Multi-Level Marketing Realities – Part 8
I finished up part 7 saying that a couple of things happened during the summer of 1998: The MLM company disallowed sponsoring indefinitely and they ran completely out of the product. I had a spreadsheet that told me how much to order and when based on how much we were selling per day, the days of lead time to get an order, the variations in the number of days it would take to receive an order, the amount of safety stock we wanted, the cost of placing an order, and the customer service percentage we were shooting for. So I would place an order for the EOQ quantity (economic order quantity) when our calculated safety stock reached a certain point and, in theory, we would receive product from the MLM company before we ran out.
I think they must have been in over their head because we would receive our orders 4 – 5 days after we ordered sometimes. Other times I would have to call after a week to see where our order was. Worse yet, I would have to call 2 or 3 times to make sure our order was on it’s way and get it in about 3 weeks. This all pushed our safety stock way up since we never knew how long it would take.
Sometime in June I was having an issue getting an order and I would call and call, and it still hadn’t been shipped yet. They weren’t really telling me much beyond that. Then I heard it through the grapevine that everyone was having a hard time getting product. Wayne Farmer must have been signed up by then as a distributor because he flew out to San Diego to see what was going on. He had also heard that distributors were able to get product if they walked up to the MLM company’s will call window. I asked him to get a master case for us if he was able to get product and I think he actually did.
After the fact we heard that the company had run dry of product because they rejected a new manufacturer’s shipment, as it wasn’t up to their quality standards. It had to be a certain blend and when they tested it there was too much of one thing and not enough of another. So they looked for another manufacturer and in the mean time, they ran themselves completely out of their dietary supplement, the one that was the most popular dietary supplement in the 1990’s.
Back in Elgin, Illinois at our little townhouse, the orders did not stop rolling in, as in tsunami if you recall part 7. When we ran completely out of product, we changed our autoresponder email to say that we were out of product but the customer order would be backordered unless the customer replied to say they wanted to cancel their order. We did the same for every other order type. We stacked up the orders in the order they were received and waited, and waited, and waited for product to roll in. It never came. I had orders for 11 or 12 master cases as I became more concerned about the MLM company’s performance. We did not want to run out ever again if possible, so our safety stock went up, we had backordered orders, and I just kept ordering more.
It all came in over 2 or 3 days and we worked our tails off to get the orders turned around and out to our customers. Nobody had cancelled or complained, and everyone paid. Most of our orders by now were paid with credit card so we got the money fairly quick. While we were filling orders, our house was a total wreck and we had tons for the garbage man that week.
This is getting a bit long so I guess I will talk about the MLM company deciding not to take distributor applications next time.