996, Patrick was an automation engineer for Hutchinson Technology.
Patrick continues to spend time with his family farm near Bismarck, ND to ensure his two sons learn and appreciate good work ethics. Mr. Fisher has a Bachelors in Industrial Engineering from NDSU and an MBA from the University of Mary in Fargo, North Dakota. He was a member of the Case Construction Dealer Advisory Board (6+ years), the American Rental Association, and the Association of Equipment Dealers. Patrick has a proven track record of business growth execution. Patrick’s hobbies include hunting, fishing, and flying.
THE 5th ELEMENT OF AN EQUIPMENT DEALERSHIP: PREDICTIVE MACHINE DATA ANALYTICS
Equipment dealerships have evolved through the years to not only include equipment sales. Parts, Service, and Rental sales have proven to be critical success factors increasing expense absorption to ensure profitability especially during these days of supplier equipment shortages. The next evolution of equipment dealerships is the 5th element: predictive machine failure analytics.
Today’s customers have access to more information about their operations and equipment than ever, yet most dealers wait for the phone to ring to help solve a customer issue. All machines are the same, if not they will be the same within the next design cycle of that manufacturer. The equipment is designed and built by engineers and production employees that went to the same schools using the same steel, plastic, and electrical components. All equipment is the same, the only differentiation is customer support. As a dealer you can no longer survive with a reactive customer support culture. How do you shift your customer support culture to the 5th element using the technology that is readily available to the industry?
The average dealer installs 40% of the parts they sell. I do not foresee a time in which all parts sold by a branded dealership will be installed by trained technicians. However, I do think by changing the culture of the dealership service support from reactionary to predictive machine failure you should be installing 60%+ of the parts sold by trained technicians. Increasing parts sales installed by technicians by 5% would increase the typical dealerships pretax net income by 20%. A 10% increase in parts installed would increase pretax income by nearly 40% for the typical dealership. How do you convince customers to buy your labor experience when buying parts? This is something that we all have struggled with through the years. The simple answer is you don’t, unless you provide predictive failure analysis support. When a customer is standing at the parts counter or on the phone talking with a parts counter associate asking about the pricing and availability of parts, they have made the decision to install the parts themselves. This decision could have been based on prior experience, timeframe to repair, pricing or many other reasons. Machines are breaking down, your dealership is selling the parts to repair the machines, however over 50% of the parts are not being installed by your dealership. How do you change this?
Today’s technology is impressive and underutilized by the typical equipment dealership. Most manufacturers offer telematics on new equipment that is tied into the CAN bus of the machine that reports alarms, usage, and position through either cellular or GPS transmissions. These can be monitored remotely to help support the customer, however after the free trial period supplied by the manufacturer, most customers do not renew their subscription because of the lack of perceived value. Most dealerships do not have processes or people in place to support remote monitoring. The primary issue with today’s telemetric systems is that they are priority to the manufacturer not the customer. Customers are looking for a one stop solution for machine uptime. The current telemetric solutions can help provide limited predictive machine failure by monitoring changes in reporting of the machine alarms.
The missing piece of the puzzle for a true machine telematics predictive failure analysis is real time oil condition and fuel condition reporting. There are solutions available today that can be added to machines that provide real time reporting of oil and fuel condition. These solutions are relatively inexpensive and can provide timely reporting of changes in oil and fuel. These systems coupled with the manufactures CAN bus telemetric solutions have the ability to provide your dealership with a predictive failure analysis solution for your customers. Customers understand that machines breakdown, however they tend to breakdown at the most inconvenient time, when they need it to work. If you are able to remotely monitor CAN bus alarms as well as real-time oil and fuel condition changes your dealership could provide predictive machine failure analysis to your customer. This would allow the customer to schedule repairs with your dealership. Scheduled repairs can be planned and are more likely to be scheduled with the dealership for repairs.
Most customers currently do not renew their telemetric subscription after the manufacture supplied free trial period because of last of perceived value. This is a function of your dealership to bring perceived value to the customer. Technology is evolving every day and will continue be a critical part of machine sales/service cycle going forward. All equipment manufactures spent excessive engineering resources to ensure engine emissions compliance over the past 10 plus years. Now the focus is technology development. This 5th element of a dealership: Predictive Machine Data Analytics will be the primary equipment distribution game changer in the next 10 years. Will your dealership embrace this technology as an integral part of service culture?
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