ISSUE/AREA OF CONCERN

IMPACT/DETAILS

SUGGESTED ACTION

PROGRESS/DATE

COMMUNICATION & CONSULTATION WITH DISTRIBUTORS

COMMUNICATION & CONSULTATION WITH DISTRIBUTORS

(contd)

•Changes are being made within Mac Tools head office to 'improve overall productivity and efficiencies' without consultation with or timely notification to distributors. These changes have a direct impact on distributors and their ability to do business. Distributors are very interested in system-wide efficiencies and could greatly contribute to increased sales and marketing.

EG: 1) Minimum order charge- Distributors were given three weeks to prepare for a change that would have a tremendous impact on their ability to maintain their inventory (financially and operationally) and provide customers with quick turnaround on products. 2) New product design and marketing-a) New mid-range tool box is not designed to meet the needs of the market or compete with the competition. Snap On is flooding the market with a comparable quality box, top and bottom for $2400 vs. Mac's new bottom box at $3500. b) Products in the monthly sales flyers become repetitive. Need creative marketing strategies to lure mechanics in automotive repair vs. autobody or industrial sales. c) There is no marketing flexibility or allowance for regional differences ie: what sells in Ontario may not sell in the Maritimes or on the prairies. d) Future orders form for promotional products reaches the distributor after the deadline for ordering. e) Distributor mail now received with orders which are delayed because of minimum order charge

•System changes for efficiencies in Mac Tools (head office) do not necessarily result in efficiencies for distributors or increased productivity overall. If operating costs were becoming problematic, consultation with distributors to identify ways of decreasing stock and shipping costs would not only improve efficiencies, but would promote distributor support in making the changes work. EG: Establish a new policy whereby more that one order/distributor/day will not be processed; consider a smaller more reasonable minimum order charge ($3-400 instead of $600 cost).

•Communication systems and method of notifying distributors of changes need to improve and become more timely. Invest in the development and use of computer technology to support quick and effective communications. It is recognized that not all distributors have the equipment or skills for this system. Fax or voice mail fan out of information could be used in these circumstances. Modems and specially designed computer software programs could maximize routine and ad hoc processes ie: ordering, action reports, inventory management, shipping/receiving, etc. Distributors are developing their own programs which only serves to isolate the distributors even more.

•Reconvene the Distributor Councils as a means of improving working relationships, communication and organizational change within Mac Tools. Council representatives need to dialogue directly with the head office management team on a routine basis, with documentation of discussions for circulation amongst distributors. Management and distributors are accountable for outcomes.

•Conduct random sample surveys of distributors within each region when preparing monthly or ad hoc marketing strategies. The distributors know their customers and the products that are currently selling. Distributors should help to prepare marketing strategies, give input re: seasonal sales and creative marketing techniques. Develop a 'team marketing' approach with input from distributors across the country.

CUSTOMER SERVICE TO DISTRIBUTORS

•Sales have increased over the years yet the number of people in head office who provide support to distributor has not changed proportionately.

•Customer services to the distributors was quoted as a key objective for Mac Tools at the Calgary Tool Fair. Distributors consistently receive poor customer service from certain staff at Mac Tool head office ie: Debbie; there is minimal help to get much needed information or delayed response to requests. This lack of customer service forces the distributor to find answers in isolation (not knowing that others may be having the same problem) and often involves hours of long distance and cell phone time.

•Provide each distributor with a current Mac Tools organizational chart (not just names and titles) which includes areas of responsibility, reporting relationships and accountabilities.

•Work with District Managers (DM) to help them develop as effective managers and facilitators within their regions. DM's have unique role requiring dual accountability: not only to head office but to distributors. An effective distributor does not necessarily create an effective DM. Skill set for managers includes: efficient and timely issue resolution, effective sales meetings, conflict resolution, 'people skills', etc.

•Monitor customer service provided to distributors my Mac Tools head office staff and DM's. Consider random performance evaluations of staff by distributors to evaluate service delivery. Mac Tools staff, including the DM's are 'life lines' to the distributors in the field - if they are ineffective, so are the distributors.

