Scania’s total solutions

Scania’s total solutions

Scania Southern Africa wants to differentiate itself from its competitors and ensure it retains the “X-factor” for which it has become known.

The impact of the Covid-19 pandemic on the transport sector – all the way from the original equipment manufacturer (OEM) to the transport operator and the freight owner – has been extensive. To respond to the new realities of doing business in such a challenging environment, Scania Southern Africa implemented several initiatives last year to help fortify its business, but more importantly to enhance the customer experience.

In providing an overview of the impact of the Covid-19 pandemic on the transport sector last year, Mark Erasmus, GM Sales, makes this comment: “From a volume perspective, the total market for extra heavy commercial vehicles was some 20% down, while Scania Southern Africa ended 25% shy of what the company had planned.”

While all segments of the market were affected, Erasmus also notes that the bus market was probably the worst hit. “One of the biggest impacts was the reduction in passenger transport demand due to a combination of government lockdowns and fears of contracting and spreading the virus when using mass transport modes. The bus market was largely affected by the restrictions on the movement of people, especially cross-border activity. And the closure of schools and tourism also played a significant part.”

However, this situation is, as Erasmus says, “more than just a numbers game”. He believes the pandemic has not only impacted on volumes, but the whole transport value chain at large, from production to people and even staff morale. “From a production perspective,  we saw factories in Europe and Brazil closed, leaving local production starved of kits to build trucks.

“From a people perspective, a number of people lost their jobs, which also impacted on the morale of the remaining staff. Consideration must also be given to how the pandemic has dampened motivation and enthusiasm.”

Total solutions

The “total solutions” approach has always been one of Scania’s key strengths. The company has, over the years, set a benchmark relative to taking a one-stop shop approach by offering all the solutions a transport operator needs from one source. This is inclusive of truck supply and financing, repair and maintenance (R&M) contracts, and buy-back options and insurance.

“The truth is that truck sales and the delivery of a bus or a truck is not really profitable. The real revenue for an OEM comes from the services around the unit. Customers’ buying decisions are largely influenced by the service the OEM can offer to them. We have thus seen a big demand for a total package approach,” confirms Erasmus.

“We have embarked on a number of initiatives in regard to being the one-stop-shop that is in demand, and which have afforded us the ability to offer a true ‘total solutions’ package to our customers. Everyone has been talking about this concept for some time, but it has been constrained because of the prevailing islands within many organisations.

“At Scania we saw the need to consolidate and earn an income across the total lifecycle of the truck. While the ‘total solutions’ approach is not necessarily new to us, it is now more focused, which gives the customer peace of mind,” explains Erasmus. “When you respond to a customer, it mustn’t be that as simply a recipient of a truck, it must be based on the whole income stream that will be delivered to your business as an OEM, which changes the whole perspective.”

Key changes

The restructure of Scania also provided the organisation with an opportunity to create a completely new service structure. “We have created a much more compact management structure in the services division,” says Alan Hugo, GM Services. “There are key areas within that, one being parts logistics that encompasses parts distribution, which consider the lifeblood of the organisation. The focus is on ensuring that we are able to provide our customers, and their own customers, with as much uptime as possible.”

Under the banner of commercial services is the services division, and it is from here that Scania provides its contracted services. Hugo explains that contracted services has been revamped as part of the organisation’s drive to become more relevant to customers and bring a lot more value to their businesses.

“Another department that falls under the services division is connected services, where we have introduced several initiatives to create stronger collaboration or connectedness between service and contacts.” Parts sales also falls under Hugo’s control, and here he is focused on securing new customers.

“We have also created a department focused on digitalisation of service processes where we incorporate or implement tools and processes to streamline all service delivery activities, improve quality, and reduce duplication and potential waste,” says Hugo. “It will also be implementing different autonomous or digital solutions to help us with cost management and improving customer experience.”

In the same vein the network development department ensures that Scania dealers, captive and non-captive, “maintain greater levels of competence to drive our business and, more importantly, to ensure we sustain all customers within our footprint,” says Hugo.

New trends

One of the key trends Scania is watching in the current Covid-19 environment is the move towards bigger loads and less strain on infrastructure. Erasmus confirms that the Performance-Based Standards (PBS) approach to trucking definitely has a place in the local market. “Scania South Africa delivered its first fleet of PBS trucks to one of its biggest customers in South Africa last year. The PBS – an alternative regulatory framework for governing heavy vehicles – pushes the limits by allowing for increased payload, while specifying stringent safety measures, thus decreasing the costs of transportation significantly.

“‘Smart’ trucks are also being developed and regulated according to a PBS framework, which has proven highly successful in Australia, New Zealand, Canada and parts of Europe. The South African pilot project, initiated in 2004, grew to include 245 demonstration vehicles in various industries by 2018, which are closely monitored for impact and performance.”

Over 100-million km of data has been collected and processed to date, indicating overall net benefits of the PBS framework, including: a 12% reduction in fuel use and emissions, a 13% reduction in road wear impact, a 39% reduced road crashes, and 22% fewer truck kilometres travelled on South African roads.

“PBS is a segment I believe will grow, especially in the bulk commodities space, such as chrome, manganese and coal. It makes sense for the transporter and the government; fewer vehicles on the roads means less damage to infrastructure,” says Erasmus.

Another key trend that has come to the fore, says Erasmus, is that more and more transport operators have invested in total cost of ownership (TCO) discussions, with PBS being one such example. “We have seen a big interest in alternative fuels. There is also a lot of interest in gas, be that compressed natural gas (CNG) or liquefied natural gas (LNG).”

Apart from alternative fuels, Scania customers are also looking at better technology to improve efficiency. “If the OEM has a vehicle with newer technology, offering between 10% and 15% better fuel efficiency, it makes sense to look at that particular option, and that’s what customers are doing,” says Erasmus.

Despite the lack of legislation around emission standards, Erasmus believes that the market will independently move from the current Euro 3 to Euro 5. “I think this will be driven by the market on its own as customers see the benefits of these new technologies.

“OEMs are no longer investing in R&D technology for Euro 3. All the money and effort is being spent on Euro 5, Euro 6 and even Euro 7. So the longer we stay clinging to Euro 3, the bigger the gap that’s going to be created between what a customer is paying for fuel today and what they could be potentially paying had they decided to switch to better technology. I think the Covid-19 scenario has reinforced the need for this approach as transport operators seek to improve their efficiencies.”

Scania has thus brought in Euro 5 demo models, which are being run by selected customers. “We want customers to experience this technology first-hand. What is needed to support Euro 5 technology in the local market is a secure supply of AdBlue, which is a challenge currently,” concludes Erasmus.

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Focus on Transport

FOCUS on Transport and Logistics is one of the oldest and most respected transport and logistics publications in southern Africa.
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