April 24, 2014 Comments 9 admin 0 6609 Views

Parts – Enough is Enough Don’t you Think?

I would say that most of my Blog posts are informational, praising and sometimes just off the cuff. In some cases something has to be said and today is one of those days. Over the last 2 years being in Dallas I have had the opportunity to observe some things that to me are just ridiculous in my mind. So let me set the stage here with some background on this before I get into the meat and potatoes of it all. First off it is no secret that the golf industry is hurting financially due to the loss of players over the last 6 years. Many golf courses have tried to hold on and in fact a good friend of mines facility just went under in Georgia at the beginning of this month. We as golf course managers have been asked to do more with less and to become more efficient but yet provide the same conditions that we always have, and for some, do that along with working less hours because overtime has become a thing of the past.

I realize that people are in business to make money and I am perfectly fine with that. However I do have issues with it when I see it being excessive as I will explain shortly. At a time when we are being asked to pay over 70k for a rough mower when does it stop? Listen we can’t make golf affordable when these costs just keep going up it’s that simple. If we can’t make it affordable then before long even fewer will be playing the game and even less equipment will be sold.

So now we come to the part which really irritates me and I would say more than anything I have experienced in this business. I have spent the last 2 years trying to understand the parts policy our Toro Distributor (I won’t name them) has to the point that I have made multiple calls and emails to Toro directly. If anyone reading this finds this policy acceptable please comment because I would love to hear your perspective. Ok so here it goes. Let’s say on Thursday I realize I have a machine down and the pump I purchase is not in stock at the dealer. That pump needs to be ordered through Toro by the Distributor. If I do not want to incur an extra charge I will need to wait 13 days before I will see that part. Why you ask? It’s because the Distributor orders all of these parts on a stock order which has to be processed by Wednesday in order to come in on the next Wednesday’s order. So if a machine goes down on Wednesday afternoon through the following Tuesday it could be 2 weeks before you get your parts. So being objective about it I understand that it saves money not having to bring parts in every day. Also many of us don’t have an emergency and need the part quickly every time we order. So let’s just say that on those occasions I am willing to wait the 13 days to get my part. My boss probably isn’t but lets move on.

So now I ask ok listen I need the part in the next few days because my machine is down. So here is the response. “Ok we can get it in for you but you will have to pay an upcharge fee”. I am thinking ok well I understand I need to pay shipping on the part and I am fine with that it’s going to have to get here some how. Uhhh No sir there is also a 20% charge in addition to the shipping. Ok run that past me again? Your going to charge me 20% more because you don’t have the part plus shipping or I can wait 13 days to get the part? Yes sir that is correct. Are you kidding me? So let’s break this down the part is $465.00 and I am being charged $93.00 because you don’t have
it plus shipping otherwise I can wait 13 days to get the part. Can someone please tell me how this makes any sense at all please? So I ask why is that? The explanation I have been given is that Toro (the manufacturer) charges them (the dealer) this upcharge when they don’t have an item in stock. So they pass that fee along to the customer. I have thought of every conceivable way to blame Toro for this issue. However I have not heard of (1) other dealer who does business this way. I have seen handling charges which I am not thrilled about but why is the customer being penalized for needing a part? No other manufacturer or dealer is passing this off to the customer?

The biggest issue with this is that I can’t choose to buy from someone else. If I walked into a furniture store to buy a lamp and they told me well sir we don’t have it in stock but we can get it for you but you have to pay a 20% penalty plus shipping because we don’t have it. I would laugh and walk out. Then go down the street and buy a different lamp. Problem is I can’t do that in this situation. It would be very easy for me to look at this situation and say you know I am leaving in June and going back to Florida so I won’t have to deal with it. However what about all the courses that will? What about our property here? Also everyone knows about it but why is nothing being done? Am I the only one missing how this makes any sense at all? What has happened is that everyone has just had to accept the fact that they have to wait on parts or pay this ridiculous penalty. I personally think we are paying enough for equipment and I will assure you that no one is breaking even on parts sales. How about a little understanding from your customers point of view so we can try to make this business viable again?

