Issue link: http://read.dmtmag.com/i/636351
www.PowersportsBusiness.com SOLUTIONS Powersports Business • February 15, 2016 • 35 Here we are again, ramp- ing up for the primary selling season in most regions. I know there are regions where the fall season can be the biggie, particularly for strong ATV and UTV dealers. Snowmobile dealers will be putting together programs to clean out remaining inventory in preparation for new model "leaks" over the coming months. Regardless, all of you will be dealing with controlling your parts, clothing and acces- sories inventory. Most of you will be plowing through shipments of preseason orders, trying to get everything stocked and properly dis- played as quickly as possible. Some of you may still be putting together orders for the upcom- ing season. If your market is slowing down for an extended period, you want to get that inventory down quickly. During these seasonal changes, I find many dealers neglecting the various inventory con- trol programs offered by OEs and aftermarket suppliers. These are tools they offer that can help you maximize your ability to quickly reduce or ramp-up the right inventory. In our Parts Management Workshops, we ask the dealer attendees to read the following statements and check boxes by each indicat- ing whether or not they do these things. If they are not doing them, they are opportuni- ties to improve. How about you? Do you take full advantage of your suppliers' inventory control offerings? 1. We budget for, and take advantage of, major preseason purchasing programs. If you are using an open-to-buy program, you will be ahead of this game. Having the cash flow available when needed is critical, so you can take advantage of extended terms and special discounts. This is how the best dealers manage to hold such high margins for PC&A. 2. I stay informed on all PC&A programs from all of our suppliers. This would seem to be obvious. However, it is not an easy task for a multi-line operation. Nonetheless, failing to do this can result in significant issues down the road. One major OE recently improved its P&A programs significantly. It had some great options, but there were critical dates involved. I visited a number of the OE's dealers, and found many of the dealers had no idea that the OE had even changed the programs. That's just sad. This is a requirement for effective parts management. 3. We minimize the number of vendors we use, so we can maximize volume-purchasing discounts and benefits. This is huge. We all have our favorites and want to use supplier "A" for widgets and sup- plier "B" for geegaws because we save 50 cents on them. But, if we can get a more profitable deal overall by leveraging the volume buy, it is worth spending a bit more for some things and buying from one supplier. This can be true when looking at purchasing from OEs, also. You are already obligated to purchase "X" amount of stuff from them, and if you buy deeper rather than using aftermarket sup- pliers, it can be to your benefit. You need to spend the time to investigate the options and the overall results to your bottom line. 4. We require our suppliers' reps to provide our staff with feature-and-benefit sales training for their products and assistance with display- ing and merchandising as well. One way to weed out the suppliers is to require they do things to help you display and sell their products. Assuming you have the right people, the better training your sales staff gets, the more they should be able to sell. 5. We utilize our suppliers' inventory return programs and OE obsolescence pro- grams to reduce our inventory, control obso- lescence and open up budgets. This is where many dealers let their obso- lescence get out of control. If it hasn't turned once in 12 months (or the season), it needs to go away. In my book, if it hasn't turned once in six months (unless it is seasonal), I'm going to start thinking about sending it back. Inventory ties up cash that could be generat- ing profits. If it isn't selling, get rid of it. Once you have exhausted the send-back options, follow the "3 Ds" Rule: Discount it, Donate it, Dumpster it! Discount it to market value and sell it. Market value means whatever someone will pay for it — it has no relationship to what it cost. It won't go up in value. Donate clothing and accessories to fun- draisers or charities. You all have these folks coming in asking for donations; now is the time to help them. You can often donate parts and accessories to small engine classes at local community colleges and other programs. Dumpster — Take the write-off and dump it. If you can get something for it at the recycler, do it. 6. We utilize daily parts stocking programs, but never penalize service parts by holding out for minimum quantities. Service represents the most expensive hourly time with the tightest margins in your dealership. You need to do everything possible to get needed parts to the service department as quickly as possible. In addition, customer satisfaction with your service department has a major influence on your future unit sales. The average motorcycle customer buys 7-8 units over his or her riding lifespan. Do the math. If you do these six things, you will find improvements in your margins as well as increased turns and reduced cash flow prob- lems. You will be able to improve your ability to stock the right stuff at the right time. PSB Steve Jones is senior projects manager at Gart Sutton & Associates. He has worked in the power- sports industry for more than 30 years, for dealer- ships and manufacturers, and as a consultant and trainer. Contact him at steve@gartsutton.com. PG&A inventory management — 6 key checks STEVE JONES RETAIL REMEDIES