Parts supplier, TVH, demonstrates the components of growth
24 June 2008
When Bernard Vandromme, business development manager - in plant vehicles, explained why TVH (Group Thermote & Vanhalst) had expanded from spares parts for fork lifts into those for access equipment too, the move makes a lot of sense. In fact, you might wonder, why they didn't do it earlier
The company, which was founded in 1969, knew, when it branched out into access, just before APEX 2005, that it already had a big stock of parts for aerial platforms. Those included DC motors, hydraulic components, and contactors. There are lots of contactors from Albright, for example, in electrically-powered platforms, and components like these have been a major mover in TVH's main business.
Moving into aerial platform components was the first expansion of TVH's parts business. The company wanted to grow its parts business, but also wanted the newly-offered parts to be familiar to customers.
TVH added JLG components to its stock list in time for at Bauma 2007 and is adding Genie parts now. By the end of 2008, access spares sales will be worth €2 million, twice that of 2007. Other aftermarket items for the access market include hydraulic generator kits, stabiliser ground plates and wheel covers.
Becoming the €500 million revenue, global player the company is today, with approximately 2300 employees around the world, was achieved via a series of acquisitions. TVH bought forklift parts suppliers, QFS, in Australia in 2002, SMH in the US in 2003, and Intrupa in the US in 2006.
TVH changed the name of QFS to TVH Australasia but allowed SMH, which was its biggest competitor with 400 employees and which also supplied access spares, to continue under its own name. Intrupa was merged with SMH. Overriding these companies' individual identities is the brand name, TotalSource, for all TVH spare parts businesses: a brand originally created by SMH.
TVH buys components direct from the same manufacturers as the OEMs, but because it buys in such large volumes, it is able to negotiate superior price discounts and pass them on. "That is our biggest competitive advantage," says Mr Vandromme, service is another, "customers don't have to go to importers, and we can deliver parts from multiple brands, which is attractive to independent repair shops."
Service at TVH is built on three points: the first is having 450000 stock-keeping units on hand at any one time; second, is delivery within 24 or 48 hours and third, TVH makes it easy for customers to buy parts. Expansion of these attributes to include access parts was easy.
TVH's main European warehouse sends out 4500 shipments a day within Europe valued between €1 and €1.2 million (see box story). An e-commerce sales service for fork lift parts has been available for years, and TVH has a full-capability customer relationship manager system, developed in-house. Today, 75% of all enquiries and 55% of orders are made over itsTVH QuickSource online facility.
TVH operates a help desk over its web site, and its in-house sales team can respond to queries in 33 languages, "...one of our strongest points," says Mr Vandromme. The company publishes several catalogues, but it is information systems and the experience of staff that help customers to identify their requirements, too.
The company has approximately 50 salesmen in Europe in its parts division, which is the biggest by far of the five in the TVH Group. It has aerial parts sales specialists in Germany, France, the UK, and the Netherlands, and Mr Vandromme says that it will not hesitate to employ more staff when it sees the necessity.
TVH now offers aerial parts in the US through SMH, although Mr Vandromme admits "[TVH is] not really focussed there yet." The Belgium base supports the US sales activities, but when it sees the need, it will stock in the US, too. Such an expansion strategy means TVH could start with a low investment, and, "We always start with fast-moving items."
Given the importance that OEMs place on aftermarket opportunities and that spares are known to be high-margin sales items, you might think that TVH's relationship with the larger manufacturers would be troublesome. But that's not the case. Mr Vandromme says, "We have a good relationship with Genie, JLG and nearly everyone."
One reason is that, although TVH's fastest-selling items are non-captive ("We are lucky in that way," says Mr Vandromme.), it also sells OEM captive parts -- about 20% of its business.
You might wonder if TVH will attain the same dominance in access parts as it enjoys with fork lifts. AI asked about that, but if TVH entertains such thoughts, Mr Vandromme kept them to himself. What he did say, however, is: "Aerial platform parts will never reach level of fork lift parts, the biggest business we have. However, our goal is to make it as big as possible."