Who you buy it from is often more important than who made it
- April 16, 2008
- Material Handling, Pallet Rack, Warehouse Equipment Tutorials
- No comments
- Posted By: Stafford Sterner
Pallet rack, like the majority of material handling equipment, is available from several quality manufacturers in the United States. The question of what to buy is normally fairly straightforward. The real question is, who you buy it from to get the best possible deal in terms of price, delivery and support. There are several options.
Direct from the manufacturer
From the buyer’s point of view, it seems logical to eliminate the middle man and avoid the distributor’s mark up. Manufacturers are often happy make a few extra bucks by going around their own distributors for a large purchase, offering a decent price and even priority delivery.
HOWEVER, what if you miscalculated or damaged a few parts during assembly and now need to make a small additional purchase? Don’t expect the same deal. One large purchase does not establish a relationship with the manufacturer.
Of course, if you’re Home Depot and make large purchases on a regular basis, you may be able to maintain your privileged status over time. Even then, you have to remember that most manufacturers have only one or two locations. Unless you are located in their neighborhood, they are in no position to provide regular support on an ongoing basis. It’s a risk, and you’ll have to decide whether you can live with it.
About ten years ago, this issue of distributor versus direct purchase came to a bit of a crisis. Some of the greedier manufacturers really went after direct sales in a big way. Their dealer networks were nearly destroyed as disgruntled middlemen sought more reliable partners to do business with. Before long, these manufacturers found themselves absolutely dependent on the large sales they had found so tempting, because they had lost the steady cash flow produced by a healthy dealer network.
The situation has calmed down considerably, but direct purchase from the manufacturer is still an option in some cases. As mentioned, you may save some money on a large purchase.
1) Don’t look only at initial cost. Also consider shipping, installation and long term maintenance.
2) Ask the manufacturer what kind of long term support they are willing to provide.
There is no question that you will almost always get the lowest price buying used equipment at auction or from a broker/middleman. Used equipment is a viable option, and I’ll get into that topic another time, but it carries its own risks.
1) This option leaves you totally on your own when it comes to shipping, installation and maintenance. This is a major risk, and only you know if you can afford it.
2) You have no warranty, not even the implied one that comes with buying form someone who knows something about pallet rack.
For any given manufacturer, there are probably several authorized distributors in your area. THEY ARE NOT ALL THE SAME.
For one thing, they don’t all get the same price from the manufacturer. The higher their volume, the greater the discount they receive – a savings they SHOULD pass on to you.
In addition, some are just sales offices for the manufacturer. You place an order with the distributor; he places one with the manufacturer, and the order is priced FOB the manufacturer’s location. Depending on where that is, you could be looking at huge delivery costs. In addition, the order is subject to the manufacturer’s delivery schedule. I know of one case where a manufacturer averaging two weeks delivery suddenly went to 12 weeks as a result of one large order.
1) For a better price, look for the higher volume distributor.
2) For better delivery, look into a stocking distributor.
Stocking distributors tend to be high volume operations, resulting in better discounts from the manufacturer and a good price for you. More importantly, they offer a much better chance of quick delivery, sometimes even same day or close to that. Again, however, THEY ARE NOT ALL THE SAME.
Some companies call themselves stocking distributors, but don’t actually stock anything. Instead, they make use of a warehouse maintained at the manufacturer’s facility and place a “quick ship” order with the manufacture when you place your order with them. This gives you the delivery schedule you expect from a stocking distributor, but IT CAN BE EXTREMELY EXPENSIVE.
1) Ask the question, “this order is priced FOB where exactly?” If the answer is the factory location, you are paying an unnecessary premium for that quick delivery.
2) Go on-line to the manufacturer’s web site. Most will list authorized and stocking distributors. Some will even list top performers so you know who gets the best discounts. If the information is not available on-line, try an e-mail to the manufacturer.
Real stocking distributors maintain an inventory and are primarily interested in moving volume, not nickel and diming you to death. They have a warehouse – which they will be happy to show you – along with loading docks and their own trucks. They don’t have to wait for multiple order to justify the cost of renting one to make deliveries.
Elite stocking distributors
Even after you have found a top performing authorized distributor that actually maintains an inventory of common items, there is now more level to explore. Some companies are authorized dealers for multiple and competitive manufacturers. If they are selling you something they have in stock, they have no axe to grind – no reason to push one manufacturer over another. If all or part of your order must come from the factory, there are two additional benefits:
1) They can go to the manufacturer offering the best current delivery schedule, with out incurring expensive “quick ship” charges.
2) They can go to the manufacturer whose facility is closest to the “Ship To” location, thus minimizing delivery charges.
Ideally, you want to establish a long term relationship with a distributor you trust, who does his best for you every time you make a purchase and for the life of the equipment you buy. If you are just making a one time purchase, however, or are not fully satisfied with your current distributor, I hope this gives you some things to think about before your next buy.