Farmer Iron

That's Logistics!

Extensive, global equipment companies get parts from all over, which can be a challenge.

This week I got to sit down with folks at Agco's logistics operation to talk parts, supply and a range of other topics (you'll see more in my May Farmer Iron column) - fascinating really. Nothing like looking at acres of parts stacked high and ready for shipping - and boy where they moving stuff.

But sometimes you can't move stuff either. The earthquake/tsunami/nuclear disaster in Japan is opening a lot of people's eyes to what "logistics" really means. Toyota announced this week it'll be shuttering a few plants due to lack of parts. There was a much-ado-about-nothing plant "closure" earlier that amounted to a couple of missed shifts, but for Toyota this is big news.

During our talk about moving parts in a global environment, the folks at Agco note that more than half their parts are made domestically for products sold here. But a global supply chain still exists. When the unpronounceable volcano in Iceland disrupted air traffic and travel last year, that challenged any company marketing Euro-built machines here - and most tractors under 100-horsepower are built overseas.

Joe DiPietro, senior manager of strategy and performance improvement, notes that the latest problem - Japan - isn't a problem right now. "We have assessed our inventory and we have the parts on hand," he notes. Agco's compact tractors - for example those sold by Massey Ferguson, are built by Iseki in Japan. But parts are available.

The Agco operation has undergone a lot of changes in the past three years, all aimed an enhancing internal productivity and making sure that when you go to a dealer the right part will be on hand. It's not a perfect system, and the entire farm equipment industry struggles with the issue. But we saw plenty in the Batavia, Ill., facility that shows the potential for streamlining parts deliveries that should bolster service for the company in the future.

UPS has made the term "logistics" popular. For farm equipment companies, this is a long-standing challenge, and they live logistics every day. Add in the seasonality of parts, the financial choices dealers have to make and even the introduction timing of new products, and you can bet meeting those parts delivery needs takes some doing.

It's a fascinating story, that I'll enjoy telling you soon. Got a question about parts delivery? Make a comment here (registered users can always comment) and I'll answer it in my column (and in the blog too).

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