Smart Pesticide Purchasing

The process is not quite as simple when it comes to purchasing pesticide or fertilizer products, however. Instead of buying one mower, contractors are purchasing these products by the pallet, truckload or ton.

And just because an order may be for an entire season’s worth of pesticides, that doesn’t mean all of the product is delivered to the contractor at the same time.

Obviously, these options translate into a number of decisions for contractors, but those decisions can only be made after careful consideration of a number of variables.

ORDERING EARLY. The first decision contractors need to make is when to purchase pesticides, and there really isn’t one standard answer for all companies to subscribe to.

“We outline our program in the beginning of the growing season and project how much product we’ll need,” explained Ray Iacabucci, director of horticultural services, Environmental Design Group, Atlanta, Ga. “Then we call four or five different vendors or visit them at trade shows to see what products they would be able to formulate for us and what the costs would be.”

This wasn’t always the case for Environmental Design Group, however.

“We used to buy product for two- or four-week blocks of time,” Iacabucci recalled. “But we wanted to reduce the paperwork associated with the invoices and purchase orders, and we now have more resources for 60- to 90-day net pricing options.”

Weather conditions can certainly influence timing pesticide purchases as well.

“We put down a preemergent-coated fertilizer in the spring that is very weather-related, but we never know for sure when we’re going to be making first applications because of the weather,” noted Dave Sandford, special projects manager, Showcase Landscape, Minneapolis, Minn. “As a result, we buy our pesticides in bulk over the winter and we have enough storage facility to hold as much as two truckloads.

“If you buy product on an as-needed basis, that can make it difficult to order custom blends or you might run short on something popular, like preemergent-coated fertilizer when it’s in high demand in the spring,” Sandford continued.

Grass Roots Inc., Lenexa, Kan., makes two preemergent applications each spring.

“We make the final decision on what to buy in November or December of each year and place our order in January,” noted Lance Schelhammer, president of the company. “Then we’ll start receiving deliveries of the product in the first part of March.”

“We assess our agronomic program at the end of each season and examine the success of the products we used,” added John Carson, division manager of the Ehrlich Green Team, J.C. Ehrlich Co., Reading, Pa. “Then we’ll request proposals from a number of vendors who we’ve worked with in the past or who were highly recommended to us.”

Other contractors are hesitant to commit to one product for a season. “Some vendors offer to warehouse our product if we order the entire allotment at one time, but I’ve been leery of getting locked in to one product or one vendor like that,” Iacabucci related. “The vendor might start expecting all of our business from that point on and I don’t want to be locked in to the product in case some extra product comes on the market at a reduced price from somewhere else.”

Iacabucci also pointed out one other potential problem with ordering large quantities of a product, particularly if it’s a new product. “If we’re planning to use a different nitrogen carrier than normal, we may have to order an entire truckload of the product,” he explained. “Then, we’re pretty much strapped into using it no matter how good or bad it is.”

Some contractors alter their purchasing for different products, however. “We order the entire season’s worth of turf products in the winter, but we’ll limit our ornamental purchases to what we need for one round or some particular period of time, such as a month, because of storage constraints,” noted Iacabucci.

One obvious key is to keep an eye on controlling any purchases that must be made later in the season.

“We really try to minimize our inventory on hand as we get to the end of the year,” Iacabucci noted. “We just don’t want to go into the winter months with cash tied up in products that aren’t being used.”

Making an accurate estimate of how much product to buy can be another challenge for contractors.

“We always try to make conservative projections of quantities and build in clauses in our purchase agreement that allow us to buy more product if need be,” Carson remarked. “And sometimes that means substituting standard blends in place of our own blends.”

“We’re always buying the insecticides, fungicides and some herbicides throughout the year as complements to our bulk order in the winter,” noted Schelhammer. “There’s just no way of accurately predicting some of the insect, fungus or weed outbreaks that will occur.”

For most of these contractors purchasing any significant quantity of product, the most popular approach is to have the vendor warehouse the order and deliver it in smaller increments as need be.

“We leave the vendor with as much product as possible,” asserted Carson. “Warehouse space costs us $6 to $8 a square foot, so we learned how to make do with smaller warehouses and more frequent deliveries.”

“It’s crazy to pay for warehouse space,” agreed Schelhammer. “Of course, it’s a different story if your supplier is 30 miles away.”

NO COUPONS NECESSARY. The business term for it is “economy of scale,” and it can apply to any organization managing its business properly, big or small. But discounts for large orders aren’t all that’s available to contractors.

Ordering an entire season’s worth of product early like this can offer a couple of different benefits to contractors, and Carson pointed out that there are advantages for companies of all sizes to enjoy.

“Making purchasing decisions round-by-round leaves the contractor at the mercy of the market and buying retail,” related Carson. “But the vendors are making their projections for next year in the fall and buying their bulk product before they talk to any contractors.

“Any contractor that has good record keeping and knows what his or her needs will be, based on the company’s growth projections, can take advantage of early order discounting,” Carson continued. “In addition, contractors with good cash flow can take advantage of early pay discounts because suppliers are eager to lock business in and boost their own cash flow.”

“Buying in bulk probably saves us between $1 and $1.50 per bag of product,” agreed Sandford.

Observant companies may find dollar saving opportunities throughout the season as well.

“If a company is looking to lower its product expenses, it needs to be on the lookout for equivalent products that perform well but are offered under a different or more limited label,” added Carson.

It’s not unheard of for a number of companies in the same geographic area to form a buying club in order to increase the amount of product they purchase to gain greater cost savings.