I recently had a dinner meeting with representatives of a company pushing a new software tool. These types of meetings are usually very congenial events without a lot of drama. It was more of a "thank you" dinner, and making sure that the warehouse was doing everything that it could to keep us happy. They introduced a few new programs, discussed the plans for the upcoming year and became downright giddy about some software/forecaster/spreadsheet database. I swear, it was like a bunch of teenage girls getting ready to go to a Justin Bieber concert. And this is where the gathering got interesting.
Dinner at cookie-cutter, mid-scale, sit-down establishment is pretty much always the same. Filling, but the steak tastes like the vegetables, which taste like the rice, which tastes like the shrimp that resemble the french fries. If the restaurant tells you, "Be careful, the plate is hot!" they are cooking with a microwave, and any so-called chef can utilize that appliance. As I was eating bits and pieces of my meal, trying to be careful to not burn the roof of my mouth, and listening to these guys talk about this software data tool that was supposed to solve all of my problems, I couldn't help but think that these guys were promoting their own version of a microwave.
Much the same as a microwave heats the food and the plate to a scalding hot temperature regardless of how it should be cooked, I envisioned this software treating every line in my store the same regardless of brand, failure rate, trend or application. The software utilized VIN information, warehouse and regional sales data, as well as catalog application look-up data. I am sure some logarithm temperature setting is applied, and Ta-Da! Needless to say, a lot of effort and thought went into this product, but the relevancy of all of that protracted information is missing a key ingredient — realism. Real customers and sales do not follow mathematical spreadsheet rules.
The realism I am speaking of has to do with the service trends within the repair industry, extended warranty programs for new vehicles, manufacturer changes and quite simply the fact that cars are being driven a lot longer and further before anything fails. I hate to say this, but it almost seems like my warehouse is trying to dumb me down to the point of being able to sell product even if I don't really know what I am doing. I just have a lot of merchandise. Manufacturers started doing this some years ago by offering packaged deals, goofy promotions, and some even changed their numbering systems.
Dinner was done, and we had moved on to the cocktail portion of the meeting — my favorite part. Rum and coke is like a truth serum for many sales reps. Even seasoned vets will loosen their ties and talk a lot more than they should. When I questioned these guys about why this new software was being rolled out and how I could make money by utilizing it, their answers were less than I expected, but they thought it had to do with trying to assimilate all of the program stores to stock the same diversity of inventory, with the same pricing and brands regardless of location. Oh my gosh, they are trying to turn me into an AppleBees or some other vision of a retail one-size-fits-all business. I was also feeling a little loose-lipped and quipped that it seems to me much more effective sales forecasting could be achieved if the warehouse would simply record lost sales data. What followed was a forlorn look of astonishment. My account rep knew nothing of the selective practice of warehouse lost-sale recording, and the warehouse manager replied that the lost sales that were recorded involved called-in items only, and were assigned a 10 percent weight when it came to inventory forecasting values. Electronic or online special order/stock checks had no weight assigned at all because there was no record keeping at all.
So let's get this all in the right perspective. My warehouse and program group want me to stock and sell more items. In order to do this, they are looking to combine sales data throughout the entire group, catalog application lookups for the entire group, and then filter the data with regional VIN numbers. Yikes, now that I put it like that, it's a little murky as to the concern of this article, so I better get back on point quick, or I'll lose you. Traditional jobbers build their business largely based upon the area they service and other businesses' needs. A traditional jobber is by most accounts 60 percent wholesale and 40 percent retail, although I agree that the percentages are coming closer together. Nonetheless, I already know how to make 60 percent of my customers happy and keep them coming back. Also, my warehouse has had the ability to further my endeavors if they would only record lost sales. Instead, my warehouse treats me like I'm price shopping them and don't really need the item I'm checking on. This is true. Check some of your distributors and see if they record lost sales. Due to this, I record my own lost sales and use them to gauge what inventory I should be keeping. I also keep track of my buyouts (items I need to pick up immediately) for our service department. I combine my sales data, lost sales data and buyout data and, Ta-Da! I have an inventory that matches my area's needs, wholesale and retail.
Beware of inventory quick-fix magic beans. If you entirely trust your manufacturers and warehouses about what to stock, well good luck. You'd better do your own homework when it comes to inventory because you should know more about your market than anyone else. I'm not saying you shouldn't at least look at the data, because there may be something you are really missing or needing. For instance, if you blindly take the extrapolated information and apply it to say, transmission filters, it might suggest you stock another $600 worth of filters. However, every service shop in your town uses a transmission flush machine. If your are a traditional jobber with a 60/40 split, possibly you only needed an additional $240 in inventory at the top of the suggestion. It's a suggestion, not a rule. Apply some of your own sensibility, or all of your profits will be in inventory, you'll pay more taxes, have fewer turns, have to replace your seasoned help with cheaper, less qualified personnel, throw out your catalog racks and work longer hours to make the same amount of money. Remember, manufacturer reps and warehouse reps want to sell you inventory and really don't know what you go through to turn it and keep it sold.
If I want a good meal, I always look for the local diner, pub or restaurant. Very seldom do I eat at a fast food or cookie-cutter eatery unless I'm in a real hurry and am willing to settle. Seriously, if you order a medium-rare steak at any microwave-equipped, menu-driven, bling-hosted wait staff deli, the plate will be scalding hot and the steak will be medium-well. It will fill you up, but it's not what you really wanted. At a local place, I can get the steak raw, burnt or which ever way I want it. That's exactly how I want my business to be thought of. Made to order, individually prepared and perfect every time. The parts and service are hot, not the method in which we deliver it.
