How to keep your vehicle stock in order

Next to staff, vehicle stock is the most valuable asset of any car retailer, yet research reveals that 11% of all inventory recorded in dealer management systems is incorrect. This could be surreptitiously siphoning off millions of pounds from businesses across the industry and highlights the pervasive issue of inefficient stock management.

Industry insiders are unanimous in their recognition of effective stock management as the cornerstone of a successful automotive dealership. From cash flow to customer satisfaction, stock management influences every aspect of dealership operations. However, the stark reality becomes apparent when trying to track the precise status and location of each vehicle across sprawling, multi-site dealership networks.

The consequences of mismanagement can be considerable, from inaccurate floorplan funding to risk of sales due to trust and even exposure to fraud. Equally, a car in the wrong location or, even worse, one that has already been sold can cause huge customer dissatisfaction. When a car is on the website, a potential customer can understandably expect to view it when they turn up at the dealership and be left frustrated and disappointed when it isn’t. I should know – it recently happened to me!

Stock management issues

There are a number of problems commonly found in environments that cause stock management challenges:

• Data quality: This is critical. An inaccurate or incomplete core database can result in misleading information, misguided decisions and missed sales opportunities. While dealership management software can streamline processes and provide a holistic view of data, its efficacy is severely hampered if the data itself is flawed.

• Disjointed systems and manual processes: Reliance on legacy systems and manual processes not only consume valuable time but also introduce a high probability of errors and inconsistencies. They limit the visibility and traceability of vehicles, making it very difficult for dealerships to keep their inventory current and accurate.

• Lack of visibility: Limited transparency across multiple dealerships is related to the point above. Without an accurate, real-time overview of inventory, management will lack vital reporting and the crucial ability for timely decision-making.

The consequences of getting stock management wrong

The economic implications of stock mismanagement can be severe and will impact many areas. Incorrect inventory records can result in inaccurate floorplan funding, resulting in unnecessary payment on overfunding or facing a shortfall. Some funders impose financial penalties on dealerships without adequate controls, and the risk of selling out of trust puts the dealership’s reputation and funding relationships at risk.

Fraudulent activity is also more likely to go undetected when stock management practices and systems are below par. Inefficiencies arising from misplaced vehicles also lead to wasted resources and time, with staff scrambling to locate vehicles rather than focusing on customer engagement and sales activities.

While stock management might not command the excitement of a new vehicle launch, it is a silent yet potent factor that drives the success of a car retailer. This business fundamental plays a pivotal role in shaping cash flow, efficiency, customer satisfaction and overall reputation.

As the industry continues to evolve, car retailers can successfully leverage a large number of technological tools and strategies to improve their stock management and find themselves leading the pack in an increasingly competitive market.

Peter Cottle is Consulting Director with Finativ