• The Parts Supply Business:The OEM Way (Part II)

    Aug. 1, 2007
    In the second round of reviewing the OEM parts business, we're going to examine the strategy and practices of three well-known manufacturers: Carrier,

    In the second round of reviewing the OEM parts business, we're going to examine the strategy and practices of three well-known manufacturers: Carrier, Lennox and Trane. The rising tide for all these companies seems to be an entrenched commitment to growing their parts business. And not surprisingly, the focus is on their customers.

    “Our customer strategy has its genesis in our customers' needs to grow their business and profitability, and is the framework that ensures we stay focused on those needs,” says Lennox's Rony Kordahi, director of Parts & Supplies. “It is the guiding light to any decisions, trade-offs and investments we make in our business.”

    Echoing that sentiment is Trane's David Coghlan, Global Parts business leader.

    “Our goal is to continue to build our capabilities and improve service to our customers. We are broadening our product range to meet even more of their needs, and we are adding more locations to make it easier for them to do business with us,” Coghlan says.

    As before, we posed the same questions to these well-respected brand leaders so that each had the opportunity to answer the identical questions.

    Look for the third and final installment in the October issue.

    What do you call your replacement parts business?

    Carrier: Totaline.

    Lennox: Our replacement parts business is called “Parts & Supplies.”

    Trane: Trane Parts Centers, American Standard Parts Centers.

    What is your strategy for your replacement parts business?

    Carrier: Provide a one-stop shop and welcoming environment for busy HVACR contractors, dealers and technicians. We make it easy for them to get in, get what they need and get back to the job prepared to perform professionally and efficiently.

    The 90+ Totaline model sales centers being launched before the end of 2007 best reflect this strategy. Stores are inviting and brightly lit. Products are logically organized and easy to identify. The new Totaline sales centers promote self-shopping where applicable, which is a major step forward from the traditional “parts counter” of this industry.

    A pretty store is only as good as the people who run it and serve our customers. When a customer visits a Totaline store, highly trained professionals who understand compressors, motors, thermostats, IAQ, tools and accessories serve them.

    That's largely because of Totaline University. A demanding curriculum for counter sales associates and store management provides the fundamentals of HVACR parts in addition to new industry trends and product information.

    From correspondence courses and four annual, regional training sessions to Masters Management classes and Refrigeration University — Totaline sales associates continue to learn throughout their careers.

    That translates to a team of top-notch professionals helping customers at the counter every day.

    Their training ensures that they help customers have everything they need to do the job correctly. We are business partners, not just order-takers.

    Lennox: Our strategy in the Parts & Supplies business is to focus on supporting our customers and the products we offer. We aim to ensure through this support that Lennox dealers continue to be efficient at growing their business, their reputation and their profitability.

    Trane: We offer the right parts and the right advice, at the right place and at the right time.

    • Trane carries a full line of HVACR parts and supplies including 300,000 Trane and non-Trane SKUs.

    • Trane has been in the parts business for more than 50 years with more than 250 dedicated parts specialists to assist our customers.

    • Trane knows that contractors don't want to travel more than 20 minutes to buy a part; that's why there are 183 (and growing) Trane parts centers in all major markets in North America.

    We offer a full line of products and technical knowledge, in convenient store locations (no more than 20 minutes away from most customers), all readily available when customers visit our parts centers.

    How do you work with distribution in expanding your replacement parts business, and how does your distributor relationship(s) fit within your strategic plan?

    Carrier: Distributors partner with us on marketing, advertising, training and store merchandising. We help make it easy for distributors to market Totaline products to contractors and technicians by offering them a selection of templates and programs that make sense for their stores.

    One example is www.totalineadbuilder.com, which allows distributors to access customizable versions of Totaline advertisements. It enables distributors to easily insert their own local offers into our national ad templates. Speaking of national ads, we offer “FREE STUFF” to dealers, contractors and technicians each month on totaline.com. This drives interest and demand for specific Totaline products and promotions.

    The Totaline merchandising and promotional item catalog is another way . . . it provides distributors with valuable yet affordable in-store giveaways and sales tools.

    Most importantly, we work hard to educate our Totaline counter sales associates. When they sell a compressor, they also need to ensure that the customer has all of the complementary parts to do the job.

    Totaline goes the extra mile to help distributors fund their Totaline marketing and advertising. Eligible customers can take advantage of our co-op program which helps them pay for their Totaline ads or Totaline giveaways. We even provide some flexibility so they can get creative and launch their own marketing programs.

    We work hard for our distributors because they deserve it. We are fortunate to have long-standing relationships with premier distributors across North America.

    Lennox: We are primarily a one-step distribution company. We have expanded our distribution by adding additional stores, expanding our delivery system and leveraging our e-business tools. The one exception to this model is we have aligned ourselves with Johnstone Supply to supply our Commercial OEM parts through their stores.

    Trane: We are broadening our product line, including Trane and non-Trane parts (e.g., Klein Tools, Venmate, Belimo and many others), adding more points of distribution (opening new parts stores throughout the U.S. and Latin America), ensuring better availability and offering the best-trained sales and service resources in the industry.

    Is your OEM parts business open to just your distributors or can “anyone” participate? In short, what are the barriers, if any, to participation?

