Team Approach

Like most of its other initiatives, Galati Yacht Sales approaches the managing of its inventory turns as a team effort. The company constantly manages its turns, which are viewed as a key performance indicator, guaranteeing that it is proactively managing its business and reducing additional expenses that quickly deteriorate the company’s overall return on investment.

Galati, which ranked No. 1 in Boating Industry’s 2007 Top 100, sets a goal to turn its inventory three times annually. By itself, managing an inventory that averages outstanding balances in excess of $50 million during the peak stocking period can be challenging. Figure in unfavorable market conditions, poor model mix, or an active hurricane season, and reaching that goal can be nearly impossible for the Gulf Coast-based dealer. But Galati manages the process through a number of means.

First of all, the company creates and updates an inventory status report, tracking each unit’s days in cycle on a weekly basis. The report provides valuable information to the company’s sales management team, including inventory availability, location, cost line, additional rigging expenses, sold status and available ordered products.

Additionally, the company’s brand managers are charged with meeting overall inventory turn goals, and they are rewarded for doing so through their compensation packages. These brand managers, who are assigned the responsibility of managing the relationship with the company’s manufacturer partners, constantly balance Galati’s inventory needs against current inventory levels. They also manage the distribution of products throughout the 12-location dealership, ensuring each has an adequate inventory for display.

Once a unit has reached a maximum of 240 days in cycle, it is placed on a tracking list known internally as the Hot Boat List, and provides incentives to encourage a sale. Many of these incentives are consumer-driven and include manufacturer-participated rebates and/or interest rate reductions in the form of finance incentives or buy downs. Other incentives are offered internally through increasing sales commissions, resulting in a higher level of concentration by the company’s sales team on those designated units

“This has proven,” the company says, “to be a successful formula for moving the aged inventories and is a great example of our business office team supporting the sales initiatives.”