Managing supply and sensing demand are critical elements to keeping technology mobile at the dealership.
Farm equipment dealers keep a close eye on machinery inventory to minimize the chance that combines, tractors and implements sit on the lot for too long. But when something breaks or wears out, having the right parts handy is critical to getting customers back up and running.
Jason Pennycook, precision farming specialist, Johnson Tractor in Janesville, Wis., talks about how he manages precision product inventory for the dealership and what to keep in mind, when ordering, tracking, storing and selling precision parts.
Managing precision farming product inventory is a different animal. Although monitors, modules and GPS receivers don’t take up much space, keeping an abundance of technology on the shelf isn’t always practical, says Jason Pennycook, precision farming specialist with Case IH dealer Johnson Tractor Inc., in Janesville, Wis.
“For machinery parts inventory, a lot of times it’s self-re-ordered because it’s tracked and employees know how many were sold and when to re-order,” he says. “On the precision side, we don’t automatically re-order anything. When I know we’re getting close to harvest or planting, I go back and check my inventory and if there’s something we need, I’ll get it on the shelf.”
During summer months, Pennycook scales back inventory because there isn’t nearly the same demand as during busy seasons. Precision orders are tracked through the dealership’s parts department and he annually prints off reports to compare sales numbers.
“If I see we sold more systems one fall to the next, I can bump up our order 5% from what it was the year before to estimate future sales,” he says. “I usually can turn most of our ordered parts around in a year.”
But ordering precision parts isn’t always a precise science. Pennycook says he’s overestimated and underestimated demand in some cases and he tries to use harvest as a gauge for future supply needs.
Last year, the widespread drought took its toll on crops and Pennycook ended up with some excess inventory.
“I’ve got a few more things on the shelf that I ordered in February for this fall, because market prices last year and the fluctuation this year turned some people off,” he says. “If we underestimate on anything, it’s service parts. One year we ran into a rash where customers started breaking corn header sensors off because corn was down. You don’t expect that.
“But if I go off of what we’ve sold in the past and bump that up a little bit, we’re usually pretty close.”
Pennycook also evaluates the volume and setup of systems sold to customers to avoid overstocking seldom used components. He typically only stocks enough electronic modules, harnesses and cables to cover what customers currently have in the field.
“Anything that will be used in multiple applications we keep in stock,” Pennycook says. “If it’s an individual thing and the customer never has an issue, that part could just sit there for 2 years and then I’ve got a module that’s out of date.”
Taking into account the age and shelf life of precision technology is also important to avoid getting stuck with antiquated products. This is especially critical with receivers and monitors, which are routinely updated to newer models.
“With those two, I don’t like keeping any more in stock than I think I can go through in 6 months,” Pennycook says. “We’ve had it happen where I have half a dozen of a display and then the manufacturer came out with a new one and the old one is obsolete, but we have to get rid of them. It happens pretty fast.
“If you get burned on it once, you pay a little more attention. We laugh because we’ll get a memo that says, ‘OK this display is going on special,’ so we’ll wonder how much longer before the manufacturer comes out with the new one.”