Back when I was working for a dealership we made the mistake of picking a fairly new line from a manufacturer to compete for tract business. Despite limited SKU’s and finish options we went with them because their samples appeared to fit the builders’ needs and their cost was 10% less than our current entry level product line at the time. When builders started choosing this new product line we began to have some serious hiccups in our cabinet business workflow. Quoted lead times of 14 days ballooned to 28 as soon as the orders started rolling in. Even worse? The finish failures that occurred after the cabinets were installed – talk about adding insult to injury!
So often cabinet dealers get absorbed in their own selling process that they forget how to act like a cautious consumer themselves when it comes to choosing their suppliers. When it comes to the profitability and efficiency of your dealership your suppliers can either make or break you. Choosing to carry product lines from bad sources can cost you time, money, and the trust your customers have in your cabinet business to get the job done right.
So how do you minimize the risk of choosing a supplier that could hurt your business? Here are a few qualifiers to consider:
1. Length of Time in Business
Try to avoid start-up manufacturers. The owners may have great manufacturing experience and vision, but do they have enough capital? Their systems will be underdeveloped and manufacturing issues will arise that you will have to deal with. Stick to products and manufacturers with at least a little history. When you do find one who’s been around for awhile be sure to take a plant tour to see their manufacturing process first hand.
2. Freight Costs
Look for suppliers with a distribution center or manufacturing plant relatively close to your operation. When choosing between two suppliers, take a hard look at the one closest to you. Do not fall into the trap of ignoring freight costs because the product is “landed.” The manufacturers that “pay” for freight include it in their product costs.
Be sure you understand their freight “rules” before you sign:
- Full trailers
- Replacement parts
3. Opinions from Current Customers
Don’t be afraid to track down and talk to some of the supplier’s current customers. Here you’ll get the real scoop on product quality, customer support, and warranties. Here are a few key questions to ask them about their relationship with the supplier:
- What product lines their business carries and which to avoid?
- Are their SKU’s adequate?
- What products they would like to see added to the line?
- How often they hear from their sales rep?
- Is their accounting department easy to work with?
4. Terms and Exclusivity Restrictions
Get extended terms up front. Most manufacturers will give you better than Net 30 from day one, if you are persistent. I always set a goal of at least 2/10 Net 45. The added flexibility of 45 days or more can come in handy when you experience the inevitable cash crunch. Also, ask them if they will carry the paper on large projects if necessary.
When it comes to exclusivity don’t forget to ask them who in your region is currently carrying their product. Certainly, you would like to be exclusive in your market with each manufacturer you use, if possible.
For a lot of these qualifiers you’re going to have to do some homework on your own instead of relying on the supplier’s sales rep. Most of these reps are independent contractors who will sell anything as long as it moves. You’re better off focusing on the sales training materials available from the manufacturer. If they are adequate to abundant, chances are your sales staff can quickly get up to speed on the new manufacturer. Find an opportunity to question the sales rep to see just how much they know about the product. If they don’t know it well, move on.