Effective Inventory Management Strategies for Profitable P&A Operations
Explore successful inventory management techniques presented by Steve Jones, a seasoned industry professional with over 30 years of experience. Learn about benchmarks, reducing losses, and improving profits in parts and accessories inventory management.
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Presentation Transcript
SUCCESSFUL P&A INVENTORY MANAGEMENT Presented by: STEVE JONES STEVE JONES
WELCOME! Who is Steve Jones? Started in dealerships 100 years ago Worked in most dealership positions Rider/racer (20 years of broken bones) Worked for OEs as a Field Tech Advisor and a DSM Dealership on-site consultant and trainer Write column for MPN mag and edit other GSA columns & articles Senior Projects Manager for GSA SUCCESSFUL P&A INVENTORY MANAGEMENT
WELCOME! Who is GSA? Powersports consulting & training company Dealership on-site assessments and training Develop training solutions for all of the major powersports manufacturers Conduct market research for industry clients Largest provider of 20-group services in the powersports industry Collect and analyze industry data Keep current with best business practices Over 30 years of experience in this industry SUCCESSFUL P&A INVENTORY MANAGEMENT
Current Benchmarks (Metric) Road Signs to Profitability Parts Gross Profit Margin 36% Accessories & Clothing Gross Profit Margin 32% SUCCESSFUL P&A INVENTORY MANAGEMENT Total P&A GP PVS $700 -800 Personnel Exp. % of DGP 34%
Benchmarks (contd.) Road Signs to Profitability Monthly GP $ per Employee $10K + % of Inventory Obsolete 15% or less SUCCESSFUL P&A INVENTORY MANAGEMENT Parts Inventory Turns 4-5 Access. & Clothing Inv. Turns 2-3
Six Steps to Reducing Losses & Improving Profits 1. Stock what sells Categorize it so you can measure it 2. Increase efficiency Use bin locations 3. Reduce shrinkage & improve inventory accuracy Implement cycle-counting 4. Control the inventory dollars Implement an open-to-buy system SUCCESSFUL P&A INVENTORY MANAGEMENT
Six Steps (contd.) Open-To-Buy Example TOTAL INV OE PARTS CLOTHING ACCESS. Max Inventory Level 246,000.00 74,000.00 62,000.00 110,000.00 SUCCESSFUL P&A INVENTORY MANAGEMENT 225,000.00 67,000.00 58,000.00 100,000.00 Current Value 15,500.00 4,500.00 5,000.00 6,000.00 Add On-Order Value 240,500.00 71,500.00 63,000.00 106,000.00 Projected Value Open to Buy 5,500.00 2,500.00 -1,000.00 4,000.00
Six Steps (contd.) 5. Identify & control obsolescence Slow-movers report Non-movers report Obsolete Parts, Clothing & Accessories don t go up in value! What options do you have for selling it? 3D:Discount it, Donate it, Dumpster it Turn this into fast-moving stock to increase your profitability SUCCESSFUL P&A INVENTORY MANAGEMENT
Six Steps (contd.) 6. Measure it so you can manage it: % of inventory obsolete Total inventory valuation PC&A GP % (separate if possible) Total GP $ PVS Personnel expense % of DGP GP $ per employee PC&A inven. turn (separate if possible) Compare YTD with previous year SUCCESSFUL P&A INVENTORY MANAGEMENT
Thank you!! Contact: Steve Jones 208-922-5995 steve@gartsutton.com SUCCESSFUL P&A INVENTORY MANAGEMENT www.gartsutton.com
