Need Kits? Plan Ahead

[Smitty37]

Planning

My supplier informs me that the shipping time by sea from Taiwan to the East Coast port of Baltimore is about 36 days and the buyer or his agent needs to get it through customs and pick it up there for final delivery.

They also tell me that that method works best for fairly large (at least a pallet full) orders so a buyer might need to buy larger quantities less frequently to use it effectively. Barea, PSI, CSUSA and some of the other bigger players can probably schedule their orders to get a lower shipping cost if they have not already done so, but it will be tough for the smaller vendors.

 

[omb76]

"I will plan a little farther ahead when it comes to buying hardware. And that is fine with me. And because I don't sell a large volume of pens, I will have to depend on the vendors to manage their inventory, so I can get what I need when I need it."



Tell me Steve, how does any vendor anticipate what their customers might require 60 days in advance? If I could do this accurately I would be on Wall Street making millions of dollars a year.


Arizona Silhouette Inc. has a customer base of over 8,000 customers. Am I supposed to be able to anticipate what each of these individuals might want to order sixty days in advance? Am I supposed to cover the cost of paying the 'flooring' cost of my inventory so you might want to order fifteen pen kits four times a year?


Most businesses in today's economy are reluctant to invest thousands or millions of dollars in inventory because they don't know what may be coming down the road with regards to government mandates (health care insurance, taxes, etc.).


Based on what you posted I would guess that what you are looking for is a vendor that will take the financial risk instead of yourself.


Bill Baumbeck
Arizona Silhouette Inc.

I find it interesting that you don't practice any type of forecasting for your inventory (or atleast very little). Any merchant that inventories goods has to perform some type of forecasting. I've been an Inventory Manger for 12 years and that is what my entire job is based on. The equipment that I forecast and inventory costs anywhere from $90k to several million dollars, so there is a big difference in budgets from my machines to pen kits, but the principal is the same. I maintain an 18-month rolling forecast for my customer base based on previous fiscal years sales, current market trends, current political issues, and my gut feeling (and I assure you that I'm not a Wall Street millionaire). Now are my forecasts always 100% accurate? Of course not, the market is constantly changing and you have to account for that in your forecast. Also, I do not carry inventory of equipment that costs in excess of $2M, but I have to forecast it in my budget so that my factory can plan for it in their budget and sometime during my fiscal year, I have to take possession of the equipment. I do, however carry plenty of stock of the less expensive equipment so that I can deliver quickly as this equipment is more easily forecasted and carries less risk if my forecast is off target a little. In terms of pen kits, I would probably carry less inventory of high end Statesman kits, and more of the slim lines and cigars as they are probably better sellers. Bottom line is that my customers will wait for a machine that costs $2.5M because it is a more highly specialized machine and harder to find (i.e. not everyone sells a Statesman pen kit..they'll wait), but they won't wait for me to get a $90K machine (i.e. slimline kit because you can find one on every corner). You also don't forecast for your entire 8,000 customers, you divide them into tiers such as 1, 2, 3, and make sure that your tier 1 customers are well taken care of as those are the ones paying your bills. Tier 2 you try to move to tier 1 and tier 3 take as they come. Bottom line is if you don't carry what the consumer wants, they'll find someone who does. Do we as consumers expect you to take on all the risk...of course! That's why you are in business and we are not.

I don't mean for anything I said to be offensive or disrespectful, so please don't take it that way.

 

[Smitty37]

Well maybe

"I will plan a little farther ahead when it comes to buying hardware. And that is fine with me. And because I don't sell a large volume of pens, I will have to depend on the vendors to manage their inventory, so I can get what I need when I need it."



Tell me Steve, how does any vendor anticipate what their customers might require 60 days in advance? If I could do this accurately I would be on Wall Street making millions of dollars a year.


Arizona Silhouette Inc. has a customer base of over 8,000 customers. Am I supposed to be able to anticipate what each of these individuals might want to order sixty days in advance? Am I supposed to cover the cost of paying the 'flooring' cost of my inventory so you might want to order fifteen pen kits four times a year?


Most businesses in today's economy are reluctant to invest thousands or millions of dollars in inventory because they don't know what may be coming down the road with regards to government mandates (health care insurance, taxes, etc.).


Based on what you posted I would guess that what you are looking for is a vendor that will take the financial risk instead of yourself.


Bill Baumbeck
Arizona Silhouette Inc.

