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We know what we need to do. With our talented employees and technology, we have nothing to fear in making positive changes to our businesses. So with that in mind let’s move forward and make the changes.

But first, let’s review the main customer needs and wants.

In the area of parts:

• Availability of parts and supplies
• Competitive pricing
• Rapid response on back orders
• Accuracy in part numbers and quantities.

In the area of service:

• Price offerings
• Response time
• Quality of work
• Convenience.

These items have been consistently at or near the top of every survey I’ve seen for the past 15 years. It is remarkable in that it points to the truth that we in the distribution business have not done a good job of responding to our customers’ needs and wants. We continue to do what we’ve always done for the most part. And as Albert Einstein once pointed out, that is the definition of insanity.

At the beginning of learning sessions I lead, I always ask for three definitions. What is the definition of ignorance? What is the definition of stupidity? What is the definition of insanity?

Ignorance is defined as not knowing what to do. Well, I believe it’s clear when our customers tell us what to do. I also believe most people in the distribution business are not insane (although with the recent market vagaries there have been times I’ve wondered).

That leaves stupidity. Stupidity is defined as knowing what to do and not doing it. And we know what to do— from the two lists shown above.

Parts Improvement

Now, let me add my two cents worth. First let’s look at the items on the parts list.

Availability of parts and supplies is critical, and with the coming shortages in the supply chain it will become an even bigger item. The solutions rest with several items.

1. Move to systems that have lead times for each part.
2. Review each stock order receipt and expedite short items.
3. Seek out alternate suppliers for when there are shortages.
4. Don’t touch suggested stock orders—let the system rules work.
5. Manage lost sales and abnormal demand.

Competitive pricing seems self-evident, yet most businesses defer their price positions to their suppliers.

1. Stratify your parts business, activity, and price levels.
2. Pay attention to the competitive landscape.
3. Establish competitive families of parts.
4. Set up price as a marketing tool.
5. Review your parts return policies.

Rapid response on back orders—expediting is almost more important than having inventory on hand. If you have the part, it’s expected. It is what you do when you don’t have the part that makes a difference.

1. Review the availability items.
2. Find every part every day before going home for the day.
3. Set up a decision tree on expediting rules.
4. Set up a network of like suppliers with purchase agreements.
5. Find after-market sources for extreme situations.

Accuracy in part numbers and quantities should be a given, yet it isn’t.

1. Manage the on-hand quantity in the physical inventory.
2. Establish cycle counts.
3. Count only at zero on hand.
4. Have the teams involved in errors write apology letters to send to the customer.
5. Errors are like accidents—when they happen, have a group discussion on them.

Service Improvement

And now let’s look at the items on the service list.

Price offerings with the labor side to the customer are what it’s about.

1. Establish fixed price offers for labor.
2. Establish various labor programs—maintenance, annual inspections.
3. Match employee skills with job needs.
4. Ensure the “best in the business” group of technicians through training.
5. Ensure you are the best equipped with leading edge tooling and technology.

Response time is critical even in this time of economic difficulty. The customer expects both predictable and prompt service.

1. Manage the work flow and backlog.
2. Set up a computer-based managed scheduling system.
3. Establish a first-in, first-out priority system.
4. Have daily schedules and work segments that can be done in 8 hours.
5. Provide a completion date on all jobs and meet it.

Quality of work should be expected of you, but not necessarily your competitors. This is a strong competitive advantage that you should use.

1. . Make very public and visible your quality statement.
2. Publish your quality in a manner that everyone can see it and knows it.
3. Track quality in the number of days or weeks or months without a failure.
4. Establish a longer service warranty than your competitors.
5. Create a warranty certificate to provide upon completion of every job.

Convenience is important. You want to be easy to do business with in every aspect of the business.

1. Market segmentation of your customer is where it starts.
2. Develop customer satisfaction models for each segment.
3. Market coverage in the field sets the stage for convenience.
4. Telephone handling is the starting point of internal customer contact.
5. Make sure your invoices and statements are easily understood and clear.

Other Ideas for Improvement?

There are some other additional thoughts for you to consider. I’m sure many of them are already covered in your businesses. If they aren’t, think about them and talk about them with your employees and customers.

Providing solutions to the customers’ needs and wants is a critical aspect of the business. However, in the course of providing these solutions we can’t forget that we don’t manage people, we lead people. This is about managing your processes and providing leadership of people.