KF: My name’s Kaylee Felio and I’m the sales manager here at PartsEdge. I also have resident parts expert Chuck Hartle, one of the founders of PartsEdge here too. We’re joined today by Denny and Mick with Fred Beans and we’re going to talk about what it’s like for you to run one of the largest parts operations in the country. I’ll have you start by talking a little about your operation.
DL: Thanks Kaylee. Well, my name is Denny Laux, and over here next to me is Mick Padgeon. We’re managers here with Fred Beans Parts. We’ve been in this operation for 20+ years. We started out with about 80 employees and we were doing about $2-$2.5 million dollars a month in business. Today we’re close to 275 employees and doing about $18-$20 million per month in business depending on the given time of year. We went from a small operation hoping to grow a little bit to something big. We believe we are one of the largest OEM suppliers of parts across the country. Our main business model started with the collision side of the business, probably 65% of our business today is selling to the EMS’s and Calibers of the world. On the inventory side, we at any given time have $24-$25 million dollars of inventory in transit or process. We saw a lot of dealer groups buy from us and we also do a lot of mechanical business for independent installers. We do have a large power train operation where we’re selling engines and transmissions locally on the east coast to other dealers and customers. That’s where we’re at. Anything to add?
MP: Yeah always plenty to do here at Fred Beans. My name’s Mick Padgeon, Inventory Manager. I’ve been with the group 22+ years and I’ve had the good fortune to work under Denny here manning his inventory growing it from probably $5 million when we got here to over $20 million. It’s a challenge every day there’s always something happening so it’s an adventure.
KF: That leads me to the next question: why did you hire PartsEdge? We’ve been working together for over 3 years now.
MP: So in our complex inventory of having multiple manufacturers, we were looking for someone to help us do the daily things, the things in the background that kept us from growing the business. We have confidence that PartsEdge is managing these things for us in the background.
DL: We’re probably 125,000 parts numbers at any given time that were managing- probably more than that.
MP: Yeah it’s probably more, it’s a lot of SKUs.
DL: The biggest thing that we get is every manufacturer does things a little bit differently and has a different set of rules so we have to be very flexible with how we go to market with that. PartsEdge has been able to help us with the sourcing of parts, setting up different criteria by the manufacturer to make things more flexible so we don’t have to worry about the day to day nuisance of making sure the parts get sorted right, into the right source, and at the right stocking levels.
KF: This is my favorite question to ask our customers: how would you describe what PartsEdge does for you?
MP: It’s like cruise control.
DL: Yeah it just happens.
MP: It just happens and I don’t have to worry about it or think about it. If Denny calls me and says ‘Mick where’s the forced inventory at today?’ I grab that report, I know where it is and I can fill him in. Yeah- it’s just like cruise control.
DL: Yeah well it’s basically like those fancy commercials out there that say stuff like ‘you can set it and forget it’- that’s basically it. Really once you get everything set you don’t have to worry about it. What we’re worried about is driving our dollars by watching that forced inventory and the monthly and quarterly returns with the manufacturer. So, that’s really what it’s helped us with.
CH: Great way to put it. Just a quick question, because you two would know better than anyone, and I remember when we talked about this about a year ago talking powertrain: you guys sell somewhere between 500-600 units per month, right?
DL: Correct. When we started out 4 or 5 years ago we were probably selling 200-300 units a month and right now we’re close to selling 600 units per month. Even in a disrupted market with everything going on in the work.
MP: And our next goal for next year is 800 per month and by the end of the year 1000 per month.
CH: Wow. I remember the last time we talked about it a few years ago you were at $500-$600 so you’ve even moved it up that much more- that’s great.
DL: Yep there’s a demand for it. People want to get their cars back on the road quickly.
CH: Yeah, awesome.
KF: Everyone is going through the same thing right now and I want to ask how have you guys adjusted your business and how has COVID impacted things out where you are?
DL: So initially when all this happened back in March we basically went into a defensive mode and started idling down on some of the product offerings just to cover our cash because we didn’t know how it was all going to play out. That helped us tremendously because we had a good selection and a good mix and I think Mick was able to coordinate with you guys on what we wanted to try and idle down a bit to move forward. The business is still crazy. We had 2.5 months where our business was off by 50-55%. I think May was our worst month where we were at 45% of our number from the previous year.
KF: And it’s picking up now?
DL: Yeah. Basically from July forward- August was good. Obviously right now we have a bit of concern with the cases spiking back up. We’re looking at it a little bit different now though because we tightened up our receivables and cash collections so we’re not floating as much cash on the street. Between AR’s and inventory, that’s where all our cash is tied up. We feel good without inventory. What we are seeing today in the manufacturer world is you can’t get the product. Lots of backorders. Our approach again is we’re beefing up a bit more.
MP: Yeah the manufacturers are recognizing the fact that there may be supply issues coming to the collision scene. So they’ve made adjustments- not that we’re happy about all of them- but it is what it is. We have to have the parts, that’s our business.
DL: Backorders are bad. When we look at Ford Motor Company…
MP: Ford Company is terrible.
DL: We love Ford, don’t get us wrong, but I think all of them struggle with the suppliers making the products. It’s going to be a tough couple of months yet.
CH: Do you think in parts some of the Ford backorder and shortages are related to their adjustment in RIM?
DL: You know Chuck I don’t know. I don’t know enough about the RIM program yet. We’re not even on the RIM program yet.
MP: Because of the uniqueness of our operation Ford is struggling to even have RIM manage our inventory.
CH: It’s just kind of ironic- we’ve got about 6 stores that have gone to RIM on Ford and their biggest complaint so far- and why I asked the question- you know there’s a dealer up in Massachusetts who had about $800,000 in inventory and he’s now at $900,000 because he had to put $100,000 in his inventory to meet compliance. So obviously, some things like that would seem like it would create more of a backorder problem than anything.
MP: I’m not against it. Like when General Motors when on it years ago- I wasn’t necessarily against it. I like what they do and what you guys bring to the table to manage it. Now I do think we get a better width of parts availability and it has helped us grow. Obviously the supply chain is still struggling so I think there will be wrinkles in the system for the next 6 months or so.
CH: Got it.
KF: Well I think that’s it for today unless you guys have anything else you want to include.
DL: We appreciate the partnership, obviously.
CH: Well we love it!
MP: Someday we’ll get to Montana (laughs).
DL: Yeah someday!
CH: Hey! The door is always open.
CH: Well we really appreciate having you as a client. I can honestly say I think I mention you guys every day one way or the other through work or to employees.