I find it interesting that you don't practice any type of forecasting for your inventory (or atleast very little). Any merchant that inventories goods has to perform some type of forecasting. I've been an Inventory Manger for 12 years and that is what my entire job is based on. The equipment that I forecast and inventory costs anywhere from $90k to several million dollars, so there is a big difference in budgets from my machines to pen kits, but the principal is the same. I maintain an 18-month rolling forecast for my customer base based on previous fiscal years sales, current market trends, current political issues, and my gut feeling (and I assure you that I'm not a Wall Street millionaire). Now are my forecasts always 100% accurate? Of course not, the market is constantly changing and you have to account for that in your forecast. Also, I do not carry inventory of equipment that costs in excess of $2M, but I have to forecast it in my budget so that my factory can plan for it in their budget and sometime during my fiscal year, I have to take possession of the equipment. I do, however carry plenty of stock of the less expensive equipment so that I can deliver quickly as this equipment is more easily forecasted and carries less risk if my forecast is off target a little. In terms of pen kits, I would probably carry less inventory of high end Statesman kits, and more of the slim lines and cigars as they are probably better sellers. Bottom line is that my customers will wait for a machine that costs $2.5M because it is a more highly specialized machine and harder to find (i.e. not everyone sells a Statesman pen kit..they'll wait), but they won't wait for me to get a $90K machine (i.e. slimline kit because you can find one on every corner). You also don't forecast for your entire 8,000 customers, you divide them into tiers such as 1, 2, 3, and make sure that your tier 1 customers are well taken care of as those are the ones paying your bills. Tier 2 you try to move to tier 1 and tier 3 take as they come. Bottom line is if you don't carry what the consumer wants, they'll find someone who does. Do we as consumers expect you to take on all the risk...of course! That's why you are in business and we are not.

I don't mean for anything I said to be offensive or disrespectful, so please don't take it that way.

Maybe, I simply reorder based on inventory level. When I get down to so many kits (an amount that I will probably not quite sell before the order arives) I order. Usually I order a specific quantity so the more popular kits I order more often if a particular type does not sell fast enough I may just not reorder and drop it from my inventory.. If something is out of stock it drops out of my store until it's back in stock.

That is not forcasting. I worked for a very large and successful company and they did a lot of forecasting. The interesting thing was it was always wrong. The forcasts were always either too low or too high (we never knew which it would be) and would be adjusted based on the actual experience as the year progressed.

 

[omb76]

I find it interesting that you don't practice any type of forecasting for your inventory (or atleast very little). Any merchant that inventories goods has to perform some type of forecasting. I've been an Inventory Manger for 12 years and that is what my entire job is based on. The equipment that I forecast and inventory costs anywhere from $90k to several million dollars, so there is a big difference in budgets from my machines to pen kits, but the principal is the same. I maintain an 18-month rolling forecast for my customer base based on previous fiscal years sales, current market trends, current political issues, and my gut feeling (and I assure you that I'm not a Wall Street millionaire). Now are my forecasts always 100% accurate? Of course not, the market is constantly changing and you have to account for that in your forecast. Also, I do not carry inventory of equipment that costs in excess of $2M, but I have to forecast it in my budget so that my factory can plan for it in their budget and sometime during my fiscal year, I have to take possession of the equipment. I do, however carry plenty of stock of the less expensive equipment so that I can deliver quickly as this equipment is more easily forecasted and carries less risk if my forecast is off target a little. In terms of pen kits, I would probably carry less inventory of high end Statesman kits, and more of the slim lines and cigars as they are probably better sellers. Bottom line is that my customers will wait for a machine that costs $2.5M because it is a more highly specialized machine and harder to find (i.e. not everyone sells a Statesman pen kit..they'll wait), but they won't wait for me to get a $90K machine (i.e. slimline kit because you can find one on every corner). You also don't forecast for your entire 8,000 customers, you divide them into tiers such as 1, 2, 3, and make sure that your tier 1 customers are well taken care of as those are the ones paying your bills. Tier 2 you try to move to tier 1 and tier 3 take as they come. Bottom line is if you don't carry what the consumer wants, they'll find someone who does. Do we as consumers expect you to take on all the risk...of course! That's why you are in business and we are not.

I don't mean for anything I said to be offensive or disrespectful, so please don't take it that way.[/quote]

Maybe, I simply reorder based on inventory level. When I get down to so many kits (an amount that I will probably not quite sell before the order arives) I order. Usually I order a specific quantity so the more popular kits I order more often if a particular type does not sell fast enough I may just not reorder and drop it from my inventory.. If something is out of stock it drops out of my store until it's back in stock.

That is not forcasting. I worked for a very large and successful company and they did a lot of forecasting. The interesting thing was it was always wrong. The forcasts were always either too low or too high (we never knew which it would be) and would be adjusted based on the actual experience as the year progressed.[/QUOTE]


With the exception of letting your stock run out before you order, you're still doing a form of forecasting. You know what your lead time is based on current information, or past experiences, so that tells you how low your inventory can go before you have to re-order (thus avoiding running out of inventory of an item you don't want to run out of). I also imagine that you have a max inventory level that you order up to as to not be overstocked, while taking advantage of the best discounts, again based on previous sales experience. Every business does some type of forecasting whether they realize it or not and it is a dynamic function as the criteria are constantly changing thus the business model has to be adaptable as well. I'm sure that if you know the lead time for pen kits has increased by 30 days you'll take that into account as you're monitoring your inventory levels, assuming that you don't want to run out. This does not mean that you have to increase your inventory levels rather you have to plan for that increased shipping time and plan your purchases accordingly.

 

[gwilki]

This is a fascinating thread for me, since living in Canada, I may see things a bit differently than the majority of those who have posted so far. I have no axe to grind with Bill. He won't sell to me since I don't live in the US. That's his business decision – one that he is perfectly entitled to take. He has to weigh the extra cost of shipping to outside the US with the size of the possible market he could serve.

A close reading of his initial post would seem to show that he is not against Chinese kits, nor championing Taiwanese kits. He is only saying that US residents should buy their kits from US suppliers. I know that I buy as often as I can from Canadian suppliers, so I'm in no position to jump on Bill for that statement.

However, he seems to criticize Dayacom for trying to bypass middle men and market directly to end users. (If I've misunderstood your statement Bill, I apologize.) Of course, "Dayacom only cares for Dayacom". Who else would you have them care for? US middle men; Canadian middle men; Australian middle men. Maybe, just maybe, they are caring for end users like me. By selling directly to me, they allow me to buy at a lower price. I am not looking for cheap, cheap, cheap – to use your words. However, if an opportunity presents itself to buy merchandise directly from the factory rather than from someone 2 or 3 levels down, why would I at least look at it. In my travels to the US, I've always been amazed at home many "factory outlets" there are. Are they considered to be un-American?

I didn't see anywhere in Bill's post where he knocked Aussies, or Canadians for that matter. He was replying to a post by an American that recommended an Aussie seller to another American. I recommend William Woodwrite here in Canada whenever I get the chance – largely, but not solely because they are Canadian.

I don't see Bill as going overboard on his nationalism either. On his site, there are several videos by Ed Davidson. Since there are no videos by anyone else, I assume that Bill and Ed are either friends, or business colleagues or both. Ed turns on a Oneway lathe – a fine example of Canadian made products. Ed does not turn on a Robust or any of the other US made lathes. (I assume that Ed does.) Now, we are not talking about $3 pen kits here. We are talking about high end, very pricey lathes. If Bill was as antagonistic about Americans buying foreign made products from foreign suppliers as some in this thread seem to believe, surely he would not have the only videos on his site been demonstrated on a distinctly non-US-made lathe.

 

[Smitty37]

Symantics

I find it interesting that you don't practice any type of forecasting for your inventory (or atleast very little). Any merchant that inventories goods has to perform some type of forecasting. I've been an Inventory Manger for 12 years and that is what my entire job is based on. The equipment that I forecast and inventory costs anywhere from $90k to several million dollars, so there is a big difference in budgets from my machines to pen kits, but the principal is the same. I maintain an 18-month rolling forecast for my customer base based on previous fiscal years sales, current market trends, current political issues, and my gut feeling (and I assure you that I'm not a Wall Street millionaire). Now are my forecasts always 100% accurate? Of course not, the market is constantly changing and you have to account for that in your forecast. Also, I do not carry inventory of equipment that costs in excess of $2M, but I have to forecast it in my budget so that my factory can plan for it in their budget and sometime during my fiscal year, I have to take possession of the equipment. I do, however carry plenty of stock of the less expensive equipment so that I can deliver quickly as this equipment is more easily forecasted and carries less risk if my forecast is off target a little. In terms of pen kits, I would probably carry less inventory of high end Statesman kits, and more of the slim lines and cigars as they are probably better sellers. Bottom line is that my customers will wait for a machine that costs $2.5M because it is a more highly specialized machine and harder to find (i.e. not everyone sells a Statesman pen kit..they'll wait), but they won't wait for me to get a $90K machine (i.e. slimline kit because you can find one on every corner). You also don't forecast for your entire 8,000 customers, you divide them into tiers such as 1, 2, 3, and make sure that your tier 1 customers are well taken care of as those are the ones paying your bills. Tier 2 you try to move to tier 1 and tier 3 take as they come. Bottom line is if you don't carry what the consumer wants, they'll find someone who does. Do we as consumers expect you to take on all the risk...of course! That's why you are in business and we are not.

