Automotive
Improving the dealership’s inventory mix by increasing productive inventory while reducing capital tied up in obsolete stock.
Paradise Chevrolet increased productive inventory by $81,590, from $1,084,568 to $1,166,158, while reducing obsolete inventory by $19,715. At the dealership’s 40% gross margin, the additional productive inventory represents $32,636 in potential gross profit if that inventory sells through at the stated margin.
PartsEdge
“PartsEdge has given us a clearer picture of our inventory and where we have opportunities to improve. We’re putting more of our inventory investment into productive parts while continuing to reduce what’s sitting obsolete. ”
Marcus McConnell
Parts Manager, Paradise Chevrolet
Marcus McConnell, Parts Manager at Paradise Chevrolet, worked with PartsEdge to improve the dealership’s inventory mix by putting more inventory dollars into parts positioned to generate sales while reducing capital tied up in aging, non-selling inventory.
Paradise Chevrolet had more than $2.5 million invested in parts inventory, making the balance between productive and obsolete inventory especially important. The opportunity was to improve the inventory mix - positioning more of that investment to sell while continuing to reduce dollars tied up in obsolete inventory.
Using PartsEdge, Paradise Chevrolet focused on improving the productivity of its existing inventory investment. The strategy centered on increasing productive inventory while reducing obsolete stock, creating a healthier balance between inventory positioned to generate sales and capital sitting in aged, non-selling parts.
Paradise Chevrolet increased total inventory by $57,397, or 2.3%, while improving the composition of that inventory. Productive inventory increased by $81,590, or 7.5%, from $1,084,568 to $1,166,158, while obsolete inventory decreased by $19,715, or 9.2%, from $215,220 to $195,505. At the dealership’s 40% gross margin, the increase in productive inventory represents $32,636 in potential gross profit if that inventory sells through at the stated margin.