An aging vehicle fleet and expanding product categories contribute to unrelenting SKU proliferation. And the introduction of slow-moving products is out-pacing the A-movers. There simply isn’t enough space or money to justify stocking full lines.
So, distributors carefully examine their local vehicle and product category mix, line by line, and choose what to carry in stock and what to leave at the factory distribution center.
When demand occurs for the non-stocked items, they are special ordered or drop shipped to the customer from the manufacturer/supplier. “I don’t have it but it’s in my master warehouse,” is an acceptable answer and allows your salespeople to say “yes” more often and be the one-stop source that keeps customers coming back.
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A study of wholesale order activity conducted by GCommerce showed that drop ship or special orders represented 80 percent of the purchase order transactions, while contributing only 20 percent of the revenue and accounting for 80 percent of the operating costs. That math is upside-down and doesn’t make the accountants happy.
If the special order tail of the demand curve is getting longer, what’s the answer to efficiently processing special orders? Many suppliers have customer portals and allow their direct distributors to check inventory and place orders on these secure websites. But that places the burden squarely on the distributor and it’s impractical to manage the security login and unique navigation of dozens or hundreds of websites.
So, most distributor salespeople turn to the phone and call-in special orders. Of course, this requires more than one call because they have to confirm availability and get an estimate of the shipping charges and delivery date. Then check back with the customer for authorization to place the order. Then call the supplier back to place the order and create a record in the business system to track the order through the receipt and payment process. Whew!
It’s no wonder that it can require 30 minutes or more to order a $10 widget. A distributor who pays his salespeople by commission recently complained that if the telephone hold time at the factory was excessive, the salespeople would hang-up and tell the customer the product was no longer available, rather than waste time on hold.