Kevin Van Dyke is chief operating officer at Skinner Nurseries, 2970 Hartley Road, Suite 302, Jacksonville, FL 32257; (904) 880-4344; fax (904) 880-1778; Kevin@Skinner
Nurseries.com.

These words hold true today in the landscape industry. As landscape distribution centers try to serve contractors, we face entrenched habits that are obstacles to providing our services. Here are two habits that serve as obstructions:

1. Plant purchase decisions are based on price only.

2. If you want it done right, do it yourself.

Regarding Habit No. 1, it's a common challenge for businesses to distinguish between price and total cost when making purchase decisions. As Warren Buffet once said, "Price is what you pay, value is what you get." When purchasing green goods, it's important to distinguish the different ways that value is delivered.

Contractors typically acquire their green goods through one of three channels, as shown in this landscape supply chain illustration.

Contractors looking only for the lowest initial cost will always buy direct from growers. But what many don't understand is how much of the work they consider ordinary business practices are actually habits that arose out of a lack of alternatives for purchasing plants.

Like all habits, some are good and some are bad. What's valuable and necessary will vary from business to business.

Dealing with growers direct will get you the lowest price, but there are tradeoffs. These extra expenses can appear to be normal costs of doing business, but can often be avoided by using a broker or landscape distributor.

Here are extra costs landscape contractors have when buying direct from growers:

* A holding yard, and people and equipment to operate it.

* Plants must be unloaded into the yard, reloaded onto trucks and unloaded at job sites. Plants are handled at least three times.

* Travel time to visit growers and time to maintain relationships with them.

* Cash to invest in inventory to stock holding yards.

* Expertise to maintain inventory in holding yards and keep plants alive and in good condition.

* You need to deal in bulky quantities to meet minimum orders from growers and pay the lowest unit delivery costs.

* Administration time to process purchases and payments to multiple vendors. Administration is burdened with paying bills rather than collecting.

* Time is spent on hassles due to late deliveries or rejections due to poor quality.

* Expertise in logistics and coordinating trucking efforts.

Take the ball

Regarding Habit No. 2, doing things yourself can get you the lowest prices, but it causes a lot of extra work. Buying direct from growers can add an extra $100,000 to $120,000 of overhead to a landscape contractor's cost structure.

So why do all of this? For contractors, this extra work often felt natural in the early stages of their businesses. It was being entrepreneurial and a means of seeking the best deal, but it's now a habit and an entrenched basic part of doing business.

Analysis shows that it takes a significant amount of plant purchases to cover the added expenses associated with buying direct from growers. The following assumes $120,000 worth of expenses for break-even purposes, and that green-goods purchases account for 25 percent of a contractor's total installation business.

If you could save an average of 20 percent on plant purchases by buying direct from growers, then you'd need to purchase $600,000 worth of green goods per year to break even to account for the extra work required. To purchase $600,000 of green goods a year, a contractor needs to sell an average of $2.4 million worth of work annually. According to Lawn and Landscape magazine, only one in 10 U.S. contractors does more than $1 million in annual sales.

As distributors, we have to constantly identify opportunities to help our customers increase their effectiveness and profitability. By targeting customers' habits that may no longer be necessary for business, we can help many contractors streamline their businesses.

There are many cases when buying direct from a growers is a contractor's best option. But it's important to help landscapers realize the total cost of purchasing direct. As Peter Drucker said, "There is nothing so useless as doing efficiently that which should not be done at all."

. . © 2003 Branch-Smith Publishing