Freightliner's Use of Computers in Customer Service

Truck Makers' Operations
Gain From High Technology

The Wall Street Journal 
Technology Supplement pages R18 and R20
November 18, 1996

''Today's truck driver is paid based on his efficiency,'' says Freightliner President and Chief Executive Officer James L. Hebe. ''We're using technology to allow that customer to move more competitively and efficiently.''

It's a philosophy that has spread through the truck industry since deregulation increased competition among manufacturers in the mid-1980s. The half-dozen or so major U.S. truck makers have abandoned their long-standing aversion to high-tech and are beginning to integrate computers into their operations, from tracking inventory to fixing engines.

But experts say Freightliner has been most aggressive in marketing its innovations to dealers and fleet operators. ''Every one of the truck companies has [computerized] systems, but Freightliner is more vocal about these things,'' says Bill Leasure, executive director of the Truck Manufacturers Association in Washington, D.C. ''They're out in front'' with promotion.

Big Wheel

And the strategy has worked. Freightliner has increased its share of the competitive market for king-size trucks for each of the past seven years: The company currently sells 29.5% of all king-size trucks, up from 23.1% in 1992, when it wrested the No. 1 spot from Navistar International Corp. The surge is due in large part to the technology push, company officials say.

The effort began in the late 1980s, when Freightliner moved to integrate computers into every stage of its business. Take buying a truck. Customers used to order the vehicles from dealers by perusing a four-inch-thick binder that offered thousands of options. It typically took a dealer about two hours to process an order, and a few more days for the order to reach headquarters by mail.

Then the company decided to streamline the process, using a computer network to link dealers to headquarters. The new system, which is currently being updated to Windows, replaces the catalog with an easily accessible database and gives salespeople information on the compatibility of parts at the click of a mouse. And when an order is ready to go, it can simply be zapped over phone lines.

Ordering parts has also been simplified using a Windows-based system. Not only does the computer cut about 30 minutes off the processing time for each order, say dealers, but it doesn't take as long to train salespeople: only about one to three days, down from several weeks before the system.

The technology can be expensive -- up to $36,000 a year for larger dealerships. ''You've got to have a fairly healthy business to afford the technology,'' says Jack W. Porter, general manager of the Valley Freightliner Inc. dealership in Pacific, Wash.

Yet, he says, there are unquestionable benefits. The Portland Freightliner Inc. dealership, Portland, Ore., has seen its truck sales triple since installing the system, and it has reduced its sales staff to five from seven. Nationwide, Freightliner has increased its after-market parts sales by 52% since 1992, due in part to the success of the ordering system.

Customer satisfaction has also gotten a boost, dealers say. With on-screen diagrams helping salespeople pinpoint the correct part for each truck, there are fewer mistakes.

''Some years ago, it wasn't uncommon to have a customer say, 'You always give us the wrong part,' '' says Michael McBride, general manager of the Portland dealership. ''Now, it still happens, but not as often.''

This year, at an estimated cost of $1 million, the company will try to duplicate that success in parts sales to truck fleets. Currently, fleets can buy parts from independents and other suppliers, but Freightliner thinks it can grab more of that parts business by offering fleet shops a computer link to Freightliner dealers.

Modeled after inventory-control systems at retailers such as Wal-Mart Stores Inc., Freightliner's inventory system speeds the ordering process and allows for more efficient just-in-time shipments. For US Xpress Inc., a Chattanooga, Tenn., trucking company that uses 2,350 Freightliner trucks, the test version of the automatic ordering system allowed eight fleet shops to cut inventory to $100,000 from $500,000 -- at a cost of about $6,500 for computer terminals and software.

Driving Logic

Freightliner is also using computers to overhaul its repair system. Like many truck makers, Freightliner equips its vehicles with diagnostic computers that keep track of engine performance. When drivers pull in to the company's service stations, mechanics can simply plug a computer into the truck and download detailed information about the engine to check for problems.

