Hove you ever heord that one before? Were you encouraged by your foctory rep to lood upf Were you told 1h01 o “great new program” was just around the comeri Did you believe whot you were told? Worse yet, did you order true.ks bosed on this premise?
If your answer is yes to any of the above questions, don’t feel alone. You and oboul 10,000 other new vehicle dealers all bought into the lie and ore still, to this day, paying the price to learn a lesson. The lesson is obout inventory management.
Every single successful retailer of any product across this great country of ours hos ot leost one thing in common. They all desire to gain market shore on their competitor. They all wont to sell more producis. They oll wont to increose their gross profits ond they all wont to occomplish this with less carrying cost. How do they go obout realizing these noble goals? Precise inventory management.
Every time any item is scanned in ot ony cosh register, a choin of unseen events occurs. Besides pricing each item, totaling the bill and collecting the money from the customer, many equally (if not more important) systems ore set into motion. These systems all relate to what is referred to os “the supply chain management cycle .” Whatever type of system is in place at the store, the system generotes data for management to analyze and answer questions like: How long did we hold the item before sale? How many do we sell in a given period? How mony ore on the shelf ot th is moment? Whal is our return on investment? How long does it toke to get o replacement? How many do I hove on order? Would sales increase if more shelf space was devoted to this item? Am I phasing in more of the quicker tumers and phasing out the slower movers? These are but a few of the questions you need to absolutely know the answers to if you plan to grow your market share. Regard less of what is happening to lhe automobile business todoy, if you ore doing things to grow your market share, you will be much better off than the people who don’t.
Let’s face it: we all know that some investments perform better than others. You hove millions of dollars invested in the hopes of a return. Con you honestly say to yourself that your current methods of tracking each of your investments ore working for you? Does your current process answer the above questions? Are you actively pursuing oll avenues available to you that will increase your market share? Many dealerships today think they have a good inventory management process in place. The truth is, the vast majority really do not hove anything like the true “supply choin monogement cycle” that the “big box”‘ retailers use.
While it is well known that there are many benefits to implementing a doily, vigilant vehicle inventory management system, it is clear that the majority of the dealerships ocross the country still do nota ctuolly use such a system. The current monogement’s intuition seems to be the predominant i1,ve1,to,-y monogement proce-ss in most stores. There is nothing wrong with management intu ition, experience, “gut feel # or the school of hard knocks. These ore all attributes that come with ony personnel decision we make. Every new monoger we hire comes with these attributes. The stores that ore realty exper iencing soles gains and positive grow1h to their bottom line, even in the current economic climate, are doing things differently todoy than they were just a short time ago. We all must face the facts that this business is chonging rapidly. Effecting change can be a difficult task, but if you are not changing the way you hove been doing things, chances are you are not making gains.
As most of you are aware, my passion and my business for the past 10 years is precise vehicle inventory management. For this reason, I have developed a simple-to-use “Revenue Impact Calculator.”