The supermarket industry has many “drivers” that determine success and failure but there is one driver which, if you get wrong, will certainly lead to failure. That is stock management and more precisely having what consumers want when they want it.
Having the right stock at the right time means that you will, in all likelihood, sell it and receive payment for it before you pay the supplier. You can, however, only do this if you purchase stock that the consumer wants and that is on the shelf when the consumer needs it.
If you buy stock today and sell it to the consumer tomorrow, you generate cash immediately and only pay your supplier 30 days from statement. Besides the too obvious cash flow benefits of this, you are generating high margin gross profit on the part and in many instances on the labour related to the sale of that part.
In my experience, whilst obsolescence in parts departments is being more actively managed, the measurement and management of having the right stock at the right time are loosely managed or not managed at all. The opportunity cost of this lack of measurement and management is almost always way more than the cost of obsolescence in most dealers.
Most Dealer Management Systems have advanced stock management features that can give you these measurements in various ways. They do, however, require to be set up and managed. Our dealer group benefited hugely from investing time and effort into this element of our dealerships. I can only suggest that it would be in your interest to do so as well.
Would you shop at your chosen grocery store if it did not stock most of what you wanted?
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Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?
George Carlin
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