Define for me...

[Audiyoda]

what 'Board Management' means to you. I have a board management agreement with one company (their own spin tower) and their reps don't - IMO - understand the concept of board management.

The spin tower has 100 slots - the board management agreement is for the spin tower and stock of 100 frames. When I laid out the agreement with them at VEW last year I also specified that I re-order as I sell from stock - so the tower is never short it's 100 frames (they also gave me free shipping so I have no problem ordering 1 frame at a time).

These reps come in and get upset that I won't order additional product - I tell them the agreement is they manage their 'board - AKA the spin tower. If there's product on their not moving, replace it with product that will - even up. They don't like that one bit.

I don't allow reps to board manage the rest of the office for this very problem/reason. So...what's your definition of 'Board Management'?

[Andrew Weiss]

1. I manage the board :bbg:
2. Each vendor has a specified number of slots.
3. I reorder stock I use on a weekly basis.
4. I see the reps every 2-3 months; they clean off discontinued product, we review sales figures and take off frames that aren't selling and replace with new product.

Reps will always try to increase their board-space, but 100 slots means 100 slots. The good reps I work with know this and are ok with it. After all, if their product is selling well, they're making money.

[Bill West]

So...what's your definition of 'Board Management'?

"Something for people who do not know how to buy"! :cheers:

[Snitgirl]

How often does the rep from this particular company come and see you and also, how often do you sell a frame from this company?

Rep = every 3 weeks????
Frames sold = 3 times per day????

[HarryChiling]

100 frames and a spin tower. I would kick the first person who said something about that deal in their @ss. It sounds like they don't appreciate a great deal and maybe you need to just slowly sell down their product and replace them with a rep that will respect the boundaries you set.

Board management is the job of the store manager and if you are placing those responsibilities on one of your reps then you are shirking your responsibility and of course they are going to take advantage of it. I have seen sneaky reps try and replace the current stock by slowly replaceing with higher priced stock, I have seen them slowly increase their space 1 or 2 frames at a time. Just manage the board yourself and you end up with less worries.

[cocoisland58]

I have two reps on "board management". The difference I see is that you re-order frames as you sell them where as I do not. I have slat board so I don't have any empty spaces showing. When the reps stop in about every three to four months they pull any stagnant product and what they order to replace it is not always what was sold but many times new product that is selling well in the area. They also do not mind if I pull a few down that I just do not care for. This way they are getting credit for the frames that are ordered and they don't if you re-order what you sell and they only do exchanges. I wouldn't be happy about that either if I were them. That is why these reps do not have appointments with me, they come by when they are in the area. It's never a big order but they get credit for it anyway and we all have to put food on the table.

[Chris Ryser]

How often does the rep from this particular company come and see you and also, how often do you sell a frame from this company?

Board Management is the fancy word for taking on frames on consignment. This translates the frame distributing company lends you thousands of dollars which you repay only as you sell the frames.

The reps take back the frames you don't want anymore for full credit and the most probably throw them in the garbage if the cant sell them as a job lot for cheap.

The sales reps work on commission usually on two different commissions, one higher one for direct sales and one smaller one for repeat orders. There could even be a smallest one for taking care of the opticians board.

So actually the optician or optometrist with such arrangements borrow money from their frame suppliers.

And if you actually believe that the good guy, your friendly frame supplier is a benevolent organization and an institution to support the optical retail world..............you were never so dead wrong and still believe that an optical Santa exists.

You are paying every cent and plenty more than the arrangement is worth. The revolving tower with a hundred slots is worth a few hundred bucks and you are paying for its value and then for renting it , and you don't even know it.

Every frame you have in consignment from the supplier is charged 2 to 3 times its value to cover the cost of the arrangement, to take back the non wanted frames, to pay for the no postage charges, to pay for the time of the rep to manage or pay his commissions.

If you would play it smart like Bill West says or Johns, and probably thousands of others that don't post on the Optiboard but look in over your shoulders and "just shudder" when they read how you guy's think you are smart by taking merchandise on loan, while you are actually get screwed royally by overpaying heavily. Do I make sense or not ?

Next time a rep comes in...............pop the question..........

" What is the deal if I buy frames I choose outright, I will pay for them, I will not return them unless they are defective, you charge me the transport, it is a straight forward business deal and I want the best pricing possible."

If you do not get a totally different pricing throw the rep out because at that time he or his company is not on the ball. :finger:

[Johns]

So...what's your definition of 'Board Management'?

It means that someone outside of your business is controlling you checkbook.

[drk]

Groovy thread!

Chris, is it a fact that reps get less commission on simple restocking phone orders placed by the accounts? I didn't know that...

Can anyone here devise a simple risk/reward hierarchy and a "value added frame buying consultation" for frame buying?

For example:
Low risk, low reward: dealing with a major vendor and doing exchanges (quasi-consignment), but paying a premium leading to lower profit margins. Frame consultant included in package.

vs.