    Carrier: We offer OEM and FAP products for Carrier and Bryant exclusively to select Carrier and Bryant distributors. Totaline generic aftermarket products are sold to our distributors for sale to contractors, dealers and technicians servicing almost all popular brands of equipment.

    Lennox: Other than the Johnstone Supply distribution for commercial OEM parts, we distribute directly to Lennox dealers.

    Trane: Our business is open solely to Trane/American Standard distributors.

    What is the breadth of your product line? Do you intend for your offering to serve only as replacements for your own equipment line or do you intend to expand it to include other products? If you expand the product line, what niche areas are you considering? For example, would you consider line sets or chemicals?

    Carrier: We offer a full range of OEM, Totaline and magnet-line equipment, parts and supplies to our distributors, including compressors, motors, thermostats, aftermarket parts, tools, chemicals, materials and more. The real question is, “What don't we have?” The 2007 Totaline parts catalog is thick at 1,196 pages in length and representing more than 120,000 products.

    Lennox: Currently, Lennox OEM parts are intended for Lennox equipment. We are also a supplier of a full line of aftermarket products including IAQ, installation supplies, minisplits, hydronic equipment, radiant heat, boilers, tools and much more.

    Trane: We have a broad product line with more than 300,000 stock-keeping-units (SKUs). Our intent is to provide customers with a full line of products. Therefore, we carry products to service Trane/American Standard equipment and a broad line of wholesale/generic parts and supplies (such as motors, compressors, line sets and chemicals), as well as equipment.

    How is your replacement parts business different from your competitors? In other words, what is your unique advantage(s)?

    Carrier: We're focusing on the key service fundamentals to create a strong competitive advantage. We train counter sales associates to be the best in the industry. We provide marketing tools and incentive promotions such as the Totaline Racing Challenge. We provide distributors with the tools they need to engage their customers and provide a fulfilling, efficient and even fun store experience. That translates to a successful selling environment.

    Lennox: We are a one-step distributor, which gets us closer to our customers. This allows us better management of inventory, more efficient use of working capital, helps us be more responsive to customers and market conditions, and facilitates greater inventory investments in what our customers require.

    Trane: We carry a full line of commercial and residential parts and supplies locally in our 200-plus parts centers. Our customers can talk to Trane associates in person and get parts on location — that means no 800 numbers to call, no waiting for parts to be shipped.

    What is your marketing plan or approach to expand your parts business, and what mechanism do you use to publicize this sector of the operation?

    Carrier: We combine aggressive national advertising/promotions in print and online media with an extensive counter sales training program to deliver a positive Totaline experience. We want to be an easy and fun place to do business and help customers get in, get what they need and get back to the job site.

    Lennox: We market directly to our Lennox dealers with a very focused approach — directly through our sales force. We have developed and are implementing strategies that will assist our customers in becoming ever more efficient in the way they conduct their business.

    Trane: Our marketing plan includes:

    • Broadening our product line.
    • Adding points of distribution.
    • Delivering our message more aggressively than in the past via advertising, Extreme Team monthly promotions and direct mail to current and prospective customers. Many of our monthly promotions feature products that customers might not know we stock, and those customers that sign up for promotions are able to access more technical knowledge on our website.

    We invite service contractors and building owners to log on to www.servfirst.net/ where they can register to become a part of the Extreme Team.

    The Extreme Team is comprised of the industry's most reliable heating and cooling professionals who are committed to delivering unmatched service and solutions to their customers. The Extreme Team resource gives members special access to product and parts promotions, announcements and additional heating and ventilation and air-conditioning (HVACR) vendors.

    Where can distributors find out more about your program? Is there a dedicated website? If not, can a distributor who doesn't carry your equipment line go to your main site and find out all the details that he or she needs?

    Carrier: For distribution, we sell exclusively to Bryant and Carrier distributors. Our distributors sell to dealers, contractors and technicians working with ALL brands of equipment. www.totaline.com gives the basics about Totaline and serves as a store locator and marketing fulfillment tool. Specific product and technical information is available on hvacpartners.com.

    Lennox: We have no plans to expand our line to any additional distributors at this point. Our focus is direct distribution to Lennox dealers.

    Trane: We provide information to all of our company-owned and independent distributors via a multidisciplined communications program, including the marketing program described above in question 7.

    How will you keep distributors informed about updates, program changes and added products?


    • Zone Sales Managers.
    • hvacpartners.com.
    • Totaline catalog.
    • Targeted distributor e-mails.
    • Regional training and individual training sessions.

    Lennox: We use a number of communication channels to keep our distributors informed. These include our dealer website (www.lennoxdavenet.com), regional and national customers meetings, promotional materials, one-on-one dealer meetings, e-mails and direct mail, electronic catalogues and general merchandising.

    Trane: We provide product and program updates to all of our company-owned and independent distributors via a multidisciplined communications program, including the marketing program described above in question 7.

    Who is in charge of your parts-replacement business?

    Carrier: Alex Legall, VP and GM of the Replacement Components Division.

    Lennox: Rony Kordahi, director of Parts & Supplies. Contact him at [email protected].

    Trane: David Coghlan, Global Parts business leader. Contact David through Andrea Hazard at 612/455-1733 or [email protected].

    Tom Peric' is the editor of HVACR Distribution Business magazine. Contact him at 856/874-0049 or [email protected].