14 Dec Reducing Idle Inventory
If you’re a Dealer Group with the same manufacturer at more than one location you’ll want to read this!
Have you ever noticed that parts will sell well at one store and not that well at another store just a few miles away? We’re seeing an increasing trend of Dealerships stocking more and more parts, usually leading to higher levels of idle inventory. When you have more than one store that can cover the same market, you can avoid some stocking some of the extra inventory. Here’s what we recommend for shedding idle inventory.
Parts brokers are an effective method for getting rid of your idle inventory quickly. Typically with a parts broker, you submit a list of parts and buyers can purchase what they want at fifty cents on the dollar, with a cut taken for the broker. If you have the resources, we highly recommend submitting your idle inventory list to a parts broker before taking any other actions. If you’d like more information on how to account for selling parts through a parts broker, read this.
Our stock swapping functionality is becoming more popular at Dealer Groups with multiple stores covering the same manufacturers in the same markets. When stock swapping is implemented, we have seen dramatic positive effects on inventory ROI by reducing excess, obsolescence, and scrap across all inventories. In our experience, executing this process for a Dealer Group with 3 domestic locations just 30 miles apart yielded a 19% reduction in total on-hand inventory in 12 months. What would that amount of liquidation mean for your dealerships? According to NADA, the average Dealership has about $385,455 in on-hand inventory. If that value would reduce by just 19% it would mean $73,236 would no longer be tied up in on-hand inventory, that’s a lot of capital.
Our stock swapping functionality is just one of the many benefits of utilizing a service like PartsEdge. Get in touch if you would like to learn more about what we can do for your inventory!