How Many Lines Should I Carry In Inventory?

In my first commercial truck operation, I found a great body company who gave me excellent service and their pricing was extremely fair and they were just nice to deal with. They were perfect. I ended up giving them virtually 100% of my business with great success. And then they decided to quit their business to do something else. Wow. A wake up call.

I had to scramble to begin some new relationships with other body companies very quickly. But, I had grown picky, so I called some up and went to interview them. I wanted to make sure that we could work together well. I found a few and was back in business without a skip. This was before a lot of body companies had bailment pools of trucks. Now there are so many that have pools.

Putting all my eggs in one basket proved to be a poor strategy no matter how good the company was. But, I didn't react to the point that I just took them all on. Here's what I think is an excellent strategy and some good reasons for doing so. I can also state that this strategy worked very well for the remainder of my career at the the dealer level.

Here's the strategy: Develop surface relationships with all suppliers so that you know what they do and how they do it, levels of inventory they carry and so on. Buy one every now and then to maintain a basic relationship.

Next, develop deep relationships with about three suppliers. I chose these companies based on the quality of their product, their service, levels and mix of available chassis, promotional thinking and so on. You will need at least one company that sells Dry Van Bodies since only some body companies sell those and then two others that sell everything else in the common lines like Service Bodies, Contractors, Flatbeds, Dumps, etc. I recommend that you give most of your business to this elite group and they become your team.

There is a number of reasons for this approach. One, you want to deal with good quality companies that will provide great service that you can count on to help you care for your valuable customers. Two, get them ordering things that you want or need that helps to set you apart. Three, due to the volume you will be able to give them with your narrow range of suppliers, you should be able to work out maximum discounts and other financial strategies that support both your interests. Four--and this one is a big one in my mind--work with these companies to assist you in your marketing efforts through advertising support, special promotions of selected products, co-op advertising, special billing arrangements, etc. This last reason can be a very powerful tool for you and the body company is more likely to assist you with these kind of things based on your volume with them and your relationship. There are many more reasons you will find over time.

If you are just spreading your business around, like you're trying to be fair with everyone, you will not be able to take full advantage of the ways you can have a body company help you grow your business. And growing your business is what it is all about. Give this strategy a try and I am confident that you will find it very rewarding.

1 comment:

Inventory Management Software said...

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