Once upon a time
Once upon a time Jonathan Ericsson Red Wings Jersey , many years ago there was a young, ambitious salesman selling flat rolled steel. This energetic young man called on one potentially large account for months and months with zero success. He was going nowhere fast. The only thing he got from the rather large, burly looking professional purchasing agent was frustration. The purchasing agent knew the young salesman was short on experience. The young salesman felt that the purchasing agent actually enjoyed watching him squirm month after month. This young salesman, being enthusiastic and energetic, tried every sales technique he had ever learned. Of course Darren Helm Red Wings Jersey , the scruffy old purchasing agent was familiar with every one of them and had seen them many times before. Nothing seemed to work on this guy. The young man just couldn't reach him. So, he went back to something very basic that most of us in sales (especially we Baby Boomers) learned from day one. The young salesman reflected on the words spoken by his most cherished mentor, ?Build a relationship son. Get the man to like you and he'll tell you how to do business with him.?
Well, the young man tried and tried, but even that didn't seem to work. He was ready to give up. He was tired of repeatedly hearing that same pathetic purchasing agent's theme song Luke Glendening Red Wings Jersey , ?I'm happy with my current suppliers.?
The young salesman was not smart enough, did not have enough scar tissue and was not confident enough to reply, ?Maybe that's because you have set your expectations way too low.? Instead he resorted to his secret weapon, his rarely used prideful technique that only came out when all else failed ? He begged. ?Mr. Customer, is there anything I can do Henrik Zetterberg Red Wings Jersey , anything at all that will convince you to give me a chance to do business with you??
Have you ever been in the midst of a sales presentation and feel a knockout punch land on your chin? Well, that's how the reply felt to the young salesman. ?Look, we have a partnership with our current supplier. The only way you could ever do business with me is if you gave me our steel for free,? the purchasing agent barked. The young salesman was devastated; He saw the thrill of victory vanish before his eyes, as he tasted the agony of final defeat. He walked away from that call with his tail between his legs. The young salesman was down and depressed. He was in one of those typical valleys anybody who is or has ever been in sales recognizes. The best way to pull ourselves out is to make a buddy call ? a call on one of our best customers Anthony Mantha Red Wings Jersey , based not on revenue but on friendship; one of those frequent calls we make and get criticized for making because the sales volume doesn't justify the number of times we visit.
?He was a friend,? the young salesman thought. So he told him the story. His friend and customer was sympathetic, understanding and even though he didn't offer any advice, the young salesman recaptured his spirit. That night as he sat on his front porch reflecting on the day, he thought Jimmy Howard Red Wings Jersey , ?Why not? Why not give him our product for free?? Full of excitement, the next morning he went directly to his boss, the owner of the small privately held company. He convinced the owner of the integrity of his new plan.
A concept was born
The concept of consignment in steel distribution was born. That happened in the mid 1980's. Consignment was already being used in the fastener industry but I do not recall anybody in the steel distribution industry using it. But, as we, the young salesman and me Justin Abdelkader Red Wings Jersey , his boss, found out, the concept of consignment can work in any industry. It was a tough sell, not so much to the customer, but to me as his boss. But Dylan Larkin Red Wings Jersey , we did it and it was successful. The prospect this young salesman almost walked away from became our largest account, purchasing over $4 million by the end of the second year. It became a learning experience for both of us and we both profited from it. And the large burly looking purchasing agent actually did become one of the young salesman's closest friends.
Consignment can become a very effective marketing tool if it is used correctly. The emphasis is on using it correctly. A consignment partnership should not be considered without establishing specific criteria for selecting appropriate accounts up front. This is extremely important to you, the supplier. We call this selection criteria the ?Rules of Engagement.?
In contrast to the normal Rules of Engagement in selling, consignment Rules of Engagement are predetermined by the supplier, not the customer. Of course Frans Nielsen Red Wings Jersey , the rules can be modified with proper approval to fit different situations. However, a consignment partnership must be a win-win relationship in order to be successful.
Rules of Engagement
The specific criteria that need to be determined before a consignment partnership is offered include:
? What is the minimum annual sales volume you are willing to accept?
? What are the minimum annual gross margin dollars you are willing to accept?
? Are financial statements available for your review?
? Is the customer financially secure?
? How much riskinvestment are you willing to accept in off-site customer inventory?
Answers to these preliminary questions need to be established in addition to others that may pertain to your product and industry.
An Assessment of the Consignment Partnership
Even today in many industries, consignment is on the leading edge of custom designed cost reduction programs. Initiatives focus on total cost, not price, in order to move to the next level of partnering Mike Green Red Wings Jersey , surpassing expensive JIT programs that have high administrative costs and service risks. The major objective of a consignment partnership is to reduce costs by eliminating inventory and duplicate effort, as well as reducing shrinkage and lowering transaction and handling costs. It is also effective in reducing scrap, rework, equipment