Found Gold

It’s that time of the year again when the mail hits your desk with notices of early order programs (EOPs). These programs are not new, and they have actually spread to many manufacturers as there is value from all sides of the equation. Do your homework to see if an EOP makes sense for your business.

Facilities that will benefit most from utilizing an EOP are those that have been managed like a business and kept good track of purchases and usage over time. Knowing your needs for fertility as well as pest control products allows the superintendent to align products with potential usage. Volumes are going to be dictated by history on that particular golf course. A typical golf course would and should have an agronomic program established by calendar year or fiscal year, because it allows for a correlation of product needs with costs that will fit into the budget.

Doing more with less has been a theme for the last decade. Costs of materials increase along with new products that rarely are more affordable than what we used a decade ago. Taking that into consideration, it is an absolute necessity for golf courses to find the best values to provide optimal plant health and adequate coverage of potential pest problems. If a superintendent could save as much as 40 percent by using an early order program, then it makes sense to do so. While it seems like a no-brainer, there are actually several things the superintendent must take into consideration.

EOP’s
While EOPs vary by manufacturer — and some are even distributor-driven — they have several main points.

Fall is the time of the year they are mostly offered
It is not always all the products in the manufacturer line but some high-volume products along with some slower moving products
-- There are deadlines
-- There may be terms for payment
-- There may be terms for delivery
-- Discounts are driven by the amount you purchase

Pros and Cons
While EOPs may not be for everybody, they surely will work for most golf courses and make a lot of sense. It will take some selling to the financial side of the club to establish the process. Know that similar programs are in effect for merchandise purchases for the pro shop as well.

Something to keep in mind is not just the budget of your department, but also the budget of the overall club. An often-overlooked term is cash flow and knowing when EOP payments are due will establish whether or not your club has the cash flow or would need to borrow money to pay for goods. If the cost to borrow money is greater than the discount received, then it doesn’t make a lot of sense to do it. Most EOPs do not require payment until spring or summer when most facilities are up and running and the cash register is ringing.

Another consideration is whether or not you have the facilities to store your EOP purchases. Some distributors will take care of this for you, but they only have so much space in their warehouses so be sure you fully understand when the product would be delivered. There is economy in volume, so most distributors would want to move your product in bulk once it comes from the manufacturer. This will vary but be sure you have the room.

SELLING THE EOP TO YOUR GOLF COURSE
Have a full understanding of your EOP before approaching the general manager or the club controller. Realize that there are multiple programs and it will surely take some paperwork to process these orders. Laying it out on paper will help to prove the value of an EOP.

The potential of a 10 to 40 percent savings on $80,000 worth of product would mean $8,000 to $32,000 in savings. Surely some courses would be buying more than that, but using that example would be enough to get the interest of management and owners.

Due to the scientific nature of our business, it is rare that decision makers really understand the products that we use but they surely understand their expense. After labor, benefits and water, the next largest expenses in the budget are normally fertilizers and pest control products. Show management your business acumen by matching your agronomic plan with your business plan for the golf course.

HOW MUCH SHOULD I PURCHASE ON THE EOP?
There must be a good business reason for the manufacturer to offer an EOP. As we know, it is a competitive business. Once one manufacturer has had success in increasing its market share, others evaluate it and get on board. However, it must make good business sense as well.

WHAT ADVANTAGE IS THERE FOR THE MANUFACTURER?
When a manufacturer can plan out their runs of product, it creates efficiencies in their operation. When shipping is done efficiently, it also reduces costs. Manufacturers want to lock in your business for the year if possible. Most manufacturers are not only in the turf business, but they also sell in ornamental and agricultural markets. Forecasting for the year ahead helps all those that produce our products.

WHAT ADVANTAGES ARE THERE FOR THE SUPERINTENDENT?
Most EOPs come out in September or October. For our northern superintendents, the heat of the summer is over and it is a good time to reflect on your programs from the prior year. Many courses have a fiscal year that ends Sept. 30, so you will know how you finished the preceding year by the time you order. It allows you to show your skill in creating savings for the facility as well as your department.

WHAT ADVANTAGES ARE THERE FOR THE FACILITY?
I can’t imagine a facility not wanting to save money. This is a great opportunity. Seldom are there any new products coming out that would change an agronomic plan. And if there are, you can save up to 20 percent of your purchases for purchase during the fiscal year. Check your cash flow and maximize your discounts taking ability to pay based on the terms offered you.

WIN-WIN
Taking all the above into consideration it sure looks like a win-win situation for golf courses and those who manufacture our products. It will take some planning, but the benefits will be seen immediately and in years to follow.