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Behind the Parts Counter

March 26, 2011
By: Dan Anderson, Farm Journal Columnist
AGCO warehouse packing 003 resized
Warehouse workers prepare shipments to send to individual dealers.  
 
 

Consider your fleet of machinery and the hundreds of parts and pieces that work together to get the job done. When one of those parts or pieces breaks, the last thing you want is to wait very long for a replacement. In most cases, if your local farm equipment dealer doesn’t have the particular part in stock, he can tap a few computer keys and have it sitting on the counter for you to pick up in 12 to 18 hours.

Now consider the hundreds of thousands of unique parts used on thousands of models of machines on farms across North America. The ability to identify, locate, ship and deliver a single part in a matter of hours is pretty amazing. But it’s everyday business for the parts distribution divisions of major ag equipment manufacturers such as AGCO, Case–New Holland (CNH) and John Deere.

Simply deciding which parts to keep in their warehouses is a critical call for equipment manufacturers. If they keep too many slow-moving parts, interest payments will skyrocket, crunching corporate profits. Failure to keep enough fast-moving parts risks not having those parts available when customers need them.

Then there’s the challenge of efficiently storing in bins and racks everything from tiny O-rings for hydraulic valves to massive subframes for four-wheel-drive tractors.

When you consider the logistics necessary to quickly locate one specific part within multiple warehouses scattered across North America and to determine the quickest, yet most economical, way to ship that part to a specific location within 12 to 18 hours, the magnitude of the ag parts distribution system comes into clearer focus.

With these challenges in mind, here’s a look inside the complexities of the parts distribution systems of the big three ag equipment manufacturers.

AGCO

AGCO parts are distributed from eight regional warehouses located in Batavia, Ill.; Dallas, Texas; Harrisburg, Pa.; Independence, Mo.; Stockton, Calif.; Stone Mountain, Ga.; and two locations in Canada: Kitchener, Ontario, and Regina, Saskatchewan.

The Batavia depot is the central warehouse and headquarters for AGCO’s parts distribution network, with more than 220 trucks leaving the facility daily. The warehouse in Independence, part of an immense commercial warehousing complex in a converted underground limestone mine, is the company’s largest facility and handles larger parts, such as tractor cabs and subframes for combines and tractors.

"Our parts books list more than 1 million individual parts," says Joe DiPietro, AGCO’s senior manager, strategy and performance implementation. "Of all those parts, we keep around 300,000 [individual part numbers] on hand at any time. We constantly manage the inventory so we don’t unnecessarily stock excess out-of-season parts."

DiPietro says AGCO uses sophisticated computer programs, weather forecasts, historical demand data and common sense to predict how many parts to put in inventory in anticipation of planting, haying, harvest and other seasonal demands.

"In addition, we know how many certain models of machines—say, combines—are in a specific dealer’s territory and can use histories and other data to know how many and what kind of parts the dealer should have to service those combines," he says.

AGCO dealers can access parts in eight ways, from seasonal orders for large volumes of parts (field cultivator sweeps, combine belts, etc.) to emergency overnight orders.

"In many cases, a dealer can send us an order in the evening and we can get it shipped by midnight and have it at that dealer’s store the next day," DiPietro says.

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FEATURED IN: Farm Journal - Early Spring 2011
RELATED TOPICS: Machinery, Magazine Features, Shops

 
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