To build or not to build?
Award dealers have a choice when it comes to selling traditional awards such as trophies and plaques. On the one hand, you can order preassembled, ready-made awards directly from an industry supplier and all you have to do is add the engraving. Or you can stock your business with a variety of award components and assemble the awards in-house on an as-needed basis.
As with any business decision, there are pros and cons to each approach. With fully assembled awards, you may pay a little more but, in turn, you get a salable, well-designed product right out of the box. Molded plastic resin awards, for example, have become increasingly popular in recent years and, according to some retailers, are replacing component parts due to their detail, weight and overall high-quality look. With assembled awards, you don’t need any special design talent to produce a quality product, as many manufacturers have professional designers on staff. And it’s simple; you usually only need to add engraving and deliver the finished award to the customer.
Years ago, every award dealer purchased assembled awards. It was in the 1960s and 1970s that “knock-down” trophies and awards came on the scene and dealers could purchase components and assemble the awards themselves.
“Way back when we started, assembled awards were about the only thing you could do,” explains Michael Montecalvo, owner of Lamont Awards & Apparel, Spencerport, NY. “Everyone was prestocking and you would buy four, five, six, seven, eight, nine, ten and eleven inch trophies already put together and the only thing you had to do was put the figure on.”
When components hit the industry, Lamont jumped on the bandwagon and started cutting metal trophy column extrusions in-house and began stocking basic parts to build the awards. “Part of our early success was because we did go with the components back in the 70s. No one else in Rochester was doing component awards at the time,” Montecalvo says.
For many years, a lot of dealers have opted to purchase components, such as bases, columns, caps, trophy figures, rods and ferrules, and then assemble the awards in-house. The component approach does add some complexity to the business. For one, it requires inventory which ties up some cash, not to mention space to store the inventory. There is also the added issue of labor; however, many dealers claim this approach actually saves money, especially if they are able to buy parts in bulk and receive case discounts. In addition, you typically have everything you need on-hand to fill award orders, and it opens up the opportunity to be creative and unique when it comes to award design.
Which approach is best? That’s not a simple question because a variety of factors come into play. What’s mostly taking place in today’s marketplace is a combined approach where dealers are buying mostly finished goods in certain situations and using in-house component-assembled awards for others.
In these increasingly tight economic times, what should you be doing in terms of increasing or decreasing your use of components? EJ sampled some experienced award dealers to find out how they are dealing with the assembled vs. components issue and the major factors that can influence your decision.
“It’s entirely customer driven,” says Charles Moss, owner of K2 Trophies & Award, Richmond, VA. “We don’t necessarily direct our customers to components. In this day and age it’s all about what the customer is requesting.”
No doubt the number one consideration on everyone’s mind when it comes to business decisions is cost. Which approach will involve the lowest cash outlay for the highest profit? Once again, that’s not an easy question to answer as many different factors weigh into the equation. Generally speaking, purchasing components tends to be less expensive than purchasing assembled awards. “I think components are a great way to start. A hundred dollars worth of components is going to go a lot farther than a hundred dollars worth of resins,” says Montecalvo.
| But not always. The types of components you stock will have a bearing on your costs as well. “We’ve pretty much standardized all of our trophy structures so we’re not buying thirty different pieces of marble,” says Montecalvo, but adds this brings up another concern. “Most of the dealers that I know have switched from marble to plastic because of shipping costs and because there’s less breakage, but many customers still prefer marble because of the weight. If you’re just starting off, that’s going to be a more expensive way to go.”
Quantity is also going to affect cost. Most dealers agree that for large numbers of traditional awards such as trophies, the component approach tends to be the most cost-effective. For example, if you’re selling 200 youth soccer trophies retailing for $3 each, that job is a good candidate for in-house assembly. However, if you’re selling one $100 plaque to a high-end corporate buyer, that might lean more towards ready-made awards. Similarly, if you are only doing a few trophies every week, an assembled award might be more cost-effective than having to buy and inventory parts that you only use occasionally.
“I say go assembled,” says Rex Tubbs, owner of Engraving Connection, Plymouth, MI. “The reason being is that you realize your profit when you turn inventory into sales. It’s so easy with component parts to have inventory sit for years before you can realize a profit in cash. Many times your profit on an order sits as inventory you never sold.”
