K&M Tire Thrives in a Year of Disruption for Tire Distribution
With 730 employees working from 28 warehouses to provide tires to customers in 27 states, K&M Tire Inc. recorded a fifth straight year of double-digit growth in 2018. And with more tire brands available, more tires in inventory, and more people on its payroll, K&M expects that growth to continue into its 50th year in business. Cheryl Gossard, president of the company her father Ken Langhals started in 1970, says sales increased 14.5% in 2018. Here’s a partial rundown of how K&M Tire achieved that growth:
- opened distribution centers in Milwaukee, Wis., and Columbus, Ohio,
- added 50 new delivery routes,
- expanded its sales team,
- added sales teams dedicated to farm and commercial tire sales,
- offered three new tire brands: Alliance, GT Radial and Nexen,
- continued the installation of a digital inventory system, and
- increased tire inventory by more than 20%.
And all of that growth came in 2018, the year that will be remembered for its shakeup of tire distribution. Gossard says that disruption “has given us a lot of opportunity.”
Existing customers have relied on K&M more heavily while other tire distributors struggled or made changes, and Gossard says a shakeup in tire sales to new car dealers also contributed to K&M’s growth last year. (Dealer Tire is no longer supplying tires to Chrysler dealerships.)
Managing more inventory K&M isn’t about to rest in 2019. After installing an inventory management system at four of its warehouses in 2018 (Delphos, Ohio; Grinnell, Iowa; Minneapolis, Minn.; and Grand Rapids, Mich.) the company will add it in two more locations. The system allows K&M to store 20% more tires in its warehouses.
Gossard says it eliminated what had been predictable complaints by K&M staff in Delphos and Minneapolis that by the fourth quarter they needed more room. Those complaints disappeared in 2018.
But it also has helped K&M keep better tabs on its inventory, and thus serve its customers better. In the past when the assigned space for a specific tire in the warehouse was full, tires could easily get lost. They’d still be in the inventory, and a customer would order them, but then the warehouse workers couldn’t find them. Gossard says the inventory management system “has cut those shortages by 75%.”
“(Customers) are able to count on us,” she says, noting it’s common practice for a tire dealer to schedule a consumer’s service appointment for the next day as soon as they confirm the tires are available in the warehouse. “We’re a better supplier.”
K&M’s information technology staff has learned how to do much of the setup of the inventory management system, which has helped the company install and expand the system in additional warehouses. Gossard says for the first installation, at the company’s largest warehouse in its hometown of Delphos, it was close to a $200,000 investment. Building 2 new warehouses
K&M currently leases two locations in South Dakota — in Rapid City and Sioux Falls. But the company is building two new — and much larger — warehouses in those same cities. The tire distributor expects to move into its new Rapid City space on Feb. 5. The Sioux Falls warehouse is expected to open by the first quarter of 2020.
Rapid City will move from a 18,000 square-foot space into a 40,000 square-foot warehouse. Sioux Falls will move from a 40,000 square-foot building into a 150,000 square-foot space.