FOLLOW UP OF SPECIAL ORDERS, PROBLEM REPORTS AND DISCONTINUED ITEMS

•Distributors are unable to provide availability information and guarantee delivery to customers. Sales are lost - people do not want to wait indefinitely for products.

•There is no immediate confirmation of special orders having been received by Mac Tools. There is also no notice re: product availability or pricing.

•Discontinued items do not appear on invoices. Voice mail notification is often not received for several days.

•There are 2 types of 'discontinued' items: actual discontinued product and items waiting in the US for multiple orders.

•Lagging response time to Action Reports. Multiple reports are sent before action is taken. Distributors need more timely responses to problems. It is too costly, both financially and operationally, to spend time tracking down problems and answers via long distance on a cell phone while trying to make sales.

•Need to develop a better system for more rapid response times and notification of availability for Special Orders and discontinued items. Requires staff commitment and accountability for turnaround times, the enhanced use of technology ie: fax, modem.

PRODUCT INCONSISTENCIES AND BACKORDERS

•When reordering a new product, a different model/version if received eg: laser pointer. Distributors lose credibility with customers when coworker start comparing similar products. One customer feels he/she got a better or worse deal than the other.

•Backorder problems continue and worsen, especially now that distributors are unable to submit daily orders due to the minimum order charge.

ORDERING AND SHIPPING

•Opportunity to order monthly promotional items arrives the day before ordering deadline and requires bulk ordering for the month. There are no opportunities to stagger or adjust orders.

•Increased number of picking and shipping errors results in lost sales for the distributors and increased time to correct the errors.

•Distributors now receive larger orders less frequently as a result of the minimum order charge. Some orders are sent by ground due to the weight factor, taking over one week to receive. Distributors must now spend more time processing inventory.

•Incomplete orders are being drop-shipped to customers when items are backordered. EG: A customer received only a top tool box when the bottom box was on backorder.

•Develop a system and order form for monthly future orders that allows for weekly adjustments in ordering instead of bulk ordering.

•Put a class on the promotional flyers so the distributors know what it will cost. EG: Promo Price: $83.95 D.

•Wait to ship complete orders.

PRODUCT IDENTIFICATION AND PROMOTION

•Mac Tools trade marks are disappearing with lower priced tool boxes. EG: MB1000 tool box does not have identifiable Mac drawer handles - cheap ones are used to lower the price so box ends up looking like a Beach Box.

•Industrial equipment does not come with identifiable Mac Tools labeling. Large equipment and kits come with small peel-off decals instead of noticeable crests.

•When making deals with clothing companies for Mac Tools there is no allowance for larger sizes ie: 14 and 15 X. We have some larger sized gentlemen, distributors and customers, who would like to wear a Mac Tools jacket or T-shirt.

•Provide distributors with free decals. Base the number on percentage of sales - encourages distributors to promote name, customers like freebies and decals.

•Place large professional crests (not stickers) on larger and industrial equipment, etc.

•Order small quantities of extra large sizes.

COMPETITIVE PRODUCT OPPORTUNITIES

•OTC pricing/Acklunds often can provide products at a better price than what distributors get from Mac Tools.

•Explore different supplier opportunities (especially for small industrial supplies) through Mac Tools.

PRICE LISTING AND PARTS BREAKDOWN

•Price list and catalogues for KD and Lisle products are not available to distributors.

•Parts price list is outdated. Distributors are losing money in parts price quotes when using price list (despite routine mark ups).

•Need more tool part breakdowns. New products such as the MB 2170 do not have breakdowns for at least 3 months so that parts cannot be ordered. Tech Services and Mac Tools each tell you to call the other.

PAYMENTS TO AND CREDITS FROM MAC TOOLS, MAC ADVANTAGE

•Payments to Mac Tools expected net in 10 days while credits to distributors are completed in 4-8 weeks.

•New distributors are penalized by previous distributors' 'bad' Mac Advantage accounts. When the previous distributor takes on another area his Mac Advantage record does not follow.

•Look for improved efficiencies in processing New Tool Returns, Broken Tool Orders, etc. Quick turnaround on distributor credits will help them financially and make returns easier to track (books are not tied up waiting for credits).