Still, there are other factors that can affect whether one approach is more cost-efficient than another. For example, Montecalvo points out that broken case pricing for resins has been rising significantly during the last couple of years, something that some smaller dealers may have trouble with when selling small quantities of assembled awards. Last year, Lamont Awards & Apparel did more business in resins than in component awards. Because of his business’s buying level, Montecalvo is able to pick and choose the types of resins to stock and then purchase the awards by the case at a reasonable price. But if a business needs to order two or three resin pieces, the price increases significantly, which is one of the key reasons Monetcalvo continues to keep components on hand. “I think some of the smaller dealers are going to have a lot of trouble with the broken case pricing. The resins are gorgeous but the pricing is becoming a problem now,” he says.
To some extent, the types of awards you sell and the types of customers you sell to can impact whether you choose to go with assembled vs. component awards. Mike Larson, owner of Northwest Engraving Service, Lewiston, ID, sells large quantities of sports trophies and, for his particular business model, feels that component awards are the best approach. “We are right in the middle of hockey season now and for that type of work, we find that component awards work better. You’ve got a box full of bases, a closet full of columns and a drawer full of hockey figures. This is also a big baseball town. Around May/June, we are doing hundreds and hundreds of baseball trophies and each coach wants something that differs from last year, so we tend to keep a variety of columns and a variety of figures stocked,” Larson says.
If you don’t have that many customers or you are a small, start-up business, assembled awards are one way to keep down your overhead. “You wouldn’t have to order one hundred rods or you wouldn’t have to order the figures and bases by the case. All you have to do is slap on a plate, price it up as much as you want and then it’s done,” Larson explains. “But for a business that is going to be doing 12 hockey teams a year or 12 baseball teams a week, it’s not a cost-effective solution. Everybody wants something different and you get a substantially lower price ordering by the case, especially around baseball season. Ordering that way means I’m not constantly ordering from my supplier and incurring shipping charges.”
| Montecalvo says Lamont Awards also has a large customer base of recreation and sports leagues and the bulk of that work is made up of component awards due to cost-efficiency and the fact that it’s easier to give the customer what they want. “We have a lot of leagues and a lot of soccer tournaments and some of those customers like the big trophies like the 20" and 24" sizes. That’s almost impossible to find in a resin at a decent price. Pretty much the only way to get the height out of the trophy is to go with the traditional column. We also stock columns in all of the school colors for our area so we always have the right size in stock,” Montecalvo says. His corporate clients, on the other hand, usually purchase assembled acrylic awards or plaques.
Larson adds that the flexibility of component awards is another plus when dealing with these types of customers. “Let’s say a coach comes in and he wants 13 awards, so you order 13 assembled trophies. Well, 9 times out of 10 he’s either going to come back and say he only wants 12 or he wants 14. You have to order another completely assembled award because you don’t have all the parts. If you order a couple extra in the beginning and he doesn’t need them, then they are kicking around your shop for a couple of decades and you’ve lost money on it,” Larson says.
What may be tricky for some award dealers is determining the type and quantity of award components to stock. Montecalvo says that they are currently looking at ways to reduce some of the inventory at Lamont Awards & Apparel because they have large quantities of too many different types of components.
Interestingly, the physical aspect of stocking component parts is not an issue for most award dealers. In fact, it’s quite the contrary. “For us it’s not a big issue because we have time and space. If you are space constrained, going to components can actually help versus trying to inventory resins and other types of assembled awards. You can have a lot of variety with very few parts,” says K2 Awards’ Charles Moss.
Larson agrees that inventory issues generally arise not when stocking components but rather if you try to stock preassembled awards. “Often they are not boxed and so they sit on the shelf and collect dust. When you are ordering individual parts, they all come individually shrink wrapped and you throw them all in a big drawer or bin to be used when you need them or you can store them for next year if you don’t use them all,” he says.
Time & Labor
While the material costs for component awards tend to be less, the labor cost is higher, requiring an assembly area and employees to do the actual assembly. Rex Tubbs points out that supplier turnaround is better today than in the past, which he sees as an advantage for assembled awards. “The real reason for assembled awards is we have so many suppliers that can have the product to us the next day and ready for engraving. In the old days, suppliers were maybe a week away and we had to inventory many of the products in our stores to make the customer deadlines. We needed components to make a wide range of awards from limited supplies on short notice,” says Tubbs.
Of course, rush orders incur additional shipping costs, a reason why many award dealers prefer the component approach. “When we have rush orders, we don’t have to try to get something in. Freight costs are rising big-time now for next-day, second-day, even three-day delivery. We don’t have to deal with that. We can get right to building it if we have to,” says Montecalvo.
Montecalvo says he also stocks assembled awards for situations when the workload outweighs the time they have available, particularly when customers need rush orders during their busy times. “One of the first questions we ask is when is it due? If it’s going to be a short lead time then we will try to push them toward a resin or something that’s already assembled because we keep assembled trophies in the back just in case. This happens mostly in the summertime when we get our big rushes and a customer forgets to order an award. Instead of turning them away, we sell them something that is already assembled. Otherwise, if they have three or four weeks, then we will give them the full choice of what they want to do,” explains Montecalvo.
Experienced award dealers all point out that time is extremely important in the assembled vs. components debate, but if you have the time and your labor costs are low, assembling awards in-house can be very viable. “Let’s say that it might take 20 to 30 seconds to assemble an award without a column. For my part-time help, I pay them $8.75 an hour, so labor is a minimal issue for me. If you break it down per piece, it takes almost the same amount to assemble an award as it does to unbox the award, take the wrapping off of it and then put a plate on it,” says Mike Larson.
Although labor is more of an issue on smaller orders and building from components certainly takes more time vs. an assembled award, like Larson, Montecalvo points out the time involved in removing the packaging from an assembled award and adhering an engraved plate. “That’s gotten tremendously better. Now they’re making resins that you can plate right in the box, which is a great idea,” he says. “Unfortunately, we still have to take the trophies out of that packaging just to put our sticker on the bottom.”
During their busy times when they have a large quantity of trophy orders, Montecalvo says they set up an assembly line of employees to speed the building process. He’s also found other shortcuts, e.g. a lot of the distributors now have precut columns that, according to Montecalvo, save a tremendous amount of time vs. cutting columns in-house.
Award dealers agree that the component approach can open up a world of opportunities in terms of creativity. “I think the biggest advantage of components is that you can build something unique with relatively few additional SKUs and minimal cost and space,” says Charles Moss.
Lori Champagne, owner of A Action Awards/Champagne Recognition, Carlsbad, CA, primarily uses component parts as a way to create new, unique and unusual awards, something her business is well-known for. “What award dealers should remember about component parts is not to limit themselves to what they think it’s used for. Expand it out. Think about other things that will look nice with it,” says Champagne. “We take resin pieces, slice off the bottoms and use them as plaque mounts or we’ll clip off the tab on the top of a medal holder and add that to a plaque. We’ll look for things that are on closeout and just buy a couple of them and then see what we can do with them.”
For example, Champagne said they once put a firefighter plaque mount on a mahogany box for a retirement award. “Many times component suppliers will send us samples and so we end up with tons of onesie and twosie merchandise, and that actually comes in real handy when we’re doing the onesie and twosie types of trophies. A lot of times we’ll take the component parts and repaint them or do something kind of cool and funky to them,” she says.
Champagne also advises that award components don’t necessarily have to be traditional award components. She recently found glass ladybugs at a rock and gem show that she used on a perpetual plaque for a “ladybug” golf tournament. “You don’t have to stick to your own industry when looking for component parts,” Champagne says. “Go find cool, funky things elsewhere.”
The general consensus? Most veteran award dealers recommend a dual approach of assembling awards and offering preassembled awards, at least on some level.
“I think you have to offer both,” says Montecalvo. “If you’re new and starting off, I think you have to get into the components to some degree or other because it gives you more
Charles Moss agrees that a dual approach is probably the best approach, particularly for new businesses. “If you’re just starting off, you don’t want to spend all of your time building a lot of trophies for one customer at the expense of everybody else. But I would say absolutely, have components as part of the business for the obvious benefit of being able to offer a large variety with very few additional parts. Also, a component-built trophy has a higher-percent and dollar margin than a resin or a prebuilt trophy, which is particularly beneficial for someone just entering the business.”
To build or not to build? Hopefully this expert advice can help you decide where components and assembled awards fit into your business.
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