Guiding inventory success

Any marine dealer will tell you that you can plan and strategize all you want, but you simply cannot know what you’re going to sell, especially in the current economic climate.

JOA faced this problem by looking at it from the opposite perspective. The company made a determination through understanding what, in the worst possible situation, it could afford to carry in its inventory. And with that knowledge, the company set maximum inventory levels for each of its stores late last year.

“These guidelines,” Matthews explains, “require keen looks at trends and customer quotes at all levels daily to ensure we are making every deal, every time.”

To avoid running into problems, JOA then tracks, daily, the number of days each unit has spent on its lot, delivers the oldest unit first, and moves inventory to an alternate location every 30 to 60 days. Its weekly spreadsheets highlight aged inventory, and management adds extra sales incentives to the sales associate who sells the oldest piece of inventory.

While those are sound strategies that every dealer should employ, JOA also took the extra step, when looking to order new product, to closely evaluate the inventory levels at its local competitors. As an example, Matthews says, if the market is carrying 75 leftover 21-foot bowriders, which will be sold at a cheaper price than ever before, “it’s probably not the time to be in the 21-foot bowrider market,” and the company would order a different unit based on availability market wide. It completed this market evaluation at every level of boat, including personal watercraft.

JOA also tapped into the expertise of its vendor partners to help them think outside the box regarding inventory levels, interest assistance and comfort with future inventory commitments. This, Matthews says, has given the dealer and lender a better understanding of each other’s business and a higher level of trust, knowing that they each have the other’s best interests and survival in mind.

It has worked. By Aug. 1, JOA’s new inventory guidelines had helped the company reduce its inventory levels to a 15-year low, without sacrificing revenue.

“We have always felt that complete monitoring of the inventory on a daily basis is paramount to inventory control,” Matthews says, “and more importantly, interest control.”