NBfffDA Resionol lleeting in Son Frqncisco Sporks ldeq of Regulor Quqrterly Sessions

A regional meeting for Northern California members and guests of the National Building Material Distributors Association was held September 13 at the Jack Tar hotel in San Francisco, with association manager S. M. Van Kirk presiding. Although organized principally for an inventory iontrol message by E. E. Gene Fahrenkrog, the possibility of starting regular quarterly meetings for Northern California NBMDA members was also discussed.

The luncheon meeting began with introductory remarks by Bill Grieve, head of BMD, Stockton, who urged the group to consider the possibility of holding regular quarter- ly meetings for Northern California members for the purpose of working more closely together. Some 25 such regional meetings among NBMDA are now being held. NBN{DA now reDresents some 730 warehouses from coast to coast doing clbse to a billion dollars worth of business annually.

Before introducing Fahrenkrog, Van Kirk gave the group a quick progress report on the Association's activities to date and urged a close look at just what they were selling. "We feel," Van Kirk stated, "that any distributor doing 20/o or more of his total business in any one product is, indeed. very vulnerable."

Fahrenkiog, a highly successful St. Louis distributor, went further into the mysteries of inventory control and "policing." One interesting ratio produced by Fahrenkrog (one which could tell us in a hurry whether we should stick it out, or sell the business and open up a laundry somewhere) dealt with return on investment. The total of all current assets (receivables taken before reserve for bad debts) divided by annual profit (before taxes) should show from 15 to 20/o, he pointed out.

Another interesting ratio discussed, one which dealt with the administrative staff (excluding salesmen and the warehouse boys) was the one where you divide your gross profit by your administrative staff and come up with a figure close to $32,666 per employee which is what it's supposed to be unless you're cheating !

Surprisingly enough, Fahrenkrog tried this one on many firms doing an annual business ranging from 3 million to 15 million a year, and the variance was negligible.

Because most distributors pay very close attention to their receivables, and because in most cases their fixed assets and expenses are pretty constant, further business im- provement can only come through a closer look at inventory.

. Using a St. Louis IBM service, Fahrenkrog checks his iuventory for "suspect" lines (ones which do not "turn" four times a year), or items not returning 60/o on his investment. These items are then labeled r'suspect" and further study is given to his investment in each of the lines, the gross profit received from each of the lines and, finally, whether to continue carrying the line. Since June of this