I recently had a dinner meeting with representatives of a company pushing a new software tool. These types of meetings are usually very congenial events without a lot of drama. It was more of a "thank you" dinner, and making sure that the warehouse was doing everything that it could to keep us happy. They introduced a few new programs, discussed the plans for the upcoming year and became downright giddy about some software/forecaster/spreadsheet database. I swear, it was like a bunch of teenage girls getting ready to go to a Justin Bieber concert. And this is where the gathering got interesting.
Dinner at cookie-cutter, mid-scale, sit-down establishment is pretty much always the same. Filling, but the steak tastes like the vegetables, which taste like the rice, which tastes like the shrimp that resemble the french fries. If the restaurant tells you, "Be careful, the plate is hot!" they are cooking with a microwave, and any so-called chef can utilize that appliance. As I was eating bits and pieces of my meal, trying to be careful to not burn the roof of my mouth, and listening to these guys talk about this software data tool that was supposed to solve all of my problems, I couldn't help but think that these guys were promoting their own version of a microwave.
Much the same as a microwave heats the food and the plate to a scalding hot temperature regardless of how it should be cooked, I envisioned this software treating every line in my store the same regardless of brand, failure rate, trend or application. The software utilized VIN information, warehouse and regional sales data, as well as catalog application look-up data. I am sure some logarithm temperature setting is applied, and Ta-Da! Needless to say, a lot of effort and thought went into this product, but the relevancy of all of that protracted information is missing a key ingredient — realism. Real customers and sales do not follow mathematical spreadsheet rules.
The realism I am speaking of has to do with the service trends within the repair industry, extended warranty programs for new vehicles, manufacturer changes and quite simply the fact that cars are being driven a lot longer and further before anything fails. I hate to say this, but it almost seems like my warehouse is trying to dumb me down to the point of being able to sell product even if I don't really know what I am doing. I just have a lot of merchandise. Manufacturers started doing this some years ago by offering packaged deals, goofy promotions, and some even changed their numbering systems.
Dinner was done, and we had moved on to the cocktail portion of the meeting — my favorite part. Rum and coke is like a truth serum for many sales reps. Even seasoned vets will loosen their ties and talk a lot more than they should. When I questioned these guys about why this new software was being rolled out and how I could make money by utilizing it, their answers were less than I expected, but they thought it had to do with trying to assimilate all of the program stores to stock the same diversity of inventory, with the same pricing and brands regardless of location. Oh my gosh, they are trying to turn me into an AppleBees or some other vision of a retail one-size-fits-all business. I was also feeling a little loose-lipped and quipped that it seems to me much more effective sales forecasting could be achieved if the warehouse would simply record lost sales data. What followed was a forlorn look of astonishment. My account rep knew nothing of the selective practice of warehouse lost-sale recording, and the warehouse manager replied that the lost sales that were recorded involved called-in items only, and were assigned a 10 percent weight when it came to inventory forecasting values. Electronic or online special order/stock checks had no weight assigned at all because there was no record keeping at all.
So let's get this all in the right perspective. My warehouse and program group want me to stock and sell more items. In order to do this, they are looking to combine sales data throughout the entire group, catalog application lookups for the entire group, and then filter the data with regional VIN numbers. Yikes, now that I put it like that, it's a little murky as to the concern of this article, so I better get back on point quick, or I'll lose you. Traditional jobbers build their business largely based upon the area they service and other businesses' needs. A traditional jobber is by most accounts 60 percent wholesale and 40 percent retail, although I agree that the percentages are coming closer together. Nonetheless, I already know how to make 60 percent of my customers happy and keep them coming back. Also, my warehouse has had the ability to further my endeavors if they would only record lost sales. Instead, my warehouse treats me like I'm price shopping them and don't really need the item I'm checking on. This is true. Check some of your distributors and see if they record lost sales. Due to this, I record my own lost sales and use them to gauge what inventory I should be keeping. I also keep track of my buyouts (items I need to pick up immediately) for our service department. I combine my sales data, lost sales data and buyout data and, Ta-Da! I have an inventory that matches my area's needs, wholesale and retail.
Beware of inventory quick-fix magic beans. If you entirely trust your manufacturers and warehouses about what to stock, well good luck. You'd better do your own homework when it comes to inventory because you should know more about your market than anyone else. I'm not saying you shouldn't at least look at the data, because there may be something you are really missing or needing. For instance, if you blindly take the extrapolated information and apply it to say, transmission filters, it might suggest you stock another $600 worth of filters. However, every service shop in your town uses a transmission flush machine. If your are a traditional jobber with a 60/40 split, possibly you only needed an additional $240 in inventory at the top of the suggestion. It's a suggestion, not a rule. Apply some of your own sensibility, or all of your profits will be in inventory, you'll pay more taxes, have fewer turns, have to replace your seasoned help with cheaper, less qualified personnel, throw out your catalog racks and work longer hours to make the same amount of money. Remember, manufacturer reps and warehouse reps want to sell you inventory and really don't know what you go through to turn it and keep it sold.
If I want a good meal, I always look for the local diner, pub or restaurant. Very seldom do I eat at a fast food or cookie-cutter eatery unless I'm in a real hurry and am willing to settle. Seriously, if you order a medium-rare steak at any microwave-equipped, menu-driven, bling-hosted wait staff deli, the plate will be scalding hot and the steak will be medium-well. It will fill you up, but it's not what you really wanted. At a local place, I can get the steak raw, burnt or which ever way I want it. That's exactly how I want my business to be thought of. Made to order, individually prepared and perfect every time. The parts and service are hot, not the method in which we deliver it.
