Last week I visited an electrical distributor client to discuss customer service. Given the economic environment that has gripped the industry over the past 18 months, no one is surprised to hear that some companies have experienced customer service issues (both manufacturers and distributors). Our recent 2010 Contractor Insights Research Report also revealed contractor service frustrations with distributors.
Customer service issues typically fall into one of three categories – inability to handle standard transactions (delivery, invoice accuracy, phone support, etc) on a consistent basis; knowledge staff; or product availability issues.
One of the topics we discussed at the meeting was the product availability issue. The client admitted to cutting their inventory value, but still was operating with a healthy inventory value. The challenge – they cut the dollar amount but didn’t consider that they should cut more in C’s and D’s and ensure that they had A and B items!
While they need to reconsider their inventory dollar allocation, we also talked about making sure that they have the top sellers for the market segments that they sell to. A strategy to do this is soliciting supplier support. Ask your customers, “what are your top x products for y market segment (i.e. industrial) nationally and within my geographic area / region?” Then compare their information to what your top sellers are for them. If you have gaps, could you be missing sales to your customers? (and yes, there may be SKUs that are not on the supplier list but are on your list – but you know what your customers are buying from you.)
Contractors want a one-stop shop. Having their most frequently needed products helps improve your service levels. Don’t let inventory for top sellers be a reason why you lose a sale. Get your top suppliers to help you adjust your inventory.
Having the right product, in stock, will help you take share, increase sales and improve your profitability … while creating satisfied customers.
1 Comment
Manufactureres have taken so many key products to China to cut costs and increase profits. When the manufacturers inventory runs out it could be weeks or even months before the product is available in the US for sale. It is a problem that does not often get fixed because the company CEO’s are so fixated on the costs side of the equation vs the sevice side (not to mention the loss of jobs here in the US.) Service and quality have both suffered by exporting our industries to China. This should be discussed further in a column here in this blog. For example, there is not a single safety GFCI receptacle made here in the USA. This is a safety product that you would think could command a small premium for being “Quality Made in the USA”. It is a sad time for the workers here in the USA. No wonder unemployment is so high and the CEO’s continue to make record bonuse. Send the CEOs to China and keep the jobs here.
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The Right Inventory, and Pricing, Drives Sales and Profits
