OPERATING OPPORTUNITIES

WALLY LYNCH Paid Associates PO. Box 741623 Dallas. fx.75243

J|l ellVenY completes every sale, Y but it's amazing how few consider this heinous cost when making and submitting bids. If, this strikes a discordant note with you, it certainly is a readily remedied malady.

You need to know three specific bits of information in order to properly anticipate the impact of delivery costs on the gross margin dollars.

(1) The Cost Per Drive Mile. This will be somewhere between $1.75 and $2.25 for most dealers.

(2) Number and Types of Deliveries

Expected. In at least one area of the country it takes a minimum of nine deliveries to handle a complete house. Your list may be different. but here's what it looks like: F'raming, Mortar Mix, Windows & Ext. Doors, Boxing, Roofing, Sheetrock,

Interior Trim & Doors, Materials, M iscellaneous.

(3) Driving Distance To and Job Site.

Fireplace

F-rom the

For illustration purposes, let's use $2 per driven mile as the cost to deliver, the minimum of nine stops listed and a driving distance of 40 miles, 20 out and 20 back, to make each delivery. Also assume a total bid of $10,000 at 200/o margin, or $2,000.

Now look at these numbers in the context of the bid. At $2 per mile, each trip costs $80. AII nine deliveries cost $720. This is 7.20/o of the bid total and 36% of the anticipated gross margin dollars.

Now you have decision making information. First consider that nine stops is absolutely the best you can expect. Experience has shown that you'll be more accurate if you plan on 12 visits. This might include a hot shot or two and at least one pick-up.

Now the numbers change to $960, which is 9.60lo of the sale and 480h of the gross margin. lt is possible that these figures could be reduced by combining stops to other sites on the same trip, but just the opposite can happen as well. During the course of completing the sale you could make 20 trips at $80 each and $1600 in total. The gross margin dollars are massively depleted and the $10,000 transaction quickly becomes a losing proposition.

There are other things you can do to preserve the initial gross margins envisioned in your bid. Each of these will benefit your business whether in support of a bid or an immediate transaction.

Set up a delivery schedule with routing that takes a truck into tlre customer's area on a routine pre-determined basis. With each release you can advise that it will be on the next regularly scheduled truck.

Consider an incentive program since drivers on incentive programs don't like to drive half full/empty trucks and will bring pressure to bear for larger loads.

Since sales people paid on a percentage of the gross margin on delivered cost tend not to give away the store in terms of service, particularly at $80 per shot, this is another way to go.

Finally this same methodology, or lack of it, will allow you to analyze completed transactions to determine why they weren't profitable. You also can identify what procedures might have heloed.

Famowood

is the PR0FESSl0tlA['S ALt PURP0SE PtASItC

Boat builders, furniture makers, cabinet makers, etc. have found it the one sure answer to correcting wood defects, filling wooo cracks, gouges, covering countersunk nails and screws. "

Can be used under Fiber Glass! y_s*es, nea.y to use rgnl oul ol Ine can, tamowoo.! applies like putty- sticks like glue; dries quickly; won't shrink, and will not gum up sander. Waterproof and weatherproof when properly applied.

AyailaDle in 16 matching wood colors and vrhite.

Yellow Pine

Southern Yellow Pine ranks in many strength properties as the strongest of softwoods. Long lasting under heavy wear; high bolt and nail holding power; high retention of wood preservatives.

Try

SOUTHERN

D-l-Y Masonry Products

Retailers and d-i-yers are the targets of a marketing program about to be launched by the National Concrete Masonry Association, Herndon, Va., and its members throughout the country.

Emphasis will be placed on the footer block which goes together dry without forms, concrete and expensive labor for foundations for single and multiple units and low-rise commercial buildings,

Heat Soak concrete masonry units also can be used by do-it-yourselfers tions, was well received during a recent home show demonstration. to achieve energy conservation and acoustical privacy in residential construction. Used within stud walls, they can be added to existing homes or used in new construction.

Pavers are the third d-i-y product to be highlighted by NCMA. The solid interlocking concrete paving system installed over sand is suitable for terraces, patios or driveways. Open grid type pavers may be combined with grass or ground cover to create an attractive surface for driveways or gardens.

Consumer Awareness Audlt

The outstanding success of the 1986 Consumer Awareness Audit (CAP) will allow the industry to negotiate a smaller survey in scope and cost for the 1987 audit, according to the Society of American Wood Preservers. Inc. and the American Wood Preserving Institute. They caution that it is extremely important, since fewer treaters will be contacted, that every effort be made to continue the outstanding participation in order to again ensure a repeat suocess.

An announcement in the Federal Register said the labeling rule for treated wood had been withdrawn in February due to the success of the Consumer Awareness Program.

Treaters are urged by SAWP and AWPI to make every effort to help retailers and others in the distribution system understand the cAP program and the importance of making Consumer Information Sheets available to the general public at the point of purchase. "The weak link in the CAP was awareness and participation on the part ofretailer," an association spokesman said, "so we must double our efforts to strengthen this aspect of the program."