EDI critical tool for PACCAR in integration with chain partners

PACCAR is a global player that builds and markets three brands of trucks: daf, originally from the Netherlands, and the American brands Peterbilt and Kenworth.

The PACCAR Parts component focuses on all parts needs that arise after the trucks have been built. The goal of PACCAR Parts is to ensure the highest possible availability of all parts that the end customer needs during the life of the truck.

To achieve this goal, PACCAR Parts supplies parts to dealers through a network of distribution centers in Europe, America, Russia and Australia.

Tim Molhoek, Demand Planning Manager at PACCAR Parts explains:

“The ultimate goal for the end customer is to keep the uptime of the trucks as high as possible. This means that the trucks have to drive as long as possible without unplanned repairs. Trucks are scheduled with very little room for margin. After a few days of standstill, the customer already focuses on it. So if the parts availability is high, the customer is satisfied because then he can get the maximum potential from his vehicle.”

Why chain integration & EDI?

To achieve this goal, PACCAR Parts strives for a high level of supply chain integration. EDI is a means to strengthen the integration with supply chain partners. Supply chain integration helps PACCAR achieve its goal. In order to keep the availability of parts as high as possible, it is necessary that the entire supply chain cooperates and actively shares information.

“If this does not happen, the danger of the bullwhip effect is lurking: in the event of a change in demand, the effect at the beginning of the supply chain is still relatively small, but the further back we go in the supply chain, the greater the variation. As a result, the entire supply chain is eventually disrupted and it has to deal with large stock shortages or surpluses,” explains Tim.

In order to guarantee the end customer the highest possible uptime of their trucks, PACCAR Parts works closely with both suppliers and their direct customers; the dealers. Information is actively shared on both sides in order to predict demand as accurately as possible and thus to be able to place the right stocks in the distribution centers.

In order to keep the stock as high as possible at the end of the supply chain, PACCAR parts receives information every day about the current stocks and sales at the dealers. Based on this information, PACCAR makes suggestions to dealers for orders.

On the other hand, PACCAR also exchanges the necessary information with suppliers, so that they can gain insight into future needs. In the role of Demand Planner, an important responsibility of Tim Molhoek is to predict (forecast) what will be sold. This information is actively shared in the supply chain.

“The more visible that is for everyone, the better they can prepare for any changes in the future,” tim adds.

The main challenge: connecting suppliers to EDI

EDI is a critical means for PACCAR to exchange this information efficiently and error-free. PACCAR strives to process as many order lines as possible fully automated. Nowadays it is therefore a requirement to be able to do business with PACCAR, especially for large suppliers.

However, from the past there are suppliers who do not yet use EDI and where there is still profit to be made. Profit for PACCAR, but of course also for the supplier itself. That is why Tim is working hard to connect suppliers to EDI.

Tim gets help from EDI coordinator Frans Elemans of OMS International who works on a secondment basis at PACCAR. Based on his expertise, Frans is responsible for the technical part of establishing EDI connections with suppliers. Another important role is to actively approach suppliers and convince them of the value of EDI.

“Our argument here is that we work together towards a higher predictability of demand and thus serve the end customer better and at the same time save costs. The persuasion process often starts with buyers and account managers. The business must first see the value of it. Gradually, technical people are connected,” says Tim.

In the three years that Tim has been working at PACCAR, the company has made great strides in the field of supply chain integration. Quantitatively, PACCAR sees this reflected in the number of order lines that are exchanged fully automated. In the last two years, this has increased by about 6% annually.

On the qualitative side, Tim sees a major improvement in the relationship with suppliers:

“I notice that there is much more communication and mutual trust than before. That trust is important: on the one hand you trust each other with business-sensitive information, but on the other hand there must also be confidence that the information you receive is accurate, so that you make the right decisions based on that data.”

On behalf of OMS International, Frans plays an important role in this. Because although EDI is highly integrated in the automotive industry, there are many standards within EDI and an expert is needed to steer the integration process in the right direction.

“We were looking for a very specific profile for this role: EDI is already a kind of niche within the IT sector, so finding specialists is therefore already a challenge. But in addition to technical EDI knowledge, we were also looking for someone who understands the business problems and has practical experience in the logistics sector. With these specific skills, it is difficult to find the right people. Fortunately, OMS International has the right people in-house who have the knowledge to be able to fulfil this role properly,” tim explains.

The experiences with Frans are therefore purely positive:

“What we reap the benefits of is that Frans has extensive experience in logistics. He knows processes and is familiar with the terminology. EDI technically he has a lot of knowledge. He knows where to look for the solution when there are issues. He has knowledge of the technical part, such as programming and processing transactions. But Frans also knows the logistics processes that take place in practice. He has experience and feeling with that. That just makes him a very good combination for us,” says Tim Molhoek.

Fruitful cooperation

For many years, OMS International has been helping PACCAR to bring chain integration with EDI to a higher level. The origins of this collaboration were already laid in the 90s when Automotive companies united to develop communication standards for the industry. For this purpose, the Odette association was founded, in which DAF occupied a management position. OMS International was founded in 1991 to support this association (ODETTE Management Support). This milestone marked the start of a fruitful collaboration.

OMS is proud of the results that PACCAR Parts has achieved in collaboration with OMS. With the path PACCAR has already taken, we are confident that many more successes will follow!