Working the Equipment Triangle

Sept. 28, 2010

As AEMP members know, the three sides of the “equipment triangle” depict the relationship between OEMs, dealers and end-users. However, it's much more than a descriptive label or a symbol of clear communication channels. The concept has spawned a business philosophy that is beginning to have an impact on how equipment professionals conduct business.

Said another way, the idea behind the equipment triangle is not only to elevate and promote the highest standards of ethical and fair business practices, but also to rid the industry of a “them vs. us” attitude and put a damper on the often confrontational nature of business negotiations.

Dave Markey, CEM, introduced the equipment triangle concept to AEMP members when he assumed the AEMP presidency in 2004.

“The term equipment triangle evolved out of several discussions,” says Markey. “It just became obvious there were three parts – the OEM, the dealer network and the fleet manager.”

There was never any strategic plan behind the triangle, he says, only his personal observations as he came up through the ranks from mechanic to dealership service manager, to his present position as vice president of American Infrastructure, a heavy civil construction company with a fleet valued at more than $120 million.

“From what I've observed, there is an 'us vs. them' mentality in our industry and a tendency to hammer on the manufacturer,” says Markey. “The idea of being adversarial is common. I think we are at a point where we should be better than that.”

By following high standards of professionalism, he says, OEMs, dealers and end users can enjoy those business relationships.

“If we can create the atmosphere of transparency that allows seeds of trust to grow, we can share meaningful information rather than just throwing data back and forth,” says Markey. “Together we can focus on problem solving, such as how machines are designed, how we want to use them, how they should be maintained, plus reliability and cost issues.”

According to Markey, the need for good dialog and mutual understanding among the three sides of the triangle is vital.

“AEMP's Standard of Ethical Conduct came into being to enable us to develop the trust necessary to move forward,” he says. “More than a list of rules and recommendations that seldom produce anything positive, we're trying to influence a change in people's thinking.”

That's not an easy job. When Markey implemented the concept in his own company, at first it was difficult. However, the idea began to catch on with various dealer organizations.

Markey says he took this new approach to business because, “I believed things could be better and wanted to have real dialog so we could really understand each other.”

Realistically, of course, not every OEM, dealer or fleet manager is open to such changes.

“Some have maintained their harsher side and it has not all been unjustified,” says Markey.

Perhaps the biggest challenge in implementation, he says, is getting people to open up. It's not a matter of pressuring anybody. It has to do with establishing trust and honesty.

“If we're doing something wrong, let's change it,” he says. “Let's stop the bleeding, fix the problem and go on.”

An Equal Partnership

Last year's AEMP president, Marilyn Rawlings, CEM, who is director of fleet services for the Lee County government in Fort Myers, Fla., also embraced the philosophy and has put it into practice. She describes the equipment triangle as an equal partnership between the end user, the manufacturer and the distributor, working together to deal with ethics and integrity to make everybody's job easier and better.

“In the past, the mentality of the end user was to take the greatest advantage of the distributor, beat him up over the price and get the most they could out of warranties,” says Rawlings.

Even in discussions prior to negotiations, she says, they would talk about how to approach the enemy, beat them up and get the best price possible.

“I didn't think that did much to produce good will,” says Rawlings. “End users wanted distributors to understand their businesses and make all the concessions without the end user making any concessions at all. It was very one-sided. Too often the distributor just wanted to make the sale. He was there just to sell a new product the end user couldn't use or didn't want.”

Rawlings took the equipment triangle philosophy and began to share it with her distributors and OEMs.

“Everybody has to make a living and everybody has to come out feeling like a winner,” she says. “As for me, I want distributors to understand my business and let me know if they have a new product that can help me, a product I can use.”

A realist, Rawlings says, “I can't base all my decisions on warm fuzzies, but that's got to be in there. I don't want somebody coming to me saying, 'I want you to use this piece of equipment' and the equipment has nothing to do with what I need. I want them to understand my business and work on my behalf, but I have to be willing to do that as well, not just beat them up over the stupid stuff.”

Once her distributors and OEMs realized the triangle was a win/win for all involved and the business relationship was more of an alliance and a true partnership, Rawlings began to see positive changes.

For example, through AEMP, she met a top management team member of a major manufacturer whose equipment was not in her fleet of 1,800 units. She wanted to change that.

“I worked really hard to get this one piece of equipment – a wheeled excavator, but the guys who operated it said it just wasn't working out and it wasn't what they wanted,” says Rawlings.

Later, during a meeting with the OEM's distributor, a second discussion started about a different piece of equipment they had, a street sweeper. The street sweeper was brought out for a demonstration

“We bought it on the spot,” says Rawlings. “The operators were happy and I'd established a business relationship with the distributor. The manufacturer didn't get the big sale yet, but they got a $30,000 to $40,000 sale that opened the door.”

As for the equipment operators, she says, they are now seeing “a whole other side of the OEM that they didn't see before.”

Rawlings and Markey expect certain things from a business partner.

“I look for people who are going to keep their word,” says Rawlings.

Markey, whose company is a multi-state operation, says, “We always look for a quality product and the ability to service that product. We also look for someone who has a footprint that matches our different locations.”

Both CEMs recognize the benefits of the equipment triangle

“It can make life a lot easier,” says Markey. “The process of renting, buying and servicing needs should be handled professionally. Doing so can prove to be enjoyable. It's really a good thing. That's why CEMs recognize the benefits of the equipment triangle.”

Of course not every distributor or OEM wants that kind of relationship, says Rawlings. But she has a solution for that, as well.

“When someone only wants to sell me equipment, I give them an opportunity to find other customers,” says Rawlings.