Importance Of Inventory Management System For Automotive Industry

Inventory management system

Importance Of Inventory Management System For Automotive Industry


Inventory management goes much deeper than tracking products. It’s an integral segment of business that cannot be neglected or compromised. Auto dealer inventory management requires the latest, state-of-the-art technology and innovative solutions – and for good reason.

Without an effective inventory management system in place, auto dealers continue to miss the opportunity for greater profit and risk losing loyal customers in the process.  Throughout this article, we detail the importance of auto dealer inventory management and how dealerships can continue to improve their process.

What Is The Main Goal Of Inventory Management?

Dealerships with advanced auto dealer management systems equipped with a proficient inventory process are more prepared to handle the many moving parts of a dealership. The goal of inventory management is essential to:

  • Minimize loss occurring from damages and wasted materials
  • Ensure the accessibility of resources for all departments
  • Identify low quantities of product
  • Avoid over storing and duplication in ordering stock
  • Maintain production costs within budget
  • Eliminate bottlenecks and downtime due to lack of materials

How Can Dealerships Improve Their Inventory Management Systems?

To answer this question, we must first look at why dealerships may need to improve their inventory management system. If your business experiences the following, it could be time for an upgrade in your DMS or benefits from a PEP plugin into your existing DMS.

  • Lack of streamlined communication between departments
  • High costs of inventory and production
  • A low rate of inventory turnover
  • Data-entry errors
  • Poor real-time updates on reporting
  • Delivering the wrong products to service techs

Inventory translates to assets and is directly correlated to revenue. It is essential that products are properly stored and correctly accounted for.  A good auto dealer inventory management system ensures a smoother workflow, clear communication between departments and customers, and minimizes mistakes.

There are several ways that innovative software and a PEP plugin addresses the constraints that dealerships often face. Among these improvements include:

1. Real-time Reporting – With many moving parts in a dealership, things can change quickly. Real-time updates ensure that the information is accurate and current that is accessible on a single source by all departments.

2. Customization – Dealerships are not a one-size-fits-all approach. Each business will have unique operational needs and customer demands. A DMS or PEP that allows for customization can fine-tune details and identify where the constraints are happening.

3. Streamlined Communication – Each department including service advisors, parts, service technicians, and sales managers are connected to one system, allowing for easy communication and a seamless process. Fluid communication about available inventory speeds up the service task makes the sales process smoother and contributes to the bottom line.

Key Takeaways

Inventory tracking impacts every department of the business – from service technicians communicating with the parts department to a member of the sales team inquiring about the availability of a certain vehicle for a customer. A reliable inventory management system could be the difference between profit and loss, further emphasizing its importance.

To the outside eye, inventory management is simply a means of assessing the available products. For many industries including the automotive sector, the objective of tracking inventory ties into increased customer satisfaction, better collaboration between departments, and a smoother workflow with less downtime. Ultimately, these points lead to a healthier bottom line.

Share this post