I don't mean for anything I said to be offensive or disrespectful, so please don't take it that way.

Maybe, I simply reorder based on inventory level. When I get down to so many kits (an amount that I will probably not quite sell before the order arives) I order. Usually I order a specific quantity so the more popular kits I order more often if a particular type does not sell fast enough I may just not reorder and drop it from my inventory.. If something is out of stock it drops out of my store until it's back in stock.

That is not forcasting. I worked for a very large and successful company and they did a lot of forecasting. The interesting thing was it was always wrong. The forcasts were always either too low or too high (we never knew which it would be) and would be adjusted based on the actual experience as the year progressed.[/quote]


With the exception of letting your stock run out before you order, you're still doing a form of forecasting. You know what your lead time is based on current information, or past experiences, so that tells you how low your inventory can go before you have to re-order (thus avoiding running out of inventory of an item you don't want to run out of). I also imagine that you have a max inventory level that you order up to as to not be overstocked, while taking advantage of the best discounts, again based on previous sales experience. Every business does some type of forecasting whether they realize it or not and it is a dynamic function as the criteria are constantly changing thus the business model has to be adaptable as well. I'm sure that if you know the lead time for pen kits has increased by 30 days you'll take that into account as you're monitoring your inventory levels, assuming that you don't want to run out. This does not mean that you have to increase your inventory levels rather you have to plan for that increased shipping time and plan your purchases accordingly.[/quote]
Spoken like a true forcaster...You call it forcasting, I don't. My own fetish is Quality.

 

[omb76]

I find it interesting that you don't practice any type of forecasting for your inventory (or atleast very little). Any merchant that inventories goods has to perform some type of forecasting. I've been an Inventory Manger for 12 years and that is what my entire job is based on. The equipment that I forecast and inventory costs anywhere from $90k to several million dollars, so there is a big difference in budgets from my machines to pen kits, but the principal is the same. I maintain an 18-month rolling forecast for my customer base based on previous fiscal years sales, current market trends, current political issues, and my gut feeling (and I assure you that I'm not a Wall Street millionaire). Now are my forecasts always 100% accurate? Of course not, the market is constantly changing and you have to account for that in your forecast. Also, I do not carry inventory of equipment that costs in excess of $2M, but I have to forecast it in my budget so that my factory can plan for it in their budget and sometime during my fiscal year, I have to take possession of the equipment. I do, however carry plenty of stock of the less expensive equipment so that I can deliver quickly as this equipment is more easily forecasted and carries less risk if my forecast is off target a little. In terms of pen kits, I would probably carry less inventory of high end Statesman kits, and more of the slim lines and cigars as they are probably better sellers. Bottom line is that my customers will wait for a machine that costs $2.5M because it is a more highly specialized machine and harder to find (i.e. not everyone sells a Statesman pen kit..they'll wait), but they won't wait for me to get a $90K machine (i.e. slimline kit because you can find one on every corner). You also don't forecast for your entire 8,000 customers, you divide them into tiers such as 1, 2, 3, and make sure that your tier 1 customers are well taken care of as those are the ones paying your bills. Tier 2 you try to move to tier 1 and tier 3 take as they come. Bottom line is if you don't carry what the consumer wants, they'll find someone who does. Do we as consumers expect you to take on all the risk...of course! That's why you are in business and we are not.

I don't mean for anything I said to be offensive or disrespectful, so please don't take it that way.

Maybe, I simply reorder based on inventory level. When I get down to so many kits (an amount that I will probably not quite sell before the order arives) I order. Usually I order a specific quantity so the more popular kits I order more often if a particular type does not sell fast enough I may just not reorder and drop it from my inventory.. If something is out of stock it drops out of my store until it's back in stock.

That is not forcasting. I worked for a very large and successful company and they did a lot of forecasting. The interesting thing was it was always wrong. The forcasts were always either too low or too high (we never knew which it would be) and would be adjusted based on the actual experience as the year progressed.

