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REVIEW
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VOL. LXXV1II. No. 25 Published Every Saturday. Edward Lyman Bill, Inc., 383 Madison Ave., New York, N.Y. Jane 21, 1924
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The Evils of Hand-to-Mouth Buying
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ANUFACTURERS and wholesalers of musical instruments have for some time past complained
more or less earnestly regarding the tendency of dealers to do their buying on a hand-to-mouth
basis, keeping wareroom stocks cut to a minimum and buying only enough to rill gaps in regular
stocks without providing for a surplus.
In certain cases it has been made to appear that this condition applies only to special classes of music
business. On the contrary, the growing practice of hand-to-mouth buying has found a place in practically
every line of business, from food and clothing right down or up the line. There is a definite and very notice-
able inclination among retailers to sail close to the wind and let the wholesalers, and particularly the manu-
facturers, hold the bag in the matter of carrying reserve stocks.
There are those who pretend to see in this new close buying" tendency results calculated to prove of
benefit to industry. They declare their belief in the fact that, by keeping stocks down to a minimum, credit
risks and the dangers of overbuying and overstocking on the part of the retailer are curtailed and in some
cases eliminated.
The main point is that the practice of hand-to-mouth buying can be carried to a point where it will
prove a real menace to industry in many ways. In the first place, after a certain point, the practice proves
unfair to the manufacturer and, as a result, reacts directly against the best interests of the retailer by making-
it impossible to gauge production requirements in advance.
With fixed advance orders on hand, the manufacturer is in a position to organize his factory force on
a basis that will permit operating smoothly and on full time for the greater part of the year. Thus this
obviates the necessity of disorganizing his force through enforced periods of inaction, and of then building
up a new staff in a large measure when the plant resumes operations. This juggling with factory organiza-
tions in the music trade, as well as in any other line of business, is a very expensive operation and adds ma-
terially to production costs, which must be passed on to the dealer and by him to the public.
Economists throughout the country have taken cognizance of this growing practice and have taken
occasion to point out to retail interests the fact that talk of price readjustments theoretically to a pre-war
basis can amount to nothing if retailers buy only to meet the needs of the moment and do not carry sufficient
stocks to spur them on to greater selling efforts and quicker turnover.
In short, it is only through stimulated retail business brought about by one method or another, and
certainly not by a curtailment of buying, that production can be increased to a point which will make for
lower manufacturing costs.
Hand-to-mouth buying, whether it be of pianos or other goods, means increased sales expense for the
manufacturer or wholesaler, for his traveling men must keep on the road almost constantly to maintain con-
tact with retailers and capture such orders as are in the offing, small though they may be.
In the music trade, and particularly in the piano division, it is the practice to buy only to meet im-
mediate requirements and hesitancy regarding placing of orders for future delivery entails an unusually heavy
burden on the manufacturer who, in an effort to keep his organization intact and his plant working, seeks to
place in his reserve stock instruments not required by dealers. With the high unit value of the average piano
two or three hundred instruments left on the manufacturer's floors mean tying up many thousands of dollars
of valuable capital.
The Review some time ago published a survey indicating that 75 per cent of all pianos used by retailers
during the year were bought within a period of three months, indicating that the remaining 25 per cent was
spread over nine months. It is this sort of ordering that means waste in manufacturing and keeps production
costs at high level.