You Need Inventory to Stay in Business
I was in a meeting this week and the comment was made that “without inventory, we are out of business.” One of the companies in the meeting was commenting on how they are getting calls from new customers outside their marketing areas looking to set up accounts. When they asked what made them think of them, the response was, “my usual supplier is out of inventory.” Their response was that they were focusing on servicing their existing customers.
In this market, I think these were wise words. This is a time to make sure that you are serving the customers that have been supporting you, and make sure that you are communicating this to them. It also points out how important it is to have business relationships with multiple suppliers and be a solutions company that can also offer alternative products when lead times are important.
As I mentioned before, I have seen lead time be the most important factor in many product decisions over the years. Often architects, general contractors or project owners adamant about keeping to the specifications, finishes and styles will quickly make changes when product availability is an issue. Even price becomes secondary when lead times become critical. I don’t know how many times after spending months negotiating price, it was quickly forgotten when I got the call, “How fast can we get this?”
Most companies I talk to say business is booming, but supply chains are changing as some products become in high demand. You want to make sure that you check with your suppliers to see if the lead times you are accustomed to have changed. This could be a good time to reach out and expand your supply base to get the products you need, when you need them, and not wait until it becomes an issue.
It is also essential to communicate to your customers any supply chain issues as quickly as you can. This is an opportunity for you to show them that you are a solutions company by offering alternatives. Make sure that you present alternatives as comparable or equal products. Take the time to include spec sheets and drawings that will support this. By offering alternatives, you may not be successful in convincing your customer to make a product change. Still, the effort will give them something to offer to their customers, making them part of the decision to accept extended lead times.
Long-distance and expedited freight always come into play when lead times become critical. It could make sense to use a supplier that will add the freight cost to the product if this reduces the lead time. You want to make sure that you include any freight costs in your quote. Again, it makes sense to give your customer a choice, quoting multiple suppliers and lead times.
It is also important that you do the same with your supplier and understand when the clock starts on an order. You want to get a confirmation that the order has been placed, including the agreed-upon lead time and freight costs, remember to account for shipping time. Many contractors will try to place penalties or fines for not meeting completion dates. By agreeing to such terms, you understand these are things you alone are committing to as many suppliers will not support you financially if they come up short.