Dealers’ Domain

Question: How do you pre-determine your inventory levels for the following season?

As a service-only repair shop, I occasionally have repair jobs people don’t pick up. Also, sometimes I arrive at the shop to find someone has dropped off a unit in the dead of night. In order to dispose of these pieces, I call a friend nearby who buys and sells lawn equipment. He drops by now and then to purchase my orphans. Works for him. Works for me. As a result, I have almost no wholegood inventory. What I do have, I can store outdoors wrapped in plastic so it doesn’t take up shop floor space.
— Flute Snyder
Hudson Mower Doctor
Hudson, Wis.

We never let the market and/or a distributor/manufacturer influence what our inventory levels will be. We have been a dealer since 1985. We have streamlined our market, so we know well in advance what we will or will not sell. Therefore, no more floorplan worries or end-of-year inventory saturation.
— Becky Montgomery
Central Power Equipment

We basically run on “just-in-time” inventory. We have been slowly getting off of the “booking” programs of many vendors. These last couple of years, with the weather and economic droughts, we are running as lean on inventory as possible. Most of our customers can no longer project their needs more than 90 days out. Most are just replacing what cannot be economically repaired. Other than that, I use year-to-year monthly sales comparisons to suggest monthly stocking levels.
Since we don’t use any third-party flooring (financing) such as GE or Textron, this works well for us.
— Paul Lasiter, operations manager
Mason’s Saw and Lawnmower Service, Inc.
El Cajon, Calif.

I just go with gut feeling. With weather playing a huge part on what sells, I never know what to expect. I try to order close to what I sold the year before, and adjust if we get a good year. Who would have thought a hurricane (two of them) would come all the way to Arkansas and cause so much destruction? So to me, it is pretty hard to pre-determine inventory that will be needed.
— Tony Nation
Nation’s Small Engine’s Inc.
Hot Springs, Ark.

We use our business software to see what units have been sold and what is still in stock. Plus, we figure in the state of the economy at the time. As is currently happening, consumers are worrying about keeping a roof over their head, plus other financial worries, so that means they will not be looking to invest money into new equipment. That will play a bigger part in what our decision will be to purchase any inventory for any given season than anything else. A dealer cannot afford to have so much inventory that he will be saddled with large interest payments, as you can never obtain a return of that interest paid out. Interest has to be considered an expense or part of “cost of goods sold” — and when in too many instances the dealer only makes 12 to 15 percent originally and you add the interest charges to that cost — the dealer in many instances loses money when that inventory is sold.
— Joanne Klee, secretary/treasurer
Jim’s Lawn Equipment, Inc.
Cheektowaga, N.Y.

I assume you are talking preseason orders. What we do is look at what we sold from January through June the previous year. We then build and adjust an order based on those numbers. As the models age, we lower stocking levels or we eliminate some parts altogether. As new machines come in, we begin to stock the parts for them based on anticipated sales. We take advantage of all discount programs with dating, making sure to pay them as early as needed to get all of the discounts offered. If you are talking stocking levels in general, we base it on the previous year’s demand on a weekly basis. Wear- and service-related items we keep 2 times the max sold for any given week; the rest is kept from 1 to 6 depending on demand. In-season, we place orders daily to keep us from running out of stock. With shipping costs rising, we may have to make some adjustments.
— Matthew Borden, owner
Ed & Matt Equipment
Greenville, R.I.

We take a look at 2 years previous sales history to kind of give us an idea of what we need. We like to turn our inventory at least three times, so we adjust accordingly and lean toward the conservative side on the first shipment to see how things go. So far, it has worked really well.
— Terry Coffin, president
Beard’s Outdoor Power Equipment Inc.
Crestwood, Ky.

We track our total inventory for the past year, break it down into individual units, and then do a preseason order of 50 percent of what we’ve sold during the last year. After that, we order weekly on an auto replenish system. This coming year, with shorter terms and higher weekly amounts needed for auto replenish, we might go higher on our preseason order. However, with the economy, fuel, etc., being so unstable, I guess I’ll just fire up the crystal ball!
— John Moon
Moon’s Farm-Yard Center
Ulysses, Pa.

We print our part sales and order 60 percent of what we sold during the year on our spring order programs. If a specific part was purchased for recall warranty campaigns, then we take that into account and usually will not order those parts for the next season.
— David Vassey
Vassey Lawn and Garden Centers
Cleveland, Tenn.

Just a wild guess mostly. For mowers, we would gauge off of a normal precipitation year and remaining stock. Being in an industrial region (the home of Bethlehem Steel, Mack Truck and Ingersoll Rand), a look at the local economy and employment levels was important.
I had worked my snow orders into a science. Being in a marginal snow area, we gauged order levels by the amount of memorable late-season snows. While one or two February or March snows never helped late-season sales, a few 1-foot-plus March snows would transfer into heavy preseason sales. Our goal was to plan that 80 percent of our inventory would be gone by Christmas. A lean snow year would kill the next preseason. During a normal snow year, any remaining stock on Groundhog Day was going to be with us till next season.
— Rob Leiser, president
Leiser’s Sales and Rentals
Easton, Pa.