WORKING WITH IRRIGATION DEALERS: The Partnership Pipeline

In today’s business world, manufacturers and distributors are continually forging relationships with suppliers that help streamline their supply chains, resulting in faster service and lower prices.

But these partnerships aren’t limited to just high-volume industries. Irrigation contractors can also realize the benefits of partnering with their equipment dealers. Irrigation dealers can significantly impact a contractor’s profits – for better or worse, according to industry professionals.  

“You’ve got to buy right from your suppliers because if you look at it industrywide, the material cost of most businesses is about 33 percent of your company dollar – so if you think about it, your supplier is about one-third owner of your business,” says Gus Collier, president, Collier Cos., Powhatan, Va.

Forming these relationships requires work on both sides. Dealers must supply the right inventory types and quantities along with technical support and timely service so contractors can remain productive. At the same time, contractors are responsible for communicating to dealers what their needs are and should provide reasonable lead times for service requests.

Dealers and contractors agree there are steps they both can take to foster effective relationships. “Sometimes the vendor/contractor relationship is viewed as us vs. them,” says David Scattergood, operations manager for the landscape division of Signature Landscape Services, Redmond, Wash. “When we can act as a team with the goal of servicing the end customer, it becomes much more workable. The way we achieve that is to grant importance to anyone who we’re working with at the supplier level, even the person working at the desk. Then that person is going to want to give you much better service in the future.”

THE ONE AND ONLY. Everyone wants to feel like they’re No. 1 – especially when there’s money involved. Irrigation dealers are no exception. Many contractors say they get the best value for their service when sticking with one primary dealer.

Dwight Elliott, president of Birmingham, Ala.-based Elliott Irrigation, knows firsthand the benefits of having a main dealer. Elliott estimates that he saved $28,000 in 2004 after switching to a new dealer because the dealer offered Elliott discounts for maintaining a high volume of business, which Elliott says is about $300,000 a year. “When I go there, these people jump through hoops for me, and I get better pricing,” he says. “If they know I’m going to do $300,000 worth of business, it helps the bottom line. They’ll give me something they won’t give somebody else because they know the volume of business we’re going to do.”

Collier uses two dealers but does 90 percent of his business with one, and the difference is noticeable, he says. When Collier was searching for fertigators, he bought 100 from his secondary supplier because he thought they had a better product than his primary dealer, he says. Collier then asked this dealer for a price on a bulk shipment and didn’t hear back until several weeks later. The delay put Collier two weeks behind on mass mailings he was sending to customers promoting his new fertigation service. “These things cost me $19,000 to buy, and I’m telling this other guy we need support, and it’s just not happening,” Collier says. “So I feel like they should have jumped all over that, and they didn’t.”

Irrigation contractors should consider the long-term benefits of having a primary dealer, says Johnny Sims, president, Sims Irrigation, Tampa, Fla. A dealer might be slightly more expensive on some one-time purchases but may offer better prices if he knows a contractor will buy in high volumes. Sims says he spends approximately $500,000 to $750,000 annually at his dealer. “When I first started in the business, we struggled – not only because we were small, but because I didn’t have the ability to buy in high volumes until I got a little bigger,” Sims says. “But the reason I got a little bigger is because I started using one dealer. That relationship with that partner gives me the best prices over a longer period of time.”

Some dealers will offer loyal contractors “program pricing,” which is when dealers set prices for certain items for an entire year, says Tom Childers, director of marketing, John Deere Landscapes, Alpharetta, Ga. This can help irrigation contractors, particularly on volatile products such as pipe and wire. Buying from just one dealer also consolidates paperwork for contractors because they’ll be receiving only one billing statement and writing one check every month, which can help save contractors administrative time.

Jeff Partridge, president of Carrollton, Texas-based Wickham Supply/Water Zone agrees that buying from one dealer can benefit contractors. “I think there’s an advantage to having a primary distributor,” he says. “And the reason that becomes important is because both come to know one another’s needs, and a store manager is an extension of that contractor’s crew. It ensures that we will have the products they need on hand.”

But there are some advantages to utilizing multiple dealers. Scattergood buys from several dealers based on their proximity to job sites, he says. Signature Landscape Services’ crews stop at dealers who are closest to where they’re working. The company also purchases from these dealers because they treat its employees the same as higher-volume customers, Scattergood says. “When I walk in the door, my suppliers call me by name, they know who I am and they treat me well,” he explains. “I may be picking up three pop-up heads and a dozen nozzles – and it may not be worth writing up the invoice for – but I’m treated the same as the guy who’s buying 1,000 heads.”

Smaller companies like Scattergood’s can still realize the benefits of a primary-dealer relationship even though they’re purchasing much less than larger contractors by signing a program-pricing agreement with their dealers, Childers says. But when contractors like Scattergood do use multiple dealers, they may lose some perks associated with one-on-one relationships. “Obviously having multiple dealers affects them from the standpoint that they’re not always going to get the best program opportunities,” Childers says. “They’re not going to get the best program rewards, so they are hurting themselves. And from a purely business standpoint as a distributor with a formal program, it hurts.

