MANAGING YOUR INVENTORY: What Are Your Product Flow Needs? Get Your Distributor Involved
“All dealers and integrators â€” large or small â€” need to be efficient and thrifty when it comes to their inventory levels,” said Dini Jones, president of Security Products Co., a distributor in Cleveland, Ohio. “How much they keep on hand really depends on several things, including:
- their operating budgets,
- how much physical space they have available,
- how far out jobs are booked (in other words, what type of pipeline they have filled),
- how standardized (or custom) their jobs are,
- the number of installers they have, and
- if they are doing new installation or service calls.
Assuming you have a choice, give consideration to a distributor that can help you best with availability of products that you frequently sell and install; flexibility in how you receive those products; help with repairs (both in and out of warranty); and availability of demo equipment.
“Whether our dealers stock equipment in their own warehouse, buy it in advance and have us inventory it for them, or if they order it ‘just-in-time’ per job, we are very diligent in making sure they have what they need when they need it,” Jones explained.
Beyond the concept of acting as a dealer’s or integrator’s warehouse, distributors also can aid in improving their customers’ cash flow by providing convenient delivery and pick-up services.
“We have the ability to deliver all parts for full job completion,” said John Sullivan, vice president of sales at ADI, a nationwide distributor with more than 200 locations, headquartered in Melville, N.Y.
As examples of its services, ADI offers “Quick Pick,” a service in which inventory is held in dealer bins at ADI for a specified period of time for a dealer. With “24/7 Pick Up AnyTime Convenience,” dealers can order inventory and pick it up 24 hours a day at ADI branch locations. Finally, “Dock on date” means ADI can deliver full jobs on a specified date, Sullivan said.
A kit containing both the low-voltage security equipment purchased at Security Products Co., and non-security equipment that may be needed for a job (but not purchased there), will be packaged and sent directly to a job site, Jones said.
Jones is convinced of the abilities distributors have to help their dealer customers improve profits.
“It really is a [myth] that a dealer pays more for their equipment from a distributor versus directly from a manufacturer,” she offered. “In most cases, the prices are the same; however, it is the value-added services offered by a distributor â€” such as inventory management â€” that make a dealer more efficient and profitable.”
On the Shelves â€” On the TruckSDM asked distributors if there are any rules-of-thumb regarding how much inventory to keep at the shop/on the truck at any given time. Distributors seem to agree on weekly assessments of inventory.
“The key to success is turning the inventory in your truck and replacing the items that move the quickest on a regular basis,” Sullivan claimed. “Regular weekly inventory reviews should be scheduled in order to make sure the team has the right parts for jobs they plan to run the following week.”
That could work for a large dealer, but may not for a smaller one. Jones said, “It makes sense for a dealer to keep enough inventories in stock to complete the jobs that they have scheduled for that week or even for two weeks. However, if the dealer is small and they need to close a sale â€” or even get a deposit â€” before they purchase the equipment, then it behooves them to work with their distributor so they can pick up what they need ‘just-in-time,’” she said.
Stock kept on a truck, Jones added, should include a few spare parts such as extra keypads, batteries, transformers, control boards, and power supplies so that technicians can be efficient on a service call. “But if they keep too much there is the tendency for equipment to get old (out of warranty),” she advised.