Article

Truck Month Is Coming: The Glut of Inventory

October 2008, Auto Dealer Today - WebXclusive

by Scott Dreisbach - Also by this author

Have you ever heard that one before? Were you encouraged by your factory rep to load up? Were you told that a “great new program” was just around the corner? Did you believe what you were told? Worse yet, did you order trucks based on this premise?

If your answer is yes to any of the above questions, don’t feel alone. You and about 10,000 other new vehicle dealers all bought into the lie and are still, to this day, paying the price to learn a lesson. The lesson is about inventory management.

Every single successful retailer of any product across this great country of ours has at least one thing in common. They all desire to gain market share on their competitor. They all want to sell more products. They all want to increase their gross profits and they all want to accomplish this with less carrying cost.  How do they go about realizing these noble goals? Precise inventory management. 

Every time any item is scanned in at any cash register, a chain 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 are set into motion. These systems all relate to what is referred to as “the supply chain management cycle.”  Whatever type of system is in place at the store, the system generates 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 many are on the shelf at this moment? What is our return on investment? How long does it take to get a replacement? How many do I have on order? Would sales increase if more shelf space was devoted to this item? Am I phasing in more of the quicker turners 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. Regardless of what is happening to the automobile business today, if you are 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 have millions of dollars invested in the hopes of a return. Can you honestly say to yourself that your current methods of tracking each of your investments are working for you? Does you current process answer the above questions? Are you actively pursuing all 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 have anything like the true “supply chain management cycle” that the “big box” retailers use. 

While it is well known that there are many benefits to implementing a daily, vigilant vehicle inventory management system, it is clear that the majority of the dealerships across the country still do not actually use such a system. The current management’s intuition seems to be the predominant inventory management process in most stores. There is nothing wrong with management intuition, experience, “gut feel” or the school of hard knocks. These are all attributes that come with any personnel decision we make. Every new manager we hire comes with these attributes. The stores that are really experiencing sales gains and positive growth to their bottom line, even in the current economic climate, are doing things differently today than they were just a short time ago. We all must face the facts that this business is changing rapidly. Effecting change can be a difficult task, but if you are not changing the way you have 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”.   If you would like to see your actual numbers and how your bottom line can be impacted, drop me an e-mail and I will send you the link to the file.  It will take less than 1 minute to show you exactly where you are and how much money may be on the table for your operation.

Vol 5, Issue 9

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