Through the Eyes Of the Bold, Part 16

I've finished talking at length about the basic mix and highlighting each category. Now, I would like to discuss commercial inventory from a global view.

There is no doubt that in most people's view I would be a bold commercial inventory person. I would agree. I would also state that I have a plan. Much of this plan has been discussed openly with you over the last many posts. At least, I trust that you see that there is a logical plan and that the plan is well thought out and well executed. That is needed. You need to know what you are doing.

There is something that I have seen several times at dealerships that really bothers me. It is an experienced commercial/fleet manager coming in, getting the dealer to buy into a commercial truck department, and then that manager goes and buys a lot of inventory with the trust and autonomy the dealer gave him or her. I've seen over 50 units show up in a very short time. That is a financial disaster waiting to happen. Then, I've seen that manager get upset about something and quit, leaving the dealer to clean up the mess. That is another disaster that is very sad and inexcusable as far as I'm concerned. I've seen some of those managers do this and then show up at another store doing the same thing again--sometimes with the same make, other times with a different make. I guess their strategy is "if you build it, they will come." It's craziness. This hurts everyone involved.

Buying inventory is fun, but it has a cost--an ongoing cost. This is why we have a plan. This is why we build the department thoughtfully, not thoughtlessly. Inventory is a necessity, but it need not be 50 units to start with and not ever with one person doing the job. Not ever! That many units in inventory will require a team, not an individual. If a dealer has one person, no matter how good that person seems to be, I highly recommend they watch very closely. When that one person leaves, it can be devastating to the dealer and the dealership. Think of this: would you have a whole dealership run by one person with 50 units on the lot? Not likely.

One person can only do so much and the typical commercial/fleet manager is selling much more than just commercial, so the amount of commercial inventory has to make sense for what is possible to get done. Selling 20 units a month is a lot of work on a regular basis. Commercial will probably be about 25% of that mix in normal times. That would be 5 units. With 120 days of free flooring, the maximum inventory could be about 20 units. This assumes that 25% of their sales are consistently commercial. You can see by looking at it this way, that the inventory needs to be carefully controlled until we change gears and create a team approach. With a team, we can grow this business. With an individual, we are limited by design.

If you are serious about building a strong commercial truck department, it will require a team. A manager to focus on all the global aspects of what needs to get done, of which, managing the inventory is only one thing. It will need a sales team to get the selling done. It will require administrative help to get the computer and paper flow smooth. It also requires a good financial team to get the deals bought and a great service team to make sure they stay on the road.

We all need the dealers financial backing and encouraging support in order to make a success of the commercial department, so we need to make sure that we take care of the goose the lays the golden egg by protecting their interests first. Excessive flooring eats up profits quickly and it is easy to get too many commercial trucks on the lot and then worry about moving them later. Bad design. Get a plan, then get the inventory and as the plan expands, expand accordingly. Take good care of the dealers money, so they will take good care of you.

This was about an experienced commercial/fleet manager, but I have also seen those inexperienced managers come in and do the same thing, so here is a good time to talk about what I think is the dealers part of the responsibility. Get a plan! Hiring a commercial/fleet manager and then giving them the power to bury you in flooring is not a good plan. You need to know what is going on, and matter of fact, either yourself or through your general manager, take part in the proper unfolding of this new operation. You would have that responsibility whether the new manager was experienced or not. Some dealers are looking for a savior to come in and build a commercial/fleet department and that is not a good plan. Get involved and interested. It's not about control, it's about participation. (Tomorrow, I will expand on the dealers participation and plan.)

The eyes of the bold are keenly focused on results and responsibility.

No comments: