Track That Inventory

Let's talk about dealer satisfaction. It's grounded in inventory control and availability much like customer satisfaction is about serving up the right vehicle quickly and effortlessly.

It's right up there with working for nothing. Worse, it's working for nothing for two beneficiaries each of whom feel entitled to your efforts, and neither of whom feel the least bit obligated to compensate you further. Of course, we speak of your car customer and of your manufacturer.

With today's computers at our fingertips, there's little need to give in to the inefficiency that creates huge inventory burdens.

If you sell more than 50 new vehicles per month, chances are a middle manager or inventory clerk is ordering your inventory. That person is inclined to stock enough units that everyone — especially the “everyone” who makes commissions based on gross profit and unit sales — is assured of every car that any customer might consider.

Sure, ordering input may come from the dealer. But generally the dealer is involved about as often as the zone manager. If either of them are drawn in, it's because they smell a problem.

If the dealer's involved, it's likely to mean that there's too much inventory. When the zone manager weighs in, you're about to hear that you've ordered too little.

Who's right and how do you defend your position?

This is where the dots and dashes of the digital divide come to play. To solve the inventory puzzle, you need to know what you sell versus what's in stock, incoming and on today's buffet.

Going uphill with the wrong models, the wrong packages or even too much of a good thing, will erode your earnings no matter how you work at it.

Here's what you might start doing today to make next month a bit easier.

On a simple electronic spreadsheet (such as an Excel format), input the sales price, down payment, monthly payment and gross profit of every car you deliver. Sort this by model.

On a separate spreadsheet, track models in stock by the amount they cost you (clean invoice). As you add vehicles to inventory compare the numbers to those on the sales log, noting how many in-stock and pipeline vehicles are ahead of the ones you are considering.

If you do this by month, before you know it you're going to be comparing your allocation against same month's sales from last year as well as the past several months.

It will also become apparent that many cars that sold in the past were incentivised such that the deal on the ones you're about to layer in will be less attractive.

Said another way, the 75 SUVs you sold for $229 per month 90 days ago (with rebates and subventions) are a poor indicator of how many you might sell next month for $365 per month unsupported.

Another interesting data point (easily researched on-line) is the availability of program cars (check out Manheim market reports on-line), as well as the number of stocked new units that are searchable on your manufacturer's dealer links.

Note that when your market is swollen with product, the age-old principle of supply and demand kicks in.

Once manufacturers have sold theirs (to you) they expect you to sell yours (to the public), and they're not interested in you whining about it.

If you measure your inventory, you're likely to be the happiest dealer in town. If you do it digitally, you're likely to do it often and well.

Peter Brandow is a 25-year veteran dealer with stores in Pennsylvania and New Jersey. He is president and CEO of Brandow Companies.