How to Control and Reduce Inventory in Your Most Troublesome Categories
When it comes to inventory, you know only too well how important it is to keep it under control. Inventory is a huge part of any dealership and if it’s not managed well, you can tie up valuable resources and miss key opportunities.
In today’s economy, dealers have to get savvy when it comes to controlling and reducing their inventory. Here are a few ideas to help get you started:
Service Technicians’ Time
Most dealers don’t recognize that their technicians’ time is an inventoried item just like a set of tires or a racing jacket. Your service department should be one of the most, if not the most, profitable areas of your business. This is why it’s so important to use your powersport computer software to manage your techs’ time.
A quality powersport office software package can help you manage every minute of your tech’s day to ensure that they’re constantly working on billable projects and earning your dealership money.
Reducing Inventories in Parts and Whole Goods
One of the best ways you can reduce your inventory is through parts returns.
Your parts department can grow as if it has a life of its own. And if you don’t stay on top of your inventory here, you’ll eventually wind up with boxes full of obsolete parts. These parts are tying up your money, and your space.
Most manufacturers encourage dealers to return at least 10% of their stock every year. They plan on this kind of “take back”. On average, however, manufacturers only see around a 2% return. This is because most dealers don’t take advantage of parts returns.
Make sure your parts manager stays on top of which parts aren’t selling, so they can be returned to the manufacturer to free up cash. This is another area where quality powersport office management software can really save you time and money.
You can also save significantly by reducing the number of lines you carry. You don’t need three after-market companies. If you’re going to handle after-market parts, you don’t have to buy from all three. Pick one and become a partner. This goes for whole goods as well.
You can help keep your inventory down by creating a stocking policy. For instance, when a customer comes in looking for a part some dealers will order one for that customer, and then another for themselves “for next time”. But this mindset is a quick way to inflate your inventory and waste cash you could be spending elsewhere.
Writing out a good stocking policy will help ensure that everyone on your team knows the rules about stocking, and how much should be ordered at a time. This will help save you cash and space in your parts department.
Last Word…
Dealers who know how to effectively manage their inventory will survive and thrive in any economy. By using quality powersport office management software and implementing these strategies you’ll be well on your way to reducing and controlling this vital area of your business.