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Forms & Functions
“During the first part of my tenure, I had the illness of signing up to sell too many lines,” he says, noting that the current level is about 20, and should be about 15. “It burdened our organization when it came to product knowledge in sales, parts and service. I started thinking about why I’m doing it all. If there’s no financial benefit, then there’s no reason.
“We knew we needed to pare down the number of lines we sell. I wanted to find a methodical way to figure out what they do for us — or do to us. And it’s not only about equipment, but the people who make it. Do they pay warranty, are they fair and do they do what they say they will do?”
Beverage Tractor’s form neatly contains all the facts Beverage wanted to collect to make an informed decision about a given line. The form includes spots to enter historical and sales data, inventory turns, net profit, carrying costs, other costs, product reliability issues, other sales that would be lost if the line did not exist (and its respective profitability), intangible reasons to carry (such as a co-op advertising budget that can be used to sell other products or a past-its-prime line with few demands but many customers in the region) or not to carry the line, and final comments/recommendations.
According to Beverage, the form got his staff thinking about the entire lines, not necessarily the equipment. “When a new shortline salesperson comes in, I hand him the form, tell him this is how we think, and then say you can come back and speak to the whole staff in the conference room.” He did say that he recently added the Ferris commercial lawn/garden mower to his business, and purged two other competing products from his offering.
Carrying cost is a big factor. “We need to know how much interest we paid last year to carry a line. You can be blinded by gross profit alone.” He added that his 20 Group requires very specific details on reporting the carrying cost of inventory. He adds, “The dealers not measuring everything, if continuing the way they did 4-5 years ago — they’ll either be bought out or closed down.”
When asked about some of the things that the form “told” him, he cited how well the firm recoups things like co-op advertising, warranty, etc. Examples of “intangibles” would include how some tractor manufacturers don’t care what happens once the machine hits your lot, while others, like Mahindra, will offer discounts to help move a tractor. He also said some manufacturers charge fees to use their computer systems or make the dealer pay for literature. All of these things are accounted for on Beverage’s form.
Click here to download an actual copy of the form.