High risk, high reward: negotiating great volume deals with smaller companies on your own terms and selling for maximum profit margin (the so-called "art of power buying")

Simply put, not everyone here is a Johns or Bill West or Ryser or Weiss. Some are neophystic novices of negotiation :p . Some are designated delegates of doctors. :) Some are apathetic abrogators of artistic aptitude.

In other words, wouldn't it be better for some to protect their downsides?

[Audiyoda]

Board Management is the fancy word for taking on frames on consignment. This translates the frame distributing company lends you thousands of dollars which you repay only as you sell the frames.

Might have to disagree here - we bought and paid for these frames.

To answer my own question - board management to me is I assign a line X amount of spaces - I expect the rep to be in our office every three to four months and sit down with me and go over sales figures. Remove stagnant product with fresh product. I also want input on what is removed and what it brought in. Reality is, in my mind I've assigned reps/lines X amount of space on our boards whether I've told them or not - I don't go beyond those numbers at all.

I normally wouldn't do board management since as Johns put it - they are in some ways at least, controlling our checkbook. But this is their spin tower so their product is not really taking away from our board space because otherwise I wouldn't have said spin tower.

I suppose I'm complaining again - my wife says I really need to get one of these and live with life. But I guess all I ask is that people do their job - in this case the rep has a job that I agreed to with their company. I don't want or expect my reps to get snitty with me when I won't go beyond that (or any) agreement).

[Johns]

But this is their spin tower so their product is not really taking away from our board space because otherwise I wouldn't have said spin tower.

You really don't want the tower. That tower is nothing more than a live-in rep that is trying to convince your customers to not buy the frames you've already paid for, but to buy theirs, so they can charge you more than they're worth.

You already have in investment hanging on your walls!! That investment won't pay dividends unless you sell it!!! Sell it, and not some consignment that you have no vested interest in.

[Chris Ryser]

Groovy thread!

Chris, is it a fact that reps get less commission on simple restocking phone orders placed by the accounts? I didn't know that...

In other words, wouldn't it be better for some to protect their downsides?

drk..................I used to have a frame distributing company for 20 years when the Germans, French and Italians still made the frames in their own country. I used to be the boss and also the guy in the confession booth for 9 sales people.

During that part of my life the reps used to make a small drawing per week against commission. For direct sales my reps made 20% and for repeat orders they got 10%. However they all paid their own expenses amd cars.

Our return rate..........frames sent back for credit.............was 7% and 10 years later was up to 12% of our sales. And there where no consignments at the time. Of course the commission paid on these returns were charged back to the reps who did not like that very much. I would believe that this is probably still the case today.

I hear that in todays world the return rate is manyfold of what it was then, so don't kick the reps when tey are unhappy for having to take back stock and send you other models in the same value.................because they have not made one cent on the deal, but spent money on hotel and restaurant.

In today's age where frames have become much cheaper to produc than 15 years ago but they sell for a lot more than they did then on every level, which means the margins are immensely higher than they used to be.

It for sure will take no big bargaining to get good prices for a straight forward purchase.

[Audiyoda]

You really don't want the tower. That tower is nothing more than a live-in rep that is trying to convince your customers to not buy the frames you've already paid for, but to buy theirs, so they can charge you more than they're worth.

You already have in investment hanging on your walls!! That investment won't pay dividends unless you sell it!!! Sell it, and not some consignment that you have no vested interest in.

This isn't a consignment deal - we've had this product line in the office before and it sold very well. It was dropped because the doctor switched to a different buying group and the optician here at the time (my predecessor) didn't know enough to negotiate a direct deal with the company. So this is product that our patient base has purchased in the past and when I came on they asked about - so I had every intention of buying their product (or product like it) anyway.

[Angels Rock]

This isn't a consignment deal - we've had this product line in the office before and it sold very well. It was dropped because the doctor switched to a different buying group and the optician here at the time (my predecessor) didn't know enough to negotiate a direct deal with the company. So this is product that our patient base has purchased in the past and when I came on they asked about - so I had every intention of buying their product (or product like it) anyway.

Hi Yoda,

Let me try to answer your question since I read every response on this thread and I can't imagine you learned a single thing from them.

I believe you are correct in the way you described how board management should work in your particular situation. Since you bought the frames outright, not consignment, and you re-order everything that sold the only job the rep should have is to come in and swap out styles that aren't selling for hopefully styles that will sell.

Example: I sell you 100 frames and since you are re-ordering there is no need to come back in unless there is a new release. At that point I would come in to find 100 frames still on the board. I would take the frames out that did not move or are being phased out and replace them with the new. If I take out 10 I put in 10. The idea is to put the ones that will get re-ordered the most.

If you have reps that are complaining about this they probably don't have a clue what they are doing or aren't making any money so all they want are big orders.

Now this may not be the way some on this board would work their practice but that was not you question. Your question was how should board management work.

And no, reps do not get a less commission for reorders than they do for initial orders. That may be how it worked back in the day but it is not the case today. The exception may be some smaller lines that are just trying to get market penetration.

Hope it helps.

