Let’s consider all the moving parts that must mesh to make complicated parts distribution networks for agricultural equipment work correctly in a “good” year.
Ag equipment manufacturers track sales of individual parts across their inventory. They know from their data how many planter disk openers will probably be used each year in the sandy soils of central Nebraska compared to the mucky soils of the Delta.
Analysts study and tweak that data to adjust inventories in anticipation of commodity prices, government programs, weather patterns and other variables. They then determine how many openers to stock in their regional distribution centers.
THE LOCAL DEMAND PICTURE
At the local level, parts managers track the sales histories of parts in their inventories. They order parts up to a year in advance based on those histories, combined with seat-of-the-pants observations.
For example, was there high corn rootworm damage in central Illinois last harvest? Dealers there might order extra corn head snapping rolls in anticipation of higher demand due to increased combine wear.
Parts managers also pay attention to spring weather patterns that might change crop mixes. More soybeans and less corn mean more demand for cutterbar knife sections and less demand for gathering chains.
Yes, they can order more parts during harvest to meet unexpected demand, but ordering in bulk ahead of season earns them volume discounts they often pass on to customers as “early order” discounts.
Plus, in-season orders are risky if demand for a particular part is higher than corporate headquarters expected.
THE CHALLENGES OF INVENTORY
Local parts managers constantly winnow their inventories to eliminate slow-moving parts. Interest payments on those parts cost dealerships hundreds of thousands of dollars per year. Most dealerships have guidelines that require a part to “turn” (be sold) at least two to five times a year to justify keeping it in stock.
Managers also must pass judgment on vintage parts. How many parts for antique tractors or 40-year-old planters should be kept in inventory for just a few customers?
Only after the multiyear, “multi-guess“ ordering process is complete are parts finally ready for purchase by customers as they lean on their dealership’s parts counter.
Ultimately, whether or not the local parts person has the right parts in stock is based on carefully documented sales histories, whiz-bang computer programming and a complicated series of educated guesses. FJ
