Wholesale Distribution

K&M Tire Thrives in a Year of Disruption for Tire Distribution

Posted on January 29, 2019

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, left, greets K&M Tire customers as they enter the trade show during the tire distributor's 2019 dealer meeting in Dallas.
Cheryl Gossard, left, greets K&M Tire customers as they enter the trade show during the tire distributor's 2019 dealer meeting in Dallas.
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

Ken Lanhals, left, CEO of K&M Tire, congratulates Dave Sylvester of Sylvester Truck & Tire Service, the Mr Tire/Big 3 Tire Commercial Tire Dealer of the Year.
Ken Lanhals, left, CEO of K&M Tire, congratulates Dave Sylvester of Sylvester Truck & Tire Service, the Mr Tire/Big 3 Tire Commercial Tire Dealer of the Year.
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.

Keith Vinje, district sales manager for Hennessy Industries, talks to Larry Schrock of Schrock Automotive in Thomas, Okla., about the company's Coats line of equipment. Schrock was in the market for heavy-duty equipment.
Keith Vinje, district sales manager for Hennessy Industries, talks to Larry Schrock of Schrock Automotive in Thomas, Okla., about the company's Coats line of equipment. Schrock was in the market for heavy-duty equipment.
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.

Related Topics: Cheryl Gossard, dealer meeting, K&M Tire, Ken Langhals, wholesale

Comments ( 2 )
  • Jon West

     | about 3 months ago

    Distributors do not have an excuse when it comes to sales and market disruption. As distributors like to blame internet as the main culprit for disruption; most independent tire shops have a limited geographic market area to sell to customers. So in terms of "market disruption" much of this blame is carried by tire our grand tire distributors. What other industry allows for one sole company such a tire distributor to sell to you and to your competitors; and let the retail dealers fight over the profit margins. Who wouldn't like to be in a business where you rent a box truck, drive to 10 different stops with in a 15 mile radius. Rather it’s to kick out tires at the transmission shop who sales 4 sets a year, or our local Sams club. It all comes the same truck. Distributor selling to a garage set up in someone’s backyard for someone side gig, as they are selling to a medium size independent shop having make a decent overhead just to cover the shop keepers insurance is a large source cause of market disruption. A course we could journey this conversation about large distributors selling direct to retail customers at dealer cost but I will save that rant for another post. Another reason distributors have no excuse is they do enjoy greater manufacture protection benefits then retail dealers do. Manufacture programs protect distributors; (By design or not I do not know) As a retail tire dealer, if I wish to be an “authorized dealer” for XYZ brand, I am force to be loyal a distributor to receive credit but the same loyalty is not necessary return by either distributor or manufacture. Rendering the point of being a dealer pointless. Whenever I read and hear how tire distributors are weathering the market distribution I just always shake my head with no empathy. As they stand to benefit the most from any form of market disruption.

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