Cummins Power Systems

Playing to its strengthsIn a climate in which decreased sales and profit are par for the course and have stopped being newsworthy, it comes as a welcome to hear that bucking the trend can, and is, happening, as Alan T Swaby learns. Cummins Power Systems is a Pennsylvania-based distributor of Cummins Engines, and its biggest customer is the truck industry. As such, it wouldnÔÇÖt normally surprise anyone to hear that it was having a bad time. However, against the odds, it looks as though its performance this year will actually surpass that of last year.The improvements have come about from a three-pronged approach: a more customer-focused supply chain, a more suitable range of products, and a new, leaner way of running the business.ÔÇ£Like everyone, Cummins Engines is always looking for ways to reduce costs,ÔÇØ explains Scott Patrohay, president of Cummins Power Systems, from his Bristol headquarters. ÔÇ£Eight years ago it recognized an opportunity for cutting the cost of servicing its distributor network. Largely through a process of restructuring when proprietors were ready to retire, Cummins has gradually been consolidating territories to a more manageable quantity, but without creating new distributors so large that they lose contact with customers.ÔÇØCummins Power Systems is one such revamped distributorship. Although his present role is new, Patrohay is a longtime Cummins staffer, working his way up through the organization from his engineerÔÇÖs desk to a joint venture presidentÔÇÖs chair. At the end of 2007 he had the opportunity to buy two small distributorships and merge them into one, servicing a 400-mile stretch of the East Coast from Connecticut in the north to Maryland in the south. This combined territory includes several major cities (New York, Philadelphia, Baltimore and Washington DC), giving access to a population of 40 million in a relatively condensed and urbanized region. Cummins Power Systems is jointly owned by Patrohay and Cummins Engines.In its territory, CPS encounters the full spectrum of customers, ranging from some of the countryÔÇÖs most sophisticated OEMs and transport companies to individual truck owners/drivers or boat builders. It sells them new engines or keeps their old ones in operation through service and spare parts.ÔÇ£It doesnÔÇÖt matter how big you are,ÔÇØ says Patrohay, ÔÇ£when thereÔÇÖs a breakdown, it means lost revenue to commercial customers, and consequently we live and die by how quickly we take care of that issue. By merging two organizations, weÔÇÖve been able to pick the best practices from each and spread that throughout the six branches we have.ÔÇØAn excellent example of this is how a customer database and call center on one side of the business developed and is now being spread throughout the group. Bearing in mind that many customers are still running equipment that might be 30 or 40 years old, CPSÔÇÖs intimate knowledge of spare parts held in the database is helping customers minimize downtime.┬áPatrohay is keen to know how clients feel about CPSÔÇÖs service. In a campaign designated ÔÇ£Closing the Loop,ÔÇØ CPS has started to survey a statistically selected sample of work passing through the companyÔÇÖs workshops. Feedback, both positive and negative, is then acted upon. Frighteningly for any business, Patrohay has found that on some occasions his company has been wrongly linked to problems caused by other workshops. ÔÇ£When customers use alternative service arrangements,ÔÇØ he says, ÔÇ£the possibility for confusion becomes real. Now that we are aware that this sort of thing occurs, we can take steps to clarify the situation.ÔÇØAlthough customers are buying less new equipment, they need to keep the old stuff running. CPS is working hard to improve servicing cycle times. ÔÇ£ThereÔÇÖs always the risk of repair shops dragging out jobs to keep service personnel employed,ÔÇØ says Patrohay. ÔÇ£Our approach is to do the work even more efficiently as a way of ensuring that customers come back to us the next time any work is needed.ÔÇØThis service-oriented approach has helped to bolster revenue over the past 12 months, but there are signs that sales are beginning to pick up once again, particularly in the public transport sector. There are large fleets of buses, still fitted with badly polluting, vintage engines, that are being re-powered with greener and more fuel-efficient versions. The governmentÔÇÖs stimulus measures promise a $360 million injection, and CPS is keeping close tabs on announcements of projects, even down to the municipal level.ÔÇ£We want to get to the decision makers as soon as possible,ÔÇØ says Patrohay. ÔÇ£There are a number of ways vehicles can be enhanced, whether with exhaust after-treatment, when budgets are low; with remanufactured engines that can give virtually new-engine performance at lower cost; or with new diesel or natural gas power plants. We can run the numbers and demonstrate clearly what emission reductions per dollar are achievable.ÔÇØThe additional anti-polluting components of new-generation engines often create space problems, particularly where re-fits are concerned. But the extra resources created by merging the two businesses have given Cummins Power Systems the capacity to provide a more sophisticated and responsive level of engineering service. By involving CPS early enough, it is often possible to make design modifications that will accommodate such equipment, and technical advice is now always on hand to help customers solve installation or operating problems.┬á In fact, the sales effort has also benefited by the merger. Individually, the two distributors were too small to justify much specialization. Staff members had to wear multiple hats, which didnÔÇÖt allow anyone the luxury of focusing exclusively on one segment of the business and thus gaining a degree of expertise in that area. Put the two together and immediately Patrohay found he was able to play to individualsÔÇÖ strengths, tailoring their roles to a more narrowly focused part of the market. The payback is now noticeable. By giving the staff greater levels of competence, greater levels of sales and customer satisfaction are being achieved.  ÔÇô Editorial research by Howie Gordon