on delivery costs How you can save G; a,

FlnuveRY PRAcTICES was r s1g of the five Dealer Services Workshops presented at the convention of the National Lumber and Building Material Dealers Association on Monday, Oct. 10, at The Pointe, Phoenix, Az.

The program was a review of three delivery studies commissioned and published by the NLBMDA for the benefit of its membership. It was a "Texas Size" opportunity to present the highlights of the three manuals in one hour.

To provide the attendees with a frame of reference in the delivery world of the dealer operations studied, the Delivery Practices Questionnaire presented in this publication last month was given to all. There are no right or wrong answers. The whole idea was to let everyone answer for themselves what was go- ing on in their companies. No one was asked to reveal his answers. The answer provided by hundreds and hundreds of delivery experiences and evaluations and the three studies conducted for the sponsor was given.

The answers to the first three questions follow:

(1) Does your firm periodically identify profitability of its delivered sales?

Typically the answer is no. It is unfortunate because in the sales mix between delivered and non-delivered sales there is about a I 5 9ocost/nargin differential. First, delivered sales currently cost about Ttlo to make. Secondly, receivables are primarily generated by delivered sales. Thirdly, anywhere from 5090 to 10090 ofany company's shrink is generated by delivered sales and theft has historically found a major nest within the bre6d pngeof the delivery activity. Finally, mct nondelivered sales have a higher retail price and mark up as opposed to the volume pricing and lower margins offered the contractor customer who also wants and expects and gets delivery. When profits on delivered sales are measured, most dealers are surprised at how little profit and./or how much loss is involved in a major portion of their sales activity. How do you stack up?

(2) Take @Vo of your totd sales last year and divide it by the number of delivery trucks you operate. lf the result is under $I,(XX),(XX) check "NO", if over $1,(XX),0(X) check "YESrt.

In almost five years of asking this typeof question,no one has everindicated that they were able to answer "YES". Most yards open at 7 am and close at 5 pm during the week. Many operate Saturdays and a goodly number open on Sundays. But just dealing with five days a week, ten hours per day, is 2,6fl) hours per year when each truck will be in the delivery process. This means a $1,(X)0,m0 per year per truck could be achieved if it could average $385 per hour in executed deliveries. If your annual delivery rate is $750,0m, your truck averages $2E8 per hour. If your annual rate is $500,0(X) per truck, your hourly average delivered sales per truck are $193. Experience shows the typical dealer to be averaging between S500,000 to $6(D,00 per truck per year. Where do you stand?

(3) Do your yard people generdly work eight hours or less per day most of the time?

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It is indeed the rare operator who has no overtime in his yard. Everyone works overtime and taking care of the "delivery customer" is thereason most cited for overtime. Those from whom we get answers say to this question an emphatic "NO", that they must work overtime, and many schedule all employees from 7 am to5 pm daily 12 months of the year without reason or need. The only reason for such a permanent overtime posture isa union contract under which management guarantees overtime. Fifty hours a week is 2590 overtime but is 37.590 of the cost of the forty hour week.

Answerc to the remaining qtcstions will be provided by Lynch in future issues-ed.