This month’s focus on dealers who offer in-house leasing brings us to one of the most popular conundrums among our panelists: in mitigating supply chain issues, how do you prioritize where equipment goes between net-new placements and existing client upgrades?
The backorder woes within the industry have been well-documented, and dealers find themselves in a precarious position of having to make the tough calls on which clients get the gear once it does become available. As the equipment availability issue has dragged on for more than a year, our dealer panel has been hard at work to ensure the disruptions have been limited.
AJ Baggott, the COO for RJ Young of Nashville, Tennessee, notes that despite its proactive efforts in containing the supply chain and inventory challenges, the dealer has not been 100% immune to issues.
“Running our own leasing company we’ve been able to provide re-leases and extend current leases without penalty if full auto-renewal to our customers while they wait on the supply chain to settle,” he said. “But we’ve also utilized lease returns that are in fantastic shape due to the lack of usage during the pandemic to mitigate some of the challenges of getting new inventory.”
It’s been imperative to communicate with manufacturers in order to keep in front of delays in getting equipment, according to Jennifer Watts, manager of leasing operations for Gordon Flesch Company of Madison, Wisconsin. The key, she believes, is in managing expectations.
“By working closely with our vendors, we can then communicate with our customers so that they are aware of any delays, and to set realistic expectations,” she said.
Inventory Management
It was around last summer when Plus Inc. of Greenville, South Carolina, began to encounter supply chain issues. Thus, company President David Carson took stock of his inventory and decided to start ordering more equipment than he needed, essentially four or five extra units at a time. The backorders began to pile up in October and November, but only about half of them had actually been sold. So as the equipment trickled in, Plus was able to fill the orders 90 to 120 days later.
“By the time January rolled around, we had pretty good inventory,” Carson noted. “We haven’t had to prioritize orders; it’s pretty much on a first-come, first-served basis. It helps that we have massive amounts of used equipment, and we’ve always had loners for customers to take if they were down.”
What has helped alleviate the situation for Richmond-based Virginia Business Systems is the degree of customers who have opted to maintain their existing equipment for an additional year at a reduced monthly payment. This has been the prudent move in environments where the run rate has been reduced due to fewer people working on-premise, according to President Jim Dotter.
Temp Gear
“For net-new customers who want to start with us and not continue their existing relationship, we have placed sales loaners in their place until their equipment comes in,” he said. “This put a tremendous burden on our setup, delivery, billing and sales teams, but we felt it’s the right thing to do to secure the business. Our open lines of communication have empowered our team members to take care of our customers and prospects as we can control our actions during the supply chain issues.”
Steve Sumner, vice president, secretary for Datamax of Little Rock, Arkansas, notes the dealership always ensures its clients are provided with “like units” if there is a delay in the order fulfillment.
“We’re not going to leave them in a situation where they’re not running,” he said. “They’ll always have a similar piece of equipment to use until we receive their order.”
