4 Ways to Plan Inventory Several Months in Advance

The military saying “if you fail to plan, you plan to fail” is very true in the context of dealership inventory management. According to dealership consultant Jeff Sheets, many dealers are reluctant to plan ahead when it comes to their inventory, which means that it’s never quite as organized as it should be.

As discussed in previous articles on dealer inventory management, the three key elements to keep in balance are inventory, scheduling and warranty claims. This balancing act can be complicated, but it’s this combination that paves the way for a dealer’s long-term success.

What is the risk? Without careful planning, inventory can easily get out of balance, resulting in steep markdowns due to overstock, and ultimately, cash-flow challenges. In a seasonal business, this is an even bigger concern. The good news is that you don’t even need to plan inventory ahead for the entire year – simply plan 60-90 days in advance.

In this article, we will cover four ways to plan for inventory several months in advance.

 

1. Get the Right Team on Board

Get the Right Team on Board

Do you think that you know your inventory well, based on years of experience? If you have been in business for a long time, you risk staying the same, when the world around you is changing. Having the right team in place, including younger members can be a huge asset.

“Be careful that you don’t get in a rut,” said Mike Green of RV World in Yuma, Arizona. “Keep an open mind and desire to grow your business every day. I think that if you’ve been doing it for a long time, you have to hire a young guy to bring some new ideas to the table. You have to constantly look for ways to be better and not just keep going with what gets you by just because you have done it that way for years.”

 

2. Know Your History

Know Your History

The easiest way to plan inventory for the future, is to check the past regularly. A great start is to analyze both your sales history and historical inventory trends. Dealer management software is helpful this way, since it allows you to run reports on every aspect of your business.

While digging into the analysis, consider how unusual or unexpected events, such as weather changes, out-of-stocks, one-time promotions, staff changes and so on, have affected your business in the past – and plan for them.

 

3. Look at Your Customers

Look at Your Customers

Each time a customer buys something from you, they are casting a vote for the merchandise that you carry. By not having what your customers want in stock, you’re inviting them to go elsewhere, leaving you with “lost sales.”

Employees may be reluctant to track lost sales because they may think it reflects badly on their performance. However, learning about lost sales, and finding their root, can be an important step towards carrying the right stock for the future. So, make sure your team reports lost sales to you, so that you always have enough data to make informed decisions.

 

4. Don’t Disregard Clearance Markdowns

Don’t Disregard Clearance Markdowns

You can also plan clearance markdowns. When sales are soft, the weakest of your items will suffer disproportionately. If you plan your markdowns before the next season even begins, you can plan the inventory you want to have on hand at that point in time, and thus your markdown percentage. This will help you avoid steeper markdowns and cash-flow challenges in the future.

 

 

Ready for More?

Does your dealership have too much dead inventory on hand? Our DIY Guide on Boosting Inventory Profitability can help you eliminate dead inventory and future losses. Get the guide here.

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