Manufacturers have it rough in this industry. At best they get 15-18% of their dealers to order kitchens electronically and just about all of them contain some sort of mistake. Cabinets are expensive and volume is down. And all those paper orders from dealers add up to even more mistakes and…..well, don’t be surprised if manufacturer’s list prices increase in 2010 and 2011, especially if you’re one of the dealers still faxing orders in.
In one manufacturer’s analysis I was involved in recently, there was about $20 per box in cost directly related to dealer’s ordering errors. There was another $40 per order in cost to re-key the order into the manufacturer’s ordering system. Ouch. That’s about $250 per order in pure, unadulterated waste.
I’ve visited many cabinet manufacturer operations over the years. On one of my first visits, I noticed that there was a ton of paper in the manufacturer’s customer service department – and I couldn’t figure out why. After all, these were big manufacturers and I always assumed they had it better than the dealer’s paperwork challenges. So I asked where all the paperwork was coming from and was surprised to hear that they were all dealers’ purchase orders.
The faxes were overflowing, it was literally a sea of paperwork.
Why Wasn’t This Stuff Coming In Electronically?
I mean there was an ARMY of people re-keying dealer orders from fax, then more people double checking their work, and still just about every order forced customer service to pick up the phone and clarify some aspect of the order with the dealer. You would think something as simple as receiving an electronic order would have already been done by now.
Electronic ordering exists in just about every other industry – and has existed for years. After I asked my question, I was surprised that the manufacturer didn’t know why dealers wouldn’t order electronically. All they could tell me was that dealers should submit orders electronically through design, but they never did. And no matter how hard the manufacturer tried, the dealers never used it. It’s a challenge they’ve been unsuccessfully trying to solve since the 90’s.
The Peasants Must Be Crazy
The conversation ended with the smug shrug of the shoulders and rolled eyes – you know, the look you get where someone implied that the peasants are sort of uneducated. But the dealers and remodelers I knew were all very competent business people. I met many of their salespeople and they were certainly not a bunch of uneducated peasants.
Something was amiss. There was some problem going on which was holding this whole thing up and we set out to figure out why orders continually came in via the ancient solution of fax.
It took us some time as we learned the ins and outs of dealer operations back in the 90’s. And we soon discovered what all the dealers already knew – ordering from design is bass-ackwards. It’s like eating your birthday cake then blowing out your candles. Sure it sounds like you could do it, but as soon as you try, it’s just a mess.
But Wait, Doesn’t Design Do Everything???
You wouldn’t go to your design software to analyze your company’s cash flow would you? Or to check the inventory levels of your molding or trim kits? So why is there this insane desire to make design do everything?
I think I’ve finally come to the realization that the Cabinet Industry is just as bass-ackwards as trying to get dealers and remodelers to order electronically through design. No matter how hard anyone tries, each year we hear about the next whizz-bang dealer ordering system and watch in dismay as millions of dollars and thousands of hours of work vaporize into the ether. Then two years later we get the call that the dealers didn’t adopt.
And still the fax machine rings. Over and over again.
Who knows, maybe 2011 will be a cultural revolution for the Cabinet Industry. Where people actually visit a dealer and watch how quoting and ordering work in real life. Then maybe they’ll realize that there are other ways to skin the electronic ordering cat than jamming design software into parts of the dealer’s process that just don’t make sense.
But then again, it could just be like my favorite show, Lost. When you’re stuck on an island, even a coconut will be used for just about anything.