Listen this isn’t a brand issue or what type of equipment I prefer over the other. It’s a business issue. It’s being forced to pay the premiums and not having any other option. If you had to pay $10.00 a gallon for gas knowing others were paying $4.00 just because you were only allowed to buy from one store would you be upset? Sure you would. I don’t get to fired up often but when I see us forced to waste the companies money that presents a big issue to me.

In closing normally when I need something quickly and I get threatened with these costs I have been able to talk with my salesman and get a little break on it. While I appreciate that it doesn’t make the policy right for me or anyone else. I for one would like to see something happen on this issue instead of sweeping it under the rug until it becomes an issue again. Not just for me but for all the golf courses that are incurring this cost.

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Blas Huezo

April 25, 13:52 Reply

Very interesting issue and fortunate not to have that particular problem with my Distributor, in fact I asked them to shed some light on the question at hand and this is what I got. Hope it helps.

“A very interesting reading… But actually is pretty much right on target.

I will try to address the bullet points:

A Distributor’s area is established by Toro based on many reasons, and no two areas may be the same. But one of the foremost is the ability to service a given customer base in a manner and time frame that meets everyone’s expectations and maintains the business plan Toro wants to establish.

Stock vs non-stock, that is based on each Distributors actual activity. Virtually all Distributors follow the same guidelines: If you sell it three times in a given year, you should be stocking it.

Shipping options and costs: I would say that this pertains specifically to when a Distributor does not have a part in stock.
As you are familiar, Toro has the 48 Hour program that allows for a part that can be shipped UPS from the factory, to be shipped second day air at regular ground rates, thus not penalizing the customer with higher shipping costs just because the part is coming from a more distant location.
I would say that about 99.5% of our backorders that are drop shipped get processed this way. There is also an overnite service available from the factory that has a slightly higher cost, but is still lower in most cases than the published UPS rates for Next Day Air service.

Costs on ordering parts, based on the example given below, this is a touchy one to cover. Granted, you are fortunate that you are in a territory that has the largest parts warehouse in Toro Distribution, and also has the highest fill rate of any Distributor, so you receive the best service in the country and do not become exposed to much of this. In fact, covering the last 10 years, you would need two hands to count the number of years that Turf Star has had the highest Fill Rate in the country. Also, to add to that, we have received the highest performance award for Parts, 2 out of the last 3 years from Toro.

So, costs: Any part that is not ordered on a stock order from Toro, the Distributor does pay 20% more for it and in many cases, this just about takes all of the profit out of the transaction. And yes, we are in the business to make a profit. So when a situation comes up where a pricey part needs to be ordered from Toro that the Distributor does not stock, it becomes a business choice that we include the customer in making. I think you agree, if the Distributor takes that hit all the time on their own, then they would have to raise prices on all parts to maintain a profit that allows them to stay in business at the level demanded upon us by our customers. We do not want to do that, thus when the unique situation arises when a specific part is going to incur some additional high costs, we bring the customer in on the choices available. In our operation, this may happen realistically, in about 1 out of a thousand transactions. Definitely, a very, very, small number.

This 20% upcharge by Toro on rush orders that we have discussed is unique to Toro for the most part. But Toro does not do that to penalize the Customer, they do that to give the Distributor incentive to stock parts.

Most Distributors do also have one other option available to order in a limit of 15 parts once per week at a lower 10% rate and it will ship Second Day air to the Distributor.”

9 Comments

Stibuzz
April 24, 05:14 Reply

RT @StephenTucker7: Parts – Enough is Enough Don’t you Think?: … http://t.co/Eh0dUxqviZ
Brian Hughes
April 24, 14:11 Reply

Why are mowers $70,000 ??? We are cutting grass here , not building Steinways … $500 for a starter . Next thing you know we will be getting our parts from China ….along with everything else we buy . We are all be gouged for every little thing . You would think these large corporations would be looking at the big picture ( Customer loyalty , service , parts etc) rather than trying to screw us over for every little part we need….And , why would they encourage the dealers to stock parts that they can sell to end users for a 20% mark up ???
Aaron Spoonemore
April 24, 14:15 Reply

Not everyone pays $70K for a rough mower! The Lastec 3300 (100″) and 4520 (120″) are both under $48K and are considerable more productive, use half the fuel and much easier to maintain.

