North Houston Supply Company Offers Open-Inventory Concept

DESCRIBING their company as the "Home Depot" of parts stores, Tom Howell and his wife Laura, owners of North Houston Trailer and Truck Supply, Houston, Texas, are enthusiastic about the advantages of their open-inventory concept.

When customers come through the door, the entire inventory is on display. Customers can browse and find what they need. Products on display will often result in additional sales.

"We think we have found a unique and effective way of doing business," says Howell. "Nothing is hidden and there are no secrets. Customers can walk through the aisles at their leisure and pick out what they need.

"When you go to the grocery store to buy a can of soup, you don't order at the counter and wait while some guy disappears behind a pair of double doors to look for it," says Howell. "Why should the parts business be any different?"

As sole owners of a company with no outstanding debt, the Howells are able to be innovative and unique without the hassles of corporate red tape.

"It's like steering a Ferrari versus trying to steer a battleship," says Howell. "I can solve problems on the spot. If we decide to do something, we just do it. There are no bureaucracies or committee meetings to contend with. We're lean and mean. There won't be any downsizing or layoffs here."

By keeping the inventory open and letting customers select the items they want, the need for a parts counter person is eliminated, Howell says. "We're always there to help in any way. But customers usually know what they need and have no problem finding it."

According to Laura, there has never been a problem with theft or clutter from customers picking up parts and replacing them in the wrong bin. "If they pick something up, they usually buy it," she says.

Controlled Growth Laura is company president and Tom is vice- president. They perform all aspects of the operation by themselves at this time, but they say they will need to hire some employees to continue growing the company.

Despite having been open only a few months, the company has hit the ground running, Howell says. "We had the advantage of watching Laura's father run a successful parts business and we are using him as a model. Laura has worked in the business a long time and has a lot of knowledge about parts. We have gained customers on the strength of her reputation."

Controlled growth and quality service are two main guidelines that Howell believes will be the key to North Houston Trailer and Truck Supply's success. "Having watched Laura's father develop a successful business, we have learned to start slowly and build, and eventually the business starts to blossom. We have doubled our inventory in four months."

Their present inventory consists of about 1,200 different parts worth $110,000 to $120,000. "The parts we keep in stock are movers," Howell says. "None of our stuff just lies around. We determine our niche and get parts to fill that niche."

Diverse Customer Base The Howells sell parts for tankers, flat beds, dump trailers, van bodies, suspensions, and running gear. They also stock batteries, lubricants, filters, and other preventive maintenance supplies.

The bulk of their business comes from the greater Houston area, Howell says. "We deliver from Huntsville to Hitchcock and all areas in between a 120-mile area. But we ship all over the country."

The Howells focus on small owner-operators with five trucks or less. "We have some big customers, but it's important to have customers with operations of all sizes as opposed to having just a few large ones," Howell says. "That way, if we lose one customer, we have enough of a base that we don't feel it as much."

When large companies change personnel, they will sometimes change vendors at the same time, leaving the vendor with a gaping hole in their business, Howell says. Relying heavily on large accounts is a dangerous business practice.

Mobile mechanics are another mainstay for the Howells. "It's a win-win situation," Howell says. "We get their business and we generate business for them. They leave their business cards with us and we deliver parts to them on location when needed."

Customer Education The Howells see customer education as vital to their success. "We show customers how we can help them," Howell says. "Our location frees us from paying city sales tax on certain items, a savings we pass on to the customers. Customers in this area can save a great deal of time by coming to us, instead of downtown to find what they need. We deliver parts as quickly as possible so the mechanic can keep working. By having us deliver, customers can save as much as two hours on some jobs."

Time considerations for walk-in customers are valued as well. "We make it a point not to hang drivers up at the parts counter," Howell says. "Laura has an extensive knowledge of the parts industry. She knows who to call and how long it will take to get a particular part. She can save customers a lot of legwork and phone calls."

The Howells accept phone orders 24 hours a day, seven days a week.

Growth and Marketing Inventory is shelved in a 5,000-sq-ft warehouse. Brake drums, tandems, and other heavy items are put on pallets and moved with a forklift. Howell says they will soon be adding a double row of pallet racks to increase capacity of the parts warehouse. Sales come in spurts, but inventory turns every couple of months.

Howell credits the telephone as his main marketing tool, although word-of-mouth generates steady sales. "We already knew lots of people in the business and had a lot of contacts, so that made it easier."

Howell says the company will have a catalog ready by the end of the year. Howell feels that a web site is not necessarily beneficial for business at this point.

Keeping Track The Howells have invested in a Peachtree Accounting System designed for retail sales. The system prints invoices, tells who bought the item, gives the unit price, and lists remaining inventory for each product.

The accounting system will give a warning when a particular part needs to be reordered. Items are listed by vendor with a history of how they are selling. Once a month the Howells have a CPA come in and download the information off the computer. All pertinent information is listed on the invoices, eliminating the need for a fulltime accountant.

A bar code system is used to determine pricing for an item. Prices are adjusted according to the type of customer (jobber, fleet, wholesale, retail) and the bar code will default the price accordingly.

A UPS online system allows the Howells to print out labels and barcodes for items being shipped. They can prepare items for UPS pickup and the system determines charges and does all the tracking.

Future plans for the Howells include hiring drivers so Tom can focus more on sales and service. They eventually plan to buy and sell used trailers. For now, in keeping with their motto of slow, controlled growth, the Howells remain focused on parts sales.

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