Dealers Sound Off on Internal Inventory Management and Online Inventory Sales Tools

by: Melissa Broadus

Managing inventory at RV dealerships is a top priority, especially when sales are slow. Dealers speaking with RV Executive Today use a variety of methods to monitor and manage their inventories. Most of those dealers use their dealer management system (DMS) to manage their inventory, and about half of them use a third party source to help move and track inventory.

Managing Inventory
There are a lot of different ways for dealers to monitor their inventory levels. A majority of those speaking with RV Executive Today are using their DMS to manage their inventory, because it is integrated with other dealership activities. DMS systems also let dealers get real time information about their inventory, allowing them to make the best decisions on how to move units.

“The IDS management system we use allows us to pull up an aging report daily to move the oldest units to get discounted pricing,” said Ernie Friesen, president of All Seasons RV Center in Yuba City, CA. “Our system is integrated to reflect changes in our inventory and update additions, deletions, and price changes.”

“Systems 2000 allows me to easily track aging inventory,” adds Bruce Medlock, general manager at Monticello RV Center in Monticello, MN. “It also tracks gross and net unit profit along with floorplan interest accrued, which is very helpful.”

“Bank of America online lets me check on things everyday,” say Gary Threlfall, president of Garick RV in Oak Ridge, NJ. “I can check absolutely everything; outstanding invoices, aged inventory, etc.”

Some dealers use more than one system to manage their inventory. Those speaking with RV Executive Today say it helps them with planning what to purchase and keeping track of what is actually on the lot.

“As far as managing what I stock, I use Spader’s inventory planning system,” says Chris Andro, vice president of Hemlock Hill RV Sales, Inc. in Milldale, CT. “As far as managing what I have on the ground, I use Dealership Software. Both systems are very helpful in managing turnover, unit levels, and aging inventory.”

A small group of dealers who spoke with RV Executive Today use general accounting software, Microsoft Excel spreadsheets, or programs created by someone at the dealership. Although not integrated with their other systems or their websites, these dealers prefer them to more costly systems.

“We’re using Lotus/Fastrac at our dealership,” says Lou Bonessa, Jr., general manager at Bonessa Brothers RV in Gilroy, CA. “I have to input everything twice, but it saves us money by not having to pay a monthly fee for someone to run it.”

“We use a homemade in-house program,” says Ed Lerch, owner of Lerch RV in Milroy, PA. “It works great, even though it isn’t integrated with our website.”

Inventory Turns
Dealers ultimately use these management tools to strive for maximum inventory turns to keep their businesses thriving. By understanding the turns, dealers can plan, predict, and evaluate their businesses.

Determining inventory turns is a simple ratio of yearly cost of goods sold, divided by the average inventory.

Yearly Cost of Goods/Average Inventory = Inventory Turns
 
For example, if a dealership had a yearly cost of goods at $9,200,000 and had $3,300,000 of average inventory, they would have 2.8 turns.

$9,200,000/$3,300,000 = 2.8

Quicker inventory turns are
important for a dealership’s cash flow, according to Stephan King, a certified public accountant at Moss Adams, LLP. “Minimizing flooring interest and curtailments are two benefits of reduced inventory levels,” King said. Incentives from the manufacturers typically do not help improve your cash situation. If the incentives do not result in net cash improvement through a higher gross profit and quicker inventory turns, you should forego taking on the additional inventory. If you are able to increase the frequency of gross profit realization, you are able to accelerate cash flow.”

Online Inventory Sales Tools
Some dealers look to third parties to move product off their lots and help increase inventory turns. Dealers speaking with RV Executive Today have various views on using third party sources to sell RVs.

Many dealers agree that third party sales companies are worth the extra money to bring in more leads and sell additional units. However, there are also concerns that some customers use the online market as leverage to get the lowest price by getting a quote from out of their market area.

“We use Channel Blade and RVTraderOnline, and we have had sales from these sites,” said Bob Been, president of Affinity RV Sales Service & Rentals in Prescott, AZ. “Unfortunately though, when folks get a price, unless they are from your trade area, they use the information to shop you all over the country.We pass on a lot of no profit deals, so we think this works best for used units.”

“We use ebay,” adds Mike Pilon, director of parts and service at Rick’s RV Center in Joliet, IL. “It has drawn some more interest in our dealership and has generated some sales for us.”

Keeping units moving and creating inventory turns is the goal of RV dealerships across the country. Regardless of how and who manages inventory at the dealership, it is a vital function. Using any of the many available systems helps dealers keep on top of their sales and helps them move their inventory as quickly as possible.