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IT Maximizes Truck Customization

Truck manufacturers are overhauling their businesses like worn-out engines. Among the companies that have embarked on dramatic technological change are International Truck & Engine Corp. and Paccar Inc.
InformationWeek 500 - AutomotiveAs with automakers, truck manufacturers are overhauling their businesses like worn-out engines. Among the companies that have embarked on dramatic technological change are International Truck & Engine Corp. and Paccar Inc.

As part of its decision to build a new 4000 Series truck line, International Truck, a subsidiary of Navistar International Corp., invested $900 million in a new manufacturing process similar to those used by carmakers-building the vehicle in larger sections provided by suppliers. "Our customers used to come in and order off an à la carte menu, pick the components, and we'd build it for them," says Art Data, VP of IT at the $8.45 billion Chicago company. "Now they can go online and say what they're going to use the truck for, and we'll tell them the best combination of components that will fit their needs." International Truck's customers are dealers who sell to trucking and construction companies. The company is a market leader in midsize trucks; it also sells buses to cities and school districts.

The 4000 series, which includes dump trucks and short-haul vehicles, is the company's first truck remake in 20 years. Available since March, the trucks are built at factories in Springfield, Ill.; Garland, Texas; and Escobedo, Mexico.

The manufacturing process adopted for the 4000 series eventually will be adopted in heavy-truck manufacturing. Important in the change was i2 Technologies Inc.'s production-scheduling software to coordinate parts delivery from suppliers. In addition, International Truck uses custom software for all its dealerships' desktops, so sales staff can work with a customer in choosing the options for a 4000 series truck, then send the purchase order to the truck maker online.

International Truck is also testing a homegrown application it calls the Dealer Inventory Alliance that tracks and manages a dealer's parts inventory for all trucks. It's also using an extranet for dealers to track orders and get service information. "We look at the dealers as part of our extended enterprise," Data says. "We look at the whole chain, from order to after-market support."

International Truck's technological and manufacturing innovations have cut the time it takes from the design to the building of trucks by 30% to 40%-shaving two years off the five-year process. In addition, the company has improved on-time delivery of trucks from about 60% to 90%, Data says.

Meanwhile, Paccar, a $7.92 billion heavy-duty truck manufacturer in Bellevue, Wash., has set a goal of conducting 95% of its business electronically by year's end. Some departments are getting close to the mark, CIO Patrick Flynn says.

Part of the process includes coordinating inventories of spare parts with dealers. Paccar is using supply-chain-management software from Manugistics Group Inc. to get inventory-related data, such as the rate of sales, minimum and maximum amounts for each part, dates of promotions, and expected sales fluctuations based on the season. When the system indicates a customer may need to restock certain parts, it sends a recommended order for approval. That way, both customers and manufacturers spend less time ordering and more time selling, Flynn says. "The customer is happy because he finds what he wants when he needs it." Paccar, the No. 3 truckmaker behind DaimlerChrysler and Volvo, started rolling out the inventory-management system two years ago in the United States and this year in Europe. The system covers about a third of Paccar's 1,500 worldwide parts dealers.

Paccar's extranet is also an efficient tool that dealers can use to look up specific parts for each truck sold to a customer. It's sold in case customers need to place an emergency order. Lists and diagrams of parts associated with each segment of the truck are available online. "What we build is more like airplanes than cars. Each truck is custom-ordered," Flynn says, and they sell for about $120,000 apiece.

Technology at Paccar has become increasingly important in cutting production costs and servicing vehicles after they're sold. International Truck's goal is to reduce production time for its medium trucks by 40%. Paccar and its competitors are struggling with a major industry slump caused by a glut of new and used trucks, higher fuel prices, and insurance costs. "It's hard to imagine that we could be as lean as we are without technology," Flynn says. "Everybody has to do more with less, and technology is the way we're able to do that."

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