I have figured out a great way to wake up a Sales or Branch meeting and get the group talking. All you have to do is mention inventories and ask for their thoughts. Everyone seems to have an opinion about inventories.
During a recent discussion on inventories last week I began to think I was listening to the Children’s story about Goldilocks and the Three Bears.
The Purchasing group thinks the inventory is not turning fast enough and we may have too much inventory.
The Sales group is on the other side of the coin feeling that we need more inventory and the inventory we have isn’t exactly what we need.
In the middle was the Branch Manager thinking for the most part the inventories are just right.
Now are you starting to remember the story? I bet a couple of you couldn’t remember exactly which story I was talking about. Was it the Three Bears or the Three Pigs with the Huff and Puff Wolf? Am I right! Back to the topic.
How many of you have been in this discussion?
I know all three groups are passionate in their beliefs and without a doubt everyone in these discussions are looking out for what’s best for the company.
So I would like to interject my thoughts since over the years I have been in all three positions and have argued all three cases.
I seem to always try to come up with a story to make my point or try to make it easier to understand. So here we go.
When I go into the grocery store across town I don’t expect them to have everything I need. If I go into a convenience store, I have even less expectations but I still think they should at least have bread, chips and cokes. But when I go to My local store that I have shopped at for years I have much higher expectations than the others. I expect them to have what I need. There is a reason I shop at that store and price is not the only reason. I am comfortable knowing that they seem to always know what I need.
So here’s my attempt at a story to make my point.
It’s the Fourth of July weekend and I run to the store to get Mustard and Mayonnaise. I may not buy these items but once or twice a year but I expect My store to have both. When I get to the condiments aisle there is plenty of Mustard but no Mayonnaise. I think, this is the Fourth so they must have had a run on the Mayonnaise but I can’t even find an empty shelf where it should be. So I ask the guy stocking the shelves where is the Mayo and he says we used to stock it but lately we haven’t been selling any so we’ve quit stocking it.
You probably think this is a dumb example. No grocery store would ever not stock Mayonnaise and I agree. But if your inventory is based solely on inventory turns and only on items with the most sales, what would prevent this from happening? Do you have a process in place to factor in Customer Expectations?
To continue with my example, I go ahead and get the Mustard but I still need Mayo. I go down the street where I may or may not have every traded before to get some Mayonnaise. Sure enough they have it and in the brand I prefer. Next to the Mayo is Mustard which happens to be cheaper than I paid at My store. I start to look at this store differently than before. I’m probably going to pick up a few more things for comparison. I’m thinking this store seems to have everything I expect a store to have and cheaper. Heck, this probably should become My store.
I’m not going back to my “Old” store and tell them I’m gone. They probably wouldn’t miss me anyway.
Can you see this happening with your Customers? How much did that one “lost sale” cost the grocery store in my example? I think a lot more than a jar of Mayo.
Having the right inventory is a very difficult process. You can have too much and not be efficient. You can have too little and not meet customer expectations. We must all work hard to make the inventory “just right.”
There are certain products that customers expect us to have on our shelves. They don’t understand and really don’t care how often it turns (sells). When they want the item they expect us to have it.
Every business should know these products and must make exceptions to turn rates and efficiencies to make sure these products are available. With all the benefits the computer brings to a business, I know computers cannot identify Customer expectations completely.
Customers don’t expect us to have everything and we should not even try to have “all”. But we must be able to meet their expectations.
As Sales Mangers and Account Managers we are the eyes and ears of our Customers. We must be providing feedback to the Purchasing group. Without our involvement and being proactive in the process we will surely fail to meet our Customer expectations.
I encourage you to be active in the Inventory Committee meetings if your organization has them. If not, offer to be a resource to the Purchasing Department. Make sure your Customer’s expectations are known.
If you have been reading this blog for long, I hope you realize that I think our relationship with our Customers is the key to our success. We must know our Customers and find a way to do business the way they wish to do business, if not the competition will. Inventories are just one glaring example of how well you know your Customer and your willingness to meet the Customer’s expectations.
Have a Happy 4th!
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