Analyse your data, forget about making another 'deal'

Dateline: 31.03.2010
Author: Martin Smith*

The distributor/reseller business in the cleaning supplies industry is an essential part of the supply channel that ultimately facilitates the efficient and timely fulfilment of the increasingly important role of cleaning and maintenance in our society.

In the past the cleaning industry has been undervalued and underrated. In the immediate future the role and importance of cleaning is increasing in importance and prominence.

Cleaners and facilities service solution providers perform a vital role in assisting all businesses build their client's reputation with consumers. None of us likes walking into to washrooms or seeing kitchens and other facilities poorly serviced or in fact plain dirty.

Some of this change in attitude and emphasis is occurring due to the increasing prevalence of virus pandemics and quickening spread of viruses and infections on ship, in hospitals, etc. Some can also be attributed to the increase emphasis on the use of environmentally sustainable products

Many organisations now understand that the cleanliness of their facility including their washrooms resonates clearly in their customer's perception of the whole experience. Unfortunately, cost pressures also mean that these facilities services are also constantly de-valued and under scrutiny when in fact they only represent a relatively small part of the cost of running the entire business.

Unfortunately, this thought process also trickles down through the service providers to the resellers/distributors.

This is clearly evident in the mindset of many resellers/distributors. Many have a pre-occupation with supplier purchase prices and will willingly change suppliers for a few cents or because the next 'deal' that walks through the door is cheaper than the previous one.

They forget that they are in the solutions provisions business.

In essence, the products purchased by cleaners and facilities service providers represents a relatively small cost of their service to the end user. The overwhelming majority of their costs for the provision of the service is labour.

Many resellers/distributors feel more comfortable dealing with suppliers than they do in ensuring that they supply orders in full on-time every-time to their customers.

What this leads to is a wide variety of stock lines/inventory that they carry. They are inclined to hold too many SKUs/items from too many suppliers and not always because they have a request from a customer for a particular product or a particular supplier.

In many instances they do not see that switching an end user over to a product that they already stock is a far better option for their total business than ranging new lines. The impact on their business in operational cost, time and efficiency is well and truly underestimated.

Product procurement is certainly a major role in any reseller business but the primary focus should be on providing an essential, timely and efficient service and solution to their customer.

Most customers want their requirements and they want them now; they also want all of them.

If they pull up at a distributors/re-sellers door in the morning they want every product that they ordered then and there. If you do not have it then there are many other resellers who will be more than happy to accommodate them.

Too many distributors carry too much stock, too many SKUs and a lot of product duplication.

This isn't helped by the nature of the supply side of the industry. There are frankly, in some categories, too me suppliers with too much 'me to' product.

A simple flick through the Yellow Pages will quickly demonstrate the vast number of chemical suppliers and manufacturers in the industry, as an example. What do each of these suppliers offer that is different from their competitors?

There is also a proliferation of distributors and resellers that market their own brands.

We are in an industry that in general has a low cost of entry for suppliers and re-sellers.

Efficient and sensible inventory size, control and management is important for all businesses. Today we have the tools to sensibly and efficiently manage and control inventory.

Even the most basic accounting or business systems are capable of reporting inventory movements to assist resellers to make appropriate decisions about what and how much they carry. A simple analysis of the product database will provide the business owner to analyse which products (individual SKUs) are their top selling, highest gross margin, widest sales spread, stock holding and velocity.

Does each of us spend enough time analysing the data or are we pre-occupied with the 'deal'? Do we spend sufficient time ensuring that we have in stock those products that our customers want now or ensuring that ordering stock with sufficient lead times bearing in mind the supplier's delivery performance? Do we conduct rolling stocktakes on key lines to ensure that our data integrity? Does the computer stock figure (the most important SKUs) match with the real inventory on shelf?

Small business people lead very busy lives. Putting in place the correct processes and procedures that deliver essential information about the business in a timely, efficient and accurate manner helps us use time more efficiently but also ensures that our customer promise is realised - deliveries in full, on-time, all the time.

www.rapidclean.com.au

* Martin Smith (pictured) is the CEO of Rapid Group

Analyse your data, forget about making another 'deal'