by Steve King, President, Pet Industry Distributors Association
Published in Pet Business magazine
Wal-Mart is by many measures the most successful retailer in the world. Many believe that their success lies in their ability to buy better than their competitors due to their immense size. But this is only part of the story. Wal-Mart also relentlessly drives costs down by being ruthlessly efficient in their supply chain.
Independent retailers will never be able to buy like Wal-Mart. But you can add dollars to your bottom line by partnering with your distributors to eliminate waste, drive out costs and adopt business practices that boost efficiency.
Distributor sales people are terrific resources for retailers. They bring you new products and help identify hot selling items through their knowledge of the local market. They can help you buy better with special deals and discounts. They can also help with merchandising tips and point of sale materials that catch the consumer’s eye.
But distributor sales people are not an efficient way to place your order. Having sales people do data entry on a purchase order that is pulled from your store’s point of sale system is like asking a third grader to read Shakespeare’s Macbeth aloud. He can do it, but it will be painfully slow and full of errors. Data entry in general invites errors leading to out of stock situations, returns, credits—inefficiency.
Distributors have invested heavily in software that allows for electronic order uploads. Taking advantage of this investment will save you time, avoid errors and make the time spent with your distributor sales person more valuable for both of you.
Delivering pet products to your store when and where you need them is a key service provided by distributors. Regular deliveries free up storage space for the retailer, minimizes your investment in inventory and helps ensure that perishable products are not out of date when on your shelves. But with diesel fuel at nearly $4.00 per gallon, distributors must use the most efficient delivery routes.
Sophisticated software now helps distributors load their trucks and plot their routes with less wasted time and distance. Retailers who insist on dictating the day and time of their deliveries throw a giant monkey wrench into this well tuned system. Refusing deliveries before noon or on Wednesdays and alternate Thursdays means the distributor’s truck may drive past your store multiple times before he can stop. Efficiency goes out the window, along with cost savings that could have been passed on to you. Work with your distributors to understand how they can deliver your orders most efficiently, and eliminate unnecessary road blocks.
Without offending our canine companions, when it comes to pet products, sometimes a dog is a dog. Products that gather more dust than sales are prime targets for “SKU rationalization”. In other words, get rid of the old to make room for the new. The pet industry is blessed with a manufacturing community that is constantly developing innovative products for you to sell. The dilemma faced by most distributors and retailers is not too few products, but far too many. Warehouse storage space and retail shelf space limitations demand that every product produce adequate sales to justify the valuable space that you have allotted. If not, there are a dozen other products that will.
Distributor inventory management systems and retailers’ POS systems help make SKU rationalization relatively easy and fact-based. Your willingness to act on the data and purge your shelves of slow selling “dogs” will increase sales and make the most efficient use of your valuable real estate.
Retailers who take a page from the Walmart playbook by maximizing the efficiency of their operations will reap the benefits that were once only available to the largest businesses. Take advantage of the investment that your distributors have made in software and other efficiency measures to drive cost out of the supply chain.
Steve King is president of the Pet Industry Distributors Association, which represents wholesaler-distributors of pet products and the manufacturers that go to market through this channel.