2002 replacement part survey: Processors reveal strategies and spending for component replacement

Dairy Foods, April, 2002 by David Phillips

Dairy processors will spend millions of dollars replacing parts and components this year, and while expectations of speedy delivery have grown, nothing beats quality, according to an exclusive survey conducted by the Dairy Foods research department.

We polled 139 dairy processors, most of them plant operations personnel with direct involvement in purchasing replacement parts, to find out how they make their purchasing decisions.

While half of those ranked on-time delivery as an extremely important characteristic when selecting a supplier, even more, (63%) ranked product quality as extremely important.

On Dec. 18 the Dairy Foods research department sent out a four-page survey to 1,000 readers whose primary job title is plant operations, production. Of those, 139 usable responses were received, which reflects an acceptable response rate of 14%. The vast majority described their job functions as either, plant operations, production (53%) or executive general management (17%).

The majority of the maintenance decisions involving parts and supplies are made by plant personnel, according to 85% of the respondents.

Our survey group represents a good cross-section of dairy products with 48% processing milk, 31% processing other fluids, 29% cheesemakers, 42% ice cream manufacturers and 25% producing some cultured products.

Strategies and preferences

You probably think the pace for delivery of replacement parts has picked up, and most, but not all of your colleagues seem to agree. More than half (54%) of the survey respondents said they get their parts faster today than they did five years ago. Thirty-two percent said delivery time is the same as it was five years ago, and 14% said delivery is actually slower.

How do you go about deciding when to replace parts? Do you ever just wait until they fail? If so, you aren't alone: 28% of our survey group said they do just that. But 61% use a scheduled visual, manual inspection to determine wear and to decide when to call the parts house.

When those processors decide it's time to replace a part, are they more likely to go to the original manufacturer or buy a compatible part made by another company? A whopping 66% said they were just as likely to go to either source.

The Internet has become part of most areas of business, and this includes the dairy processor's maintenance and parts replacement. Thirty-five percent of those surveyed said they had purchased parts from a Website. An additional 17% expected to do so sometime within the next 6 months.

Speaking of the Internet, it has also become an important source of information about replacement parts. Those surveyed were allowed multiple responses when asked where they turn for information. Thirty-seven percent included manufacturer Websites and 32% said they turned to distributor Websites. The most important source, however, appears to be the distributor's sales and customer service staff (76%).

Anticipated spending

As we noted at the outset, processors spend millions of dollars each year on replacement components, parts, or services. Individually, 26% of our respondents said they spent between $251,000 and $1 million on these in 2001. Twenty percent said they spent less than $50,000, 18% said they spent between $51,000 and $100,000, and a considerable number, (24%), said they spent more than $1 million.

The survey also asked processors what portion of those sums went to services, replacement parts and supplies. The mean percentages were 48% for parts, 32% for supplies and 20% for services. But 38% of those surveyed said parts accounted for more than half those expenditures.

Mean Percent of Maintenance 2001 Annual Dollars

Replacement components, parts  48%
Supplies                       32%
Services                       20%

* Processors were asked what percentage of their maintenance dollars is
used for components, supplies or services.

Note: Table made from pie chart
Acceptable Delivery Time n=123

Same Day              2%
Within 24 hours      28%
Within 48 hours      37%
Within 72 hours      17%
Within 1 week        14%
Within 2 to 3 weeks   1%
Within 1 month        1%
More than a month      0

* More than half of processors polled expect parts within 2 days or

less.