But Freightliner has taken the concept a step further. In addition to safety features such as electronic braking, speed control and a radar-based collision-warning system, the company now offers an optional on-board computer, installed behind the driver's seat, that records 50 types of diagnostic information. When the device detects a problem -- from rapid deceleration to high oil temperature -- it alerts the driver on a two-line dashboard monitor and starts recording data. If the driver gets to one of the 155 Freightliner service stations that has compatible computer gear, the mechanic's computer will not only download the diagnostic data, but also suggest possible causes of trouble based on the readings.

This system considerably lessens mechanics' role in tracking down malfunctions -- and also reduces the need to hire seasoned, and expensive, journeymen. ''I could diagnose the problem in this truck, and I'm not even a truck person,'' says Brett Clancy, a systems coordinator at Portland Freightliner.

Freightliner says that having mechanics try to puzzle through problems was just too time-consuming and imprecise. And some mechanics agree. ''It's just too complex to work on [advanced new trucks] without some type of computer,'' says Danny Wilson, a mechanic at Portland Freightliner.

The price? Max Fuller, co-chairman of US Xpress, says the extra technology on the truck alone adds $4,000 to $7,000 to the truck's overall price of $70,000 to $100,000. But ''if we avoid an accident or deliver a load on time'' as a result of technology, it is worth the extra cost, Mr. Fuller says.

Although Freightliner predicts the systems will eventually reduce warranty-repair costs, the short-term expense has been huge -- in fact, says Mr. Hebe, the CEO, the service changes have been among the most costly initiatives Freightliner has undertaken. The manufacturer has had to hire three software companies to put together and update its database. Moreover, the company has struggled to teach tradition-bound mechanics how to use the machines.

''It's a major change,'' says Mr. Wilson. ''Some want to learn something new; others say they screw up an ATM, so keep it away. [But] sooner or later, they'll have to learn.''

The company is currently trying to streamline the diagnosing process even further. The idea: A truck driver would use a cellular phone or satellite link to transmit the on-board computer's diagnostic information to a service station, however far away. The mechanic's computer would then analyze the data and suggest a solution -- or pose further questions to ask the driver to pinpoint the problem. The mechanic could even order parts before the truck pulled in for repair.

To offer the service -- which Freightliner says is at least a year away from completion -- the company hopes to piggyback on fleet operators' existing cellular and satellite-based networks. Currently, about half of the bigger fleets give their drivers cellular phones or satellite links to let them know about future routes or changes in instructions, says Robert D. Pritchard, director of regional economic analysis for the American Trucking Association's policy-research foundation in Alexandria, Va.

Screen Savings

Internally, Freightliner is pursuing computer enhancements that speed up production. Over the past two years, the manufacturer has installed a computer network -- comprising 1,180 terminals -- in four out of its five North American assembly plants.

The network essentially replaces the old system of distributing truck plans to workers. Every vehicle that came down the assembly line meant a new set of plans to be drawn up and distributed to workers; last-minute changes slowed the production process by forcing managers to redraw plans and distribute those. Now all plans are stored on a Windows-based system, and can be updated easily, or called up by employees when needed.

The company expects the $10 million network will shave about 1.8 hours off production time for each truck. Already, officials say, warranty claims for manufacturer errors have been reduced 20%. (The company won't say how much money that comes to.)

In the long term, Mr. Hebe thinks computer-based efficiencies will help Freightliner diversify and go global. The company is opening plants in Saudi Arabia, Israel and South Africa, and has already started diversifying into making firetrucks and school buses.

But the newest systems will take years before providing a return on the company's investment, Freightliner officials say.

Moreover, continuing the innovations might prove even more difficult down the road. Officials at Freightliner say technological improvements were made possible by a comfortable profit base. But the cyclical trucking industry is currently in a downswing, and many companies have laid off workers in the face of declining sales.

At Freightliner, where sales leveled off near 30,000 units through July, about 800 workers have been laid off nationwide. And officials acknowledge the hard road ahead. ''Technology isn't free,'' says Mr. Hebe, ''and it's very difficult.''

--Mr. Lucchetti is a staff reporter in The Wall Street Journal's New York bureau.

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