JUST IN TIME. Irrigation contractors are always looking for ways to reduce downtime. Procuring the right supplies in a timely fashion sustains productivity and boosts profits. But contractors and dealers know without clear communication contractors won’t get the right parts when they need them.

Contractors should first outline for their dealers their expectations and needs. When Elliott starts working with dealers, he invites them to his facility and shows them his trucks and how they’re outfitted so the dealers can offer suggestions on how Elliott can better stock inventory, he says. “I want them to have a finger on our pulse because when I talk to them about things or ask them a question or their advice on something, I expect them to be knowledgeable about their end, but also I don’t want to be just another voice on the other end of the line,” he says.

By familiarizing dealers with his company, Elliott says not only are they more knowledgeable about his inventory requirements, but the dealers also refer potential irrigation clients to him. “If they know I don’t do commercial work they won’t bother sending commercial people my way,” Elliott says. “But if they know I have the best repair service in town, they will say, ‘Call Elliott first because I’ve seen their operations, and they’re really geared up to do service work.’ And they don’t know that unless they come in here and actually see what we do.”

Childers agrees that dealers can respond to contractors more efficiently if they know contractors’ needs. “Anytime an issue arises typically it’s because there’s been an unmatched expectation, so let the dealer know up front what you expect and quantify it whenever possible,” he says. “If you need a 100-percent fill rate or same-day delivery, tell them up front.”

Through these initial consultations, dealers can help contractors optimize their inventory levels. When contractors purchase new trucks or add crews, Partridge will review with them their inventory requirements and help them stock their trucks with necessary equipment. But when contractors don’t initially outline their inventory requirements, that’s when the dealer’s job becomes more challenging, Partridge says.

Contractors should also provide reasonable lead time when requesting supplies, especially on commercial projects that require larger-sized equipment, such as 8-inch diameter pipe. Ideally, contractors should give dealers seven to 10 days notice on these larger-sized jobs, Partridge says. “Dealers usually will have everyday residential products, such as heads or valves in stock,” he explains. “But central control jobs, for instance, often require some advanced notice because dealers don’t stock large volumes of central control packages.”

Another way contractors can decrease order time is by faxing supply requests. Elliott has discovered too often that phone orders often result in mistakes. Now, when Elliott places an order he faxes it by 7 a.m., and his dealer will usually have it ready no later than 8:30 a.m.

Elliott estimates that 20 percent of phone orders result in errors. Faxes also offer an opportunity to make notes about special preferences, such as expected delivery time, Elliott says. Noting expected delivery time helps reduce downtime for crews. “A lot of times you have a crew chief that makes $55,000 or $60,000 a year and he’s got four guys in the truck with him,” he says. “If supplies aren’t sitting out for him to just throw in the truck and sign and they have to wait 30 or 45 minutes for it – and you do that 20 times a year – that’s a lot of money.”

SUPPORTING CAST. Once a partnership is established, some irrigation contractors expect dealers to provide technical assistance and training for high-tech systems and at the very least, some input on designs. Sims says his dealer will draw an irrigation design free of charge that details what supplies are needed and where they must go.

Collier’s dealer also provides free designs, which allows him to pursue larger accounts because his staff is too small to handle design work, he says. “Without the support of my supplier, I wouldn’t be going after this big job,” Collier says. “But because my supplier has some expertise and he’s supplying support, we’ve got enough confidence to do the job.”

Collier also depends on his dealer for technical training. His dealer will travel to job sites with a computer technician who will make sure Collier’s employees are coding decoders properly for two-wire systems, he says. 

Contractors should expect their dealers to provide technical and design support, Childers says. “If the contractor needs that, the distributor, without a doubt, is the best place to start,” he says. “Distributors today will be able to help contractors, not just technically, but also from a business management standpoint, and contractors should be looking for that because that’s a cost they don’t necessarily want to incur.”

In addition to technical support, some dealers will provide classes that educate contractors on job bidding, estimating and collection. With these programs, dealers can help contractors pinpoint their actual costs so they don’t underbid projects, Partridge says.

Locally held courses are typically free while contractors may have to pay for some more in-depth nationally held seminars, which cost about $300 per session, says Childers, adding that about 25 percent of his contractor clients take advantage of these classes. Some dealers also will provide their clients who have a contractual relationship with them points for purchases that may be used to pay for the nationally held courses, Childers says.

And while dealers are providing contractors with more classroom and technical assistance, Scattergood says dealers could help even more if they would provide brief on-site training modules in Spanish.

“It would also help if they had a mock-up – a machine where you can see how a product works and guys can practice on it,” Scattergood says, adding that he would be willing to pay up to $200 for a 45-minute demonstration.