tmundal wrote:Theoretical question. If you have had a good wholesale operation for years, but a mega dealer an hour away has ten times your inventory and will undersell you no matter what. How do you