With the exception of letting your stock run out before you order, you're still doing a form of forecasting. You know what your lead time is based on current information, or past experiences, so that tells you how low your inventory can go before you have to re-order (thus avoiding running out of inventory of an item you don't want to run out of). I also imagine that you have a max inventory level that you order up to as to not be overstocked, while taking advantage of the best discounts, again based on previous sales experience. Every business does some type of forecasting whether they realize it or not and it is a dynamic function as the criteria are constantly changing thus the business model has to be adaptable as well. I'm sure that if you know the lead time for pen kits has increased by 30 days you'll take that into account as you're monitoring your inventory levels, assuming that you don't want to run out. This does not mean that you have to increase your inventory levels rather you have to plan for that increased shipping time and plan your purchases accordingly.[/quote]
Spoken like a true forcaster...You call it forcasting, I don't. My own fetish is Quality.[/quote]

Don't quite understand what you mean by quality, but okay...

 

[Sylvanite]

Semantics aside, what this means to me as a penturner is somewhat higher prices. As has been pointed out already, carrying inventory costs money. Somebody is going to have to bear that burden. Either we are going to have to buy further in advance ourselves, or the vendors will - and it will cost.

Regards,
Eric

 

[ed4copies]

Eric,

IN THEORY!!! The saving from Sea vs. Air will equal the "carrying cost' of the inventory.

While I doubt this, I do believe competitive pressure will keep prices down at "retail" level, I don't feel as confident at the wholesale level. Time will tell.

 

[OKLAHOMAN]

Ed, I'll be testing the waters again at retail this year. I've raised my prices every year and this year is no different. My wholesalers are raising my cost, travel expense is raising none of my promoters are lowering prices it's either raise prices or absorb all the related cost of doing business or pass it on to the end customer my choice is to still offer a great product at a good value and by raising my price I might sell a few less pens but not lose any income.

 

[Smitty37]

We agree on this

Eric,

IN THEORY!!! The saving from Sea vs. Air will equal the "carrying cost' of the inventory.

While I doubt this, I do believe competitive pressure will keep prices down at "retail" level, I don't feel as confident at the wholesale level. Time will tell.

I think for the large seller's maybe - for us smaller vendors I also doubt it. At the retail level small guys like me will try to follow the big boys up, we won't be able to raise prices unless they do.

 

[ed4copies]

I understand how you read my entry, Roy. Upon re-reading it, I was unclear.

I think the price of kits that YOU pay as a penmaker will not rise because of competition from China and other international sources.

I KNOW the prices I pay HAVE risen. So, Bill, Ernie and last and least and newest, I will have to cut other costs to hold the line on our prices. Don't worry, I will find a way. And, I suspect the others will too.

And yes, I remember all the promoters raised booth fees every year until they went out of business---smart planning.

I can learn from others' mistakes.

 

[Nick]

Here is what it boils down to for me. Do I care where my kits come from? As long as the pen hardware is good quality and it sells well, NO I don't care. We live in a global economy. And regardless of what we buy, there is some global influence in that product.

And to get back to what this thread is all about. I will plan a little farther ahead when it comes to buying hardware. And that is fine with me. And because I don't sell a large volume of pens, I will have to depend on the vendors to manage their inventory, so I can get what I need when I need it.

I fully agree with you Steve, not because we are friends, but that you are correct as well.

Bill, with a customer base of "8000" customers, I should think your records would reflect past sales volumes by product to your customers. That would indicate what products you should be stocking the largest quantity of. Vendors could possibly revisit their margins as well.
Respectfully submitted
Don Nicholas
Lakewood, WA

 

[dogcatcher]

I think that anyone that runs a business, no matter how large or small needs to forecast their requirements for inventory, material and supplies at least for 3 months in advance. I usually forecast my future requirements every 2 months, I keep my inventory high. I order about 4 times a year instead of every month or every week. This way I buy in bulk and get better discount prices which helps to keep my costs done and and improves my "greedy" results.

I cringe when I hear that someone buys one kit to make a pen, you are already paying shipping costs on one, why not order 6 and save on the shipping costs, reducing your per kit cost. If you say you are a business, then you have to gamble that you will sell all 6 pens within a reasonable time, if not then reduce that number. But if you know your business you will rarely "eat" a pen kit in inventory for very long.

The same goes for my suppliers. If my suppliers cannot keep an inventory to meet my needs, I will find another supplier. I found that I can always find someone else that can supply what I need at a reasonable cost, no supplier is immune from being dropped and I move to another.

 

[Irish Pat]

This is amazing,I've just started up my craft business,looking for kits from all over the world,UK,Australia,China and USA,all of which buy there kits from China/Taiwan.I believe there is a company in the USA that has also got a factory in China,where is your loyalty now.I live in IRELAND so I have to buy from suppliers from all over the world,then there is shipping and taxes etc.I only wish I had so many suppliers at my door step but I don't!