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Managing In A Down Economy

Not since the Great Depression has the U.S. faced an economy like this one. Expected new truck sales are forecasted at only a fraction of what they were in previous years, and capital budgets are not allowing for many new equipment purchases.

Logic would dictate that these are times for distributors to hunker down, ride out the storm and do what is necessary to survive. However, a down economy presents an opportunity for distributors to evaluate every facet of their operation. Let’s analyze the key departments of a distributorship and break down internal and external opportunities that can help you start the process of improvement.

Sales Managers

Internal Factors

Communication is paramount. Meet with each salesperson in your team. Evaluate the dynamics of the territory they cover. What are the opportunities? What are the challenges? Do not limit yourself to looking at merely new product sales, but evaluate opportunities in the service, parts and rental arenas.

Good ideas often come from surprising places. Look outside your sales force for ideas. Interview personnel from other departments, they can have amazing insight into the needs of your customers.

External Factors

Continue to plant seeds. Re-visit customers in your territory. Make sure they know who you are and the breadth of product and services that you provide. When the economy turns, you will be on the top of their list.

Create new literature and freshen up your Web site. Do whatever you can to differentiate yourself from your competition.

Your salespeople have to be out in their territory to establish your presence. This ‘feet on the street’ approach is true even today. This helps you establish relationships and meet new contacts. After all, people buy from people, but customers call companies that present a professional face to the market, not ones handing out photocopied line sheets with nothing but words written on them. DO NOT discount your marketing and advertising.

Help your customer Go Green. Sell what is selling. With trucks and batteries, there are not a lot of sales out there and if there are, the margins are thin. However, green products are going strong. These products help your customer save money. Energy efficient lighting, high-volume, low-speed fans, air curtains over dock doors and building insulation can all be quick hits that have a very short and measurable payback.

Service Managers

Internal Factors

Evaluate your technicians. Efficiency is paramount. Use benchmarks to weed out poor performers. Even with larger coverage areas, your better technicians will yield a higher gross margin regardless of the additional travel.

Scrutinize procurement. Do not overlook even the smallest items. Chemicals, office supplies, toner cartridges, tools and vehicle maintenance can all yield surprising savings.

Something as benign as the degreaser your technicians use can be a source of revenue. Switching from a $12 bottle of name brand to a $6 dollar bottle of a comparable product will place savings directly to the bottom line.

Use focus groups. Meet with your office personnel and your technicians. Ask for their opinion on market opportunities and ideas to spur service opportunities.

Energy efficiency. Look at your shop lighting. Switching from old technology such as high pressure sodium or metal halide to new T5 high output fixtures can yield a 50 percent or greater savings in electricity.

Evaluate your vehicle fleet and consider moving from old gasoline vans that get 8 to 12 mpg to new diesel vans such as the Dodge Sprinter or Ford Transit. These models can get upwards of 25 mpg and carry significantly more parts which can increase your first-call completion. The use of diesel in the marketplace is growing. This will keep prices more stable and competitive to gasoline in the future.

External Factors

Update your marketing and advertising. Put a new face to your department. Upgrade the aesthetics of your literature and place a heavy emphasis at what sets you apart from the competition. Take your new look and blast the marketplace.

Help your customer help you. Provide your customer contacts with packages, coupons and promotions that will assist them in gaining access to corporate funds to service their equipment. This might help turn tide and free up budget money.

The art of the refurb. Customers can’t afford new trucks? Have literature providing refurbishment services. Show before and after pictures. Establish the value of refurbishment in light of a lack of budget money for more trucks. There is always more money in refurbished trucks over new. Offer 30, 60 and 90-day warranty refurbishment options.

Parts and Rental Managers

Internal Factors

Evaluate your inventory levels. Keep your carrying costs as low as possible. Eliminate parts that don’t turn at least once a year. Buy high-velocity parts in larger volumes to increase your purchasing power and get a better cost per piece.

Dial in your van stock. Evaluate each technician on an individual basis. Each technician has a unique territory and set of customers. Make sure that their vans are stocked with the parts that they use most often. This will reduce the number of trips you have to make to your depot and keep technicians in the field making money.

Perform maintenance. Now is the time to perform all that overdue maintenance on your rental equipment. When times are busy and your fleet is in the field, it is hard to keep up with maintenance. It costs much less to take care of issues in your shop then it does to have a technician sacrifice billable hours to make a service call. Your customers will also value renting from a company that has such a well maintained and aesthetically pleasing rental fleet.

External Factors

Get Creative. Traditional approaches are just not working. Lowering prices and running specials are a great idea, but not if your customer base doesn’t know about them. Create campaigns to get the word out. Get creative. With larger customers, provide rentals on a usage basis. Park a truck in their facility, if they use it, they pay. If they don’t, you just got a truck out of your warehouse and freed up space. Offer free pick-up and delivery. The options are endless.

Assess your parts lockers. Make sure that your parts lockers contain the parts that your customer is most likely to use. Have technicians recommend any adjustments to the parts make-up of the locker. This will keep turns up as high as possible.

Parts specials. No one likes to discount parts, and for good reason. However, consider running specials to spur volume purchases. Customers are extremely sensitive to price right now and the opportunity to purchase high-use parts at a discount could help your customers help you by placing orders.

Unique circumstances require unique approaches. Think outside the box and try new things. There is no formula for immediate success, but progress can be made if you are diligent. Look all around you for ideas. You might be surprised by who in your organization has a contribution to make. Challenge your people to be creative and even incentivize them to contribute. Even in a down economy, there can be a silver lining. The key is finding it.

Material Handling Equipment Distributors Association
Matthew Senecal Meet the Author
Matthew Senecal is a material handling consultant based in Jacksonville, Florida, and can be reached via e-mail at mattsenecal@yahoo.com.

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