If a local dealer doesn’t have a part the factory will drop ship the part directly to customer (I believe at no extra charge). The only extra charge would be over-nighting a part.

Lastec has a 98% fill rate on parts and if you order before 3pm EST they ship that day!
Bob Pruneau
April 24, 17:47 Reply

I totally agree Steve . I have to buy from my Toro dealer. If not in stock I have to wait same as you guys. Before our dealer i use to get any part 99% of the time next day . Of course it was a way bigger outfit . Where One of the big three I get it ASAP “: machine down “special order just pay to fly it in .Which we don’t mind (private club) if we need the part yesterday . The other one of the big three they will ship direct from company if not in stock 1-3 days tops . When we need a large area mower fixed 13 days is not an option during the growing season .
Frank McQuiggan
April 25, 05:44 Reply

I totally agree with Stephen on this point, I was at a club once where one of the big three actually charged me sometimes upwards of $100 for shipping parts to me. Granted at this time I was overseas and they needed to ship through the US Postal system to me but come on that much of a mark up to have someone go to the post office and ship it to me. I would get the parts in see what they paid in shipping to USPS and then my jaw would drop. In one year I was over charged for shipping by over $7000. I spoke to the GM at the time, showed him all of the shipping labels from USPS and the invoices from the dealer and our solution was to order from another dealer, worked out for us our parts budget shrunk by the amount we were over charged for shipping the next year. I know that sometimes if a company is used to shipping through UPS that going to the post office takes some time from someone, so we were willing to pay an extra $10-$15 to get this service from them but they didn’t see it this way so we did what we needed to do for us and changed dealers. It always took us at least 7-10 days for parts not like we were getting anything overnighted to us regular mail system. One that really stuck out to us was a mailing label that the company paid $9.90 to mail and then charged us $99.90. Tell me was it worth it? No way! Were they going to change there practices? No way!

We thought about buying from a dealer overseas but the cost was counter productive, a single bedknife cost 88 euro at the time and multiply that but the fact that we had 4 triplexes it would have cost us over $1400 for 12 bedknives, so we paid the dealer back here $360 for the bed knives and $99 to ship them it saved us money in the short run but we searched and spoke to other dealers and then made a change to buy from another dealer where we only paid $10 over the USPS shipping both companies were happy and then the company that we switched to did us one better after a few months and started only charging the actual shipping costs. Worked for us. I know I got a bit off Stephen’s rant here but it some what in the same ball park.

I agree that when we pay some much for our equipment some things need to come with the equipment, fair and equitable parts pricing, my pet peeve is the Technicians Manual, and some down to earth good business practice of follow up on the equipment. In my current club, I don’t have the problem so much as before, but since UPS charges more for shipping than USPS I pay the $9.90 shipping fees. I won’t pay an additional 20% if they don’t stock it and I need it, If that was the case I would look some where else to buy parts from. So I might piss the dealer off by going to his competition, if he wants my business and we want to remain accessible to our golfers than so be it.
- Blas Huezo
  April 25, 13:52 Reply
  
  Very interesting issue and fortunate not to have that particular problem with my Distributor, in fact I asked them to shed some light on the question at hand and this is what I got. Hope it helps.
  
  “A very interesting reading… But actually is pretty much right on target.
  
  I will try to address the bullet points:
  
  A Distributor’s area is established by Toro based on many reasons, and no two areas may be the same. But one of the foremost is the ability to service a given customer base in a manner and time frame that meets everyone’s expectations and maintains the business plan Toro wants to establish.
  
  Stock vs non-stock, that is based on each Distributors actual activity. Virtually all Distributors follow the same guidelines: If you sell it three times in a given year, you should be stocking it.
  
  Shipping options and costs: I would say that this pertains specifically to when a Distributor does not have a part in stock.
  As you are familiar, Toro has the 48 Hour program that allows for a part that can be shipped UPS from the factory, to be shipped second day air at regular ground rates, thus not penalizing the customer with higher shipping costs just because the part is coming from a more distant location.
  I would say that about 99.5% of our backorders that are drop shipped get processed this way. There is also an overnite service available from the factory that has a slightly higher cost, but is still lower in most cases than the published UPS rates for Next Day Air service.
  
  Costs on ordering parts, based on the example given below, this is a touchy one to cover. Granted, you are fortunate that you are in a territory that has the largest parts warehouse in Toro Distribution, and also has the highest fill rate of any Distributor, so you receive the best service in the country and do not become exposed to much of this. In fact, covering the last 10 years, you would need two hands to count the number of years that Turf Star has had the highest Fill Rate in the country. Also, to add to that, we have received the highest performance award for Parts, 2 out of the last 3 years from Toro.
  
  So, costs: Any part that is not ordered on a stock order from Toro, the Distributor does pay 20% more for it and in many cases, this just about takes all of the profit out of the transaction. And yes, we are in the business to make a profit. So when a situation comes up where a pricey part needs to be ordered from Toro that the Distributor does not stock, it becomes a business choice that we include the customer in making. I think you agree, if the Distributor takes that hit all the time on their own, then they would have to raise prices on all parts to maintain a profit that allows them to stay in business at the level demanded upon us by our customers. We do not want to do that, thus when the unique situation arises when a specific part is going to incur some additional high costs, we bring the customer in on the choices available. In our operation, this may happen realistically, in about 1 out of a thousand transactions. Definitely, a very, very, small number.
  
  This 20% upcharge by Toro on rush orders that we have discussed is unique to Toro for the most part. But Toro does not do that to penalize the Customer, they do that to give the Distributor incentive to stock parts.
  
  Most Distributors do also have one other option available to order in a limit of 15 parts once per week at a lower 10% rate and it will ship Second Day air to the Distributor.”
james wilkinson
April 28, 03:03 Reply

A very interesting read, along with good comments. I find your situation Stephen unusual and not one I’ve heard of, just going on Toro my Distributer and dealer I must be very lucky as I couldn’t be more happy with the service… I’m no sucker but I’m a true Red, for me there the full package yes there probably the more expensive but you pay for what you get…. when I order parts I always think to myself ‘how much’ but I find that with all manufactures… The parts game is big business and they all take the Micky mouse. My situation is I can’t order parts direct from my Distributer I have to go through my local dealer but all parts I sent from my Distributer weird I know but that’s how it is. A typical call for me ordering a part would be I call my dealer and give them the part no: they give me the price, I ask for it to be sent direct from the Distributer if the Distributer have it in stock it will be sent direct to me FOC next day by courier by 11am, if the part isint in stock then my distributor and Toro guarantee me it will be with me within 72 hours from the states and once again FOC whether the part is £0.20p or £1000.00 it doesn’t matter the cost or size they always deliver…. I can honestly say in 10 years with an average of £25k a year i havant been let down once…. Very impressive So your circumstances are not great and i wouldn’t be happy either I sure get better service and I’m across the pond…. less
Jerry Kara
May 02, 07:03 Reply

I agree with Stephen, I have the same distributor that we are talking about. I think the manufacture needs to rethink this policy along with the distributor. I have no extra charges except for overnight shipping from the other two manufactures. It is not very fun to tell the Boss sorry you don’t have a sprayer because the distributor does not have the part in stock and will be 13 days. Or you can pay 20% more and the part is $2000 plus another $400. Another thing, in Dec I have to put in a $1500 order to receive the price in the parts performance book for the next year. I have asked other Equipment Managers across the country if they have these extra charges. They have told me no. Whoever at this company, who came up with this 20% every take their car or truck to a dealer. And was told they will have to wait 13 days for a part to fix their car or pay 20% more to have their car the next day? I bet they would be mad. I do get next day parts from my distributor at no extra charge. But there are exception the price of the part, how big the part is. Example I needed a bump bracket it was $125 could not get it next day. Not sure why because it could fit in the palm of your hand. So it must the cost? In closing I am ok waiting for a part in the off season 7 days. In season our equipment needs to be out mowing. I should not have to wait more the 2 days 3 max for a reasonable priced part and that includes shipping.

Jerry
Darden Nicks
May 25, 19:02 Reply

Well put Stephen! You are correct! Thank you for all you do for our industry!