9/08/08

Through the Eyes Of the Bold, Part 8

Today I will go back to stocking mix. The commercial inventory is such an important thing to try to perfect because it is your solution for your customer's problems and it is your profit for your business. I take it very seriously, yet with a light heart. To me, it is pure fun. I don't let things slide by, I want to orchestrate it.

In Part 6, I gave you the formula that I use in consulting with dealers. I'll repeat it here for a refresher:
  • Contractor Body 10-15%
  • Combo Body 5-10%
  • Flatbed 20-30%
  • Service Bodies 30-45%
  • Plumber Bodies 5-10%
  • Van Bodies 15-25%
  • Dumps 5-10%
  • Other Bodies 5-10%

I use this to help a dealer have a good plan to get started, but there is much more in the detail, that doesn't show in the numbers above. Today, I will discuss some of that detail.

For those experienced commercial people, you might be saying that the Combo Body is just a Service Body and the Plumber Body is just a Service Body. Well, yes, you could look at it that way. They are metal bodies with cabinets, some have roofs and rear extensions. But, the reason they are broken out the way they are is to understand having a mix of things and these are the major categories that cover the largest part of the market. In reality, there are basically three different kinds of bodies: Service, Flatbed, Box Van and everything else is a derivative of some kind from those.

So, let's take Contractor Bodies for our first example. In other posts this week we will deal with the other body types one at a time.

In my travels, I see almost 100% 12' Contractors on lots. If they have 6 units, I can bet money that 6 of them are 12' models. They may put the 12' units on regular cab, 350, 450, 550 and they might have a crew cab or 4x4 or other variation. With Ford dealers in particular, there are a huge percentage of 450 and 550 Contractors. And they also stock an unreasonably high percentage of diesels. When I see this, a red flag goes up. Here is why:

  • The biggest portion of the real market are 350 style, so if you are stocking so many 450 & 550, you are pricing yourself out of the market.
  • The Chevy and GMC dealers down the road are going to be stocking and primarily selling the 3500. The Ford dealer will not be able to compete because the 450 and 550 are so much more money.
  • The Chevy and GMC dealers down the road are going to stock a larger number of gas trucks. The diesel motor adds $6,000 to the price, so this makes the Ford less competitive.
  • The way the Contractor is used in real life doesn't warrant the greater GVWR of the 450 and 550. On the Ford F350 with a GVWR of 13,000 lbs., the cargo capacity is 4,000-4,500 lbs. You would have to really work at it to get that much weight on the Contractor. If you are a cement contractor, maybe. A Stone mason, perhaps. Any other use, doubtful. I am more concerned about overloading than almost anyone I know, but I am not the least bit concerned about 13,000 GVWR on this truck.
  • Think of the operating costs to the customer. The tires, brakes and other services are considerably more expensive on the 450 and 550 than the 350.
  • Think of the operating height. The 350 has a great advantage here.

I've seen lots of Contractor Bodies in real use and they just don't carry things that are so heavy to warrant the 450 or 550 except in a very few rare cases. So, why would you stock so many of something that is only needed rarely. There is no problem convincing the customer to pay less money. It's an easy sell on that and having them understand the capacity of the 350.

Now, here's the great advantage of knowing this. Now you can be much more fluid in your stocking of Contractor Bodies. The first thing is that you will automatically sell more Contractors by stocking the F350 with the V8 gas. It will become your number one selling Contractor. Why? Price and value, which is every customers concerns. Next, you need to start mixing up your lengths. You need some 60"CA 9' or 10' bodies. This allows you to mix it up further by having regular cab, super cab and crew cab and still stay very competitive. The 5.4 liter V8 has plenty of performance for most uses in most terrain--even with a trailer. There are certain situations where the V10 gas or the Diesel will be a benefit, but generally, the 5.4 gas will be your main engine. Remember, there are so many 450 and 550 diesels out there, so all you need to do is get on the phone and you can have all you need right away.

So, if I were going to stock 6 Contractor Bodies at a Ford store, I would stock 2-F350 V8 gas 12' models, one is a price leader without underbed boxes and hitch. Then I would have an F350 V8 Super Cab with a 10' Contractor and an F350 Crew Cab with a 10' Contractor. Next, I would have one F450 Diesel with a 12' Contractor, and last I would have an F350 Diesel with a 12' Contractor. So, I have 4-12' units and two 10' units. I have 2-diesels and 4-gas. On six units, this is a great mix. You also have a lot to show people to offer some varied solutions. Harbor Truck Bodies has what they call a Contractor II which has taller boxes and I would for sure have one of those in the 60" CA instead of the Standard Contractor. This will give you even more flexibility. Carter Industries has a nice looking Contractor with Aluminum Treadbrite Upper Boxes and that could take the place of one of the 12' units.

Some people might think that they could stock the standard things and then trade or get the other ones they might need. You will find that this will work the other way around much better. Since there are so many not so bold, stocking the not so different, it will be a piece of cake to get the standard units, don't you think? Be bold and get a mix to sell from. With just that 6 piece inventory, look how varied the applications can be and how many different things you can sell, but you're still selling Contractor Bodies. I will tell you this for sure: you will sell more and your grosses will go up and your flooring costs will go down.

Now, the trick is in keeping your mix as a mix. So, if you trade one or sell one, you need to get another one as soon as possible. Keep the flow going. Don't be without for more than a moment if you can help it. If you are turning your inventory, you can work deals with your favorite body partners to have one in the wings already built for you. As long as they know you turn them, that won't be a problem at all. So many little tricks like that can help you be a superstar when it comes to inventory. All it requires is a good plan, creating partnerships of value and paying attention to the market and your stocking levels and mix. In other words, focus.

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