The new purchasing paradigm: Early-order vs. just-in-time

We’ve all heard the farmer’s tale about the early bird catching the worm.Well, here’s another one, albeit not as storied or oft-repeated. It’s about the early-ordering superintendent catching a break by saving money and helping his bottom line on chemical purchases.

“We early order about 75 percent of our pesticides,” says Kirk Hardin, director of golf maintenance at Camelback Golf Club in Scottsdale, Ariz. “Through rebates on the early order programs, we are able to either spread monies with certain manufactures on a wide variety of inventory or utilize it as a straight cost savings.”

Hardin jumped onto the early-order bandwagon about six years ago to take advantage of rebate incentives being offered by chemical suppliers. “In some regards, our early ordering is purely a budgetary move,” he says. But most purchases are based on historical applications and also our agronomic plan. So, we are able to schedule delivery dates based on when applications are made.”

Doug Lowe, director of golf and grounds maintenance at Greensboro Country Club in Greensboro, N.C., who has early ordered for a number years, says the motivating factor is obviously cost savings. He can save as much as 10 percent on specific orders.

With nerves  and budgets stretched thin by the trying weather conditions in many areas of the country, as well as the ongoing economic uncertainty that hangs in the air like a threatening thunderstorm, superintendents are looking for any way to save money.

“The early-order programs allow superintendents to reserve the best price and lock in extended terms for a commitment on the products he knows will be used during the season,” says Bob York, marketing manager for BASF Professional Turf and Ornamentals. “This helps the superintendent manage his budget and stretch the value of his purchasing dollar.”

Using an early-order program has provided Buddy Tate, superintendent at Victoria Hills Golf Club in Deland, Fla., with an inventory that is readily available throughout the year. “I can confidently schedule applications without having to factor any potential delivery delays or mark-ups in shipping costs,” he says. “This also allows us to be prepared in making an immediate treatment during a disease or insect outbreak.”

Ben Scanio, a representative for Supreme Turf Products in Felton, Mo., has seen a steady amount of early-order requests from his clients. “It is usually the same amount of customers every season that early order, the ones that order enough to get a better price and terms,” he says. “Most country clubs will use the programs for early order, municipal and other privately owned facilities will try to only buy as needed. There are municipalities that will not let the super make an early purchase due to fiscal year or accounting practices. And some golf courses can only purchase during the period that the product will be used.”

Early-order programs also benefits suppliers. “The EOP helps BASF with forecasting sales, planning our production and managing logistics,” York says.

Bayer Environmental Science is planning to offer an early-order program this fall, says fungicide product manager Jimmy Johnson. Bayer will offer key products providing solutions for insect, disease, weed control and those that promote plant health.

“Fall purchasing has been trending higher for the past several years. In 2009, total fall volume was down slightly but participation was still high,” Johnson says. “Many customers were lowering preseason inventory to best manage their golf course business finances. Along with this, the U.S. economy was still uncertain, causing all to be cautious and conservative in their buying decisions.”

Fall early-order programs allow superintendents to stretch their maintenance budgets and stock products they depend on each year. Many products also offer attractive terms that allow the payment to be more closely aligned with higher revenue months for the golf course. Some superintendents purchase products to apply for that year’s winter protection and get payment flexibility to better fit the golf course’s cash flow. 

“As for Bayer, early-order purchasing helps spread production and product shipments,” Johnson says. “If all products were purchased and delivered as needed the entire distribution channel would be further challenged to service customers in a timely manner.”

Last fall, Syngenta launched a simplified year-long purchase program designed to provide maximum flexibility to golf course superintendents. The Syngenta GreenTrust 365 Purchase Program provides incentives with additional bonuses for purchases. In addition to the GreenTrust 365 incentives, Syngenta is placing an emphasis on its combination brands – Concert, Headway and Instrata fungicides, as well as the foundation fungicide, Daconil. The company believes the program is easy to understand and offers greater flexibility to make purchases when desired, while still allowing customers to earn significant rebates during these uncertain economic times.

Key elements of the GreenTrust 365 plan include incentives on purchases made throughout the year, with additional bonuses on purchases during the early-order period and consistent year-long pricing. The minimum purchase qualification is $5,000, with no brand requirement. Syngenta StarterPaks of Turf Essentials fungicides, Primo MAXX plant growth regulator, Monument herbicide and other brands are available, too.

“We feel like we do a good job listening to customers, and the Green Trust 365 program has allowed superintendents to earn rebates on all purchases made throughout the year rather than just early-order,” says Scott Cole, Syngenta’s golf market manager. “These are very important considerations in these uncertain economic times and trying weather conditions.”

Offering golf course turf caretakers extended payment terms allows superintendents to make payments for early orders during times of peak revenue streams, Cole says. “The program also allows the superintendent to tap into what we believe is the most knowledgeable sales force in the industry,” he says.

And, Cole says, Syngenta’s GreenTrust 365 and performance assurance programs allow the company’s representatives to “get in on the planning process, where we sit down identify emerging trends in disease and pest problems with certain grasses and develop a plan of attack with the superintendent.”

BASF is continuing its Paperless Agency Product Early Order Program through Dec. 17 of this year. The company will also be instituting a new Paperless Non-Agency Product Early Order Program from Dec. 1 of this year through March of 2011. “With the Paperless Early Order Program we have made it easier to get the best price and best products available,” York says.

In addition to asking for simplified programs that deliver those “best prices available,” turf managers are asking for extended terms to help ease economic  pressures and allow clubs to generate spring revenues prior to the due date on EOP purchases. York adds, “We also see a rise in the number of superintendents taking advantage of our EOP.”

Early ordering, says Sean Flynn, superintendent at Great River Golf Club in Milford, Ct., has become a way of doing business. He orders about 75 percent of his chemicals early. “When I first became a superintendent in 2003 I was bombarded by about seven salesmen who wanted the club’s business. Fortunately, I have narrowed my salesmen visits to only two who actively call on me,” he says. “The owners of Great River find tremendous value to the fixed pricing, delayed payment terms and increased rebates when conducting business. It forces me to have a more detailed pesticide application program that is more or less zero-based. Our owners can review the pesticide application proposal that I have presented and approve it during the early order period.”

Adopting early-order practices “forces you to be a good communicator with your superiors, effectively getting the best bang for your buck. In this area, some clubs are spending well over $100,000 a year on chemicals. A three to five percent savings can be quite substantial. Not only does it guarantee your pricing for the following season, you can expect rebates between 3 to 5 percent on all orders, which can be incorporated back into your budget,” Flynn says.

Brian Benedict, superintendent at The Seawane Club in Hewlett Harbor, N.Y., early orders about 75 to 80 percent of his fungicides, insecticides and herbicides.

“We also early order our wetting agents, foliar fertilizer and granular fertilizer,” Benedict adds. “With as volatile as the fertilizer markets are, I think it is a great idea to take advantage of left over inventory and strike when the market may be soft.”

Benedict began early ordering when he started at Seawane in 2000. “It is strictly an effort to try and get the most product from our vendors as possible for the least amount of money,” he says. “Early ordering is budgetary, aids in the planning process and keeps vendors honest. We actually produce a chemical bid sheet to get the best price for each product.

“Naturally, like any other superintendent, we have our three to four vendors that we deal with all the time, and there is definitely a certain amount of loyalty for vendors that get you products in a pinch and support you with great service. Anyone in the Northeast who has a budget of $100,000 or less for chemicals is going to be hard pressed, especially after this hell ride of a summer. We are all pressed to get the best price and get the most out of our budgets so we can get as much product down on the turf as possible.”

Scott Sewell, superintendent at Emerald Bay Golf Course in Destin, Fla., says early ordering allows him to put out chemicals in the fall and pay for it in the summer when he has the cash flow to do it. “I order for applications I know we will make for the year, which saves me time and money,” he says.

Changes in manufacturers’ billing procedures no longer requiring a Dec. 31 invoice date has motivated Lowe to become more aggressive with early ordering in recent years. However, he has seen a decrease in rewards points being tied into early-order programs, which he once used to upgrade his office operations. “The first is the biggest reason I have expanded my early orders,” he says. “But most of the companies have backed off the rewards programs for obvious reasons in recent years, and it looks like my next computer replacement is coming out of the budget.”

The effect early ordering has had on the use of generics appears minimal, although not negligible. “While I buy a lot more generics than I used to early ordering has not played a big role in that, Lowe says. “My primary generic supplier is QualiPro and they do have an early-ordering program. The biggest thing with generics is the cost savings versus brand name products. But my movement into these products has been conservative, as I have to weigh cost versus efficacy and support.”

Benedict believes superintendents are just trying to get their budgets to go as far as they can. “Expectations are higher and we all spray more acreage for less money,” he says. “This begs the question: How do we do it? The answer is through bid lists and the purchase power of generics. I think we have saved or made the chemical budget go farther with the use of off-branded products. The competition of generic fungicides, herbicides and insecticides has created a great situation for the purchasing agent for any club. You can competitively price products between vendors and do you due diligence, getting the best product price for you facility.”

Early ordering has become one more key method to better manage turf maintenance programs, York says. “Especially this year, Mother Nature will play a big role in what pressures a superintendent will face during the year. Most superintendents know they are going to use certain amounts of products every year and that’s the best reason to take advantage of the early order programs.”

John Torsiello is a freelance writer based in Torrington, Conn.