[Barry Santini]

Reps will always try to increase their board-space, but 100 slots means 100 slots. The good reps I work with know this and are ok with it. After all, if their product is selling well, they're making money.

If anyone is still thinking of their frame displays as "boards or slots", therein lies the problem.

Brands and collections that convey *fashion* (not function or gender) are the only way to go.

My two cents...what's yours?

Barry

[Angels Rock]

If anyone is still thinking of their frame displays as "boards or slots", therein lies the problem.

Brands and collections that convey *fashion* (not function or gender) are the only way to go.

My two cents...what's yours?

Barry

I don't know if thats the only way to go but if you have those fashion lines than I definetly agree with you. Face it not everybody is looking for the so called fashion lines or brands. If they were we wouldn't have WalMart or K Mart. The trend does seem to be going in that direction though, at least according to the numbers.

[FOREYES21]

If anyone is still thinking of their frame displays as "boards or slots", therein lies the problem.

Brands and collections that convey *fashion* (not function or gender) are the only way to go.

My two cents...what's yours?

Barry

I agree. I took over an existing optical in an ophthalmology practice 2 years ago. The average retail price of the frames was around $120 and the styles catered mostly to older patients. I took down all of the lower end frames and replaced them with upscale collections like Gucci, Prada, Coach, Cazal etc. It was a big initial investment in inventory but it has really paid off. Sales are way up and we are getting a lot of word-of-mouth referrals. I still keep the cheap stuff in trays underneath and bring them out when needed. It's surprising how many of those older patients are buying more fashionable frames now. Our optical is gaining a reputation as being upscale and fashion oriented and that has been great for business.

[Fezz]

It was a big initial investment in inventory but it has really paid off. Sales are way up and we are getting a lot of word-of-mouth referrals business.

Having sales go way up makes sense with the approach you have taken. Your cost of goods has also gone way up! What has happened to the NET? How much more money is wrapped up in inventory? Inventory costs can kill growth in a practice.

[drk]

Fezz,
Now that you've broached the "business" end of things, what do you think of this dynamic?

Frame inventory is really a capital injection, not an expense, from an accounting standpoint.

In a inventory expansion scenario, the capital TECHNICALLY comes in the form of an equity injection from the owner. (Yes, the vendor may in reality be paid out of the general account, but on a balance sheet it's an owner's equity investment.)

Then, if the frames are sold "off the board", the optical is technically borrowing from the owner's equity and will need to repay, by replacing the inventory.

If the frames are NOT sold off the board, but are only used as samples, and everything is drop shipped, THEN the frame orders become true expenses and COGS.


So, to your good point, inventory expansion like that which was mentioned should NOT be financed, in a pure sense, by the businesses operating account, but instead from an owner's equity account. From an accounting standpoint, when the inventory goes up too high, as you posit, the owner's assets go way high, but his liabilities go up as well.

I think you're mainly talking about choking off cash flow in the opticals operating budget by the owner taking "loans" from the general operating account.

Of course, you're correct, but that's a different perspective, no?

[Fezz]

DRK-

Great post. Valid points! I am digging your perspective.You obviously "get it". But, how many opticals are run using owner's equity vs. general account? It is amazing how COG, inventory and even office consumables are mislabeled or miss-catagorized maybe?


Bravo!


:cheers: :cheers: :cheers: :cheers: :cheers: :cheers:

[Barry Santini]

Face it not everybody is looking for the so called fashion lines or brands. If they were we wouldn't have WalMart or K Mart.

The only people *not* looking for brands or eyewear fashion are "older than their years". The *appliance* approach to eyewear is, I think, so last millenium.

Barry

[HarryChiling]

[QUOTE
=drk]In a inventory expansion scenario, the capital TECHNICALLY comes in the form of an equity injection from the owner. (Yes, the vendor may in reality be paid out of the general account, but on a balance sheet it's an owner's equity investment.)

Then, if the frames are sold "off the board", the optical is technically borrowing from the owner's equity and will need to repay, by replacing the inventory.

If the frames are NOT sold off the board, but are only used as samples, and everything is drop shipped, THEN the frame orders become true expenses and COGS.
[/QUOTE]

I hate it when you doctors actually say something so smart. :D

[drk]

My tagline says it all.

[FOREYES21]

Having sales go way up makes sense with the approach you have taken. Your cost of goods has also gone way up! What has happened to the NET? How much more money is wrapped up in inventory? Inventory costs can kill growth in a practice.

Net is also up considerably. In addition to our average sale almost doubling, our # of sales has gone up 50%. Our optical is in the waiting room of an ophthalmology practice and I'm assuming that many of our patients were taking their rxs elsewhere because they didn't like our selection.

[Fezz]

I can understand why your average sale may be up 50%(because your frame prices have doubled or tripled!). If your number of actual sales is up 50%....Bravo! Either the business REALLY SUCKED before you came on board, or you are so unbelievably fantastic at what you are doing there that all of us here should hire you! I'll assume the second! Good job...keep it up........it may be your best defense against losing your job!!!



:cheers::cheers::cheers::cheers::cheers::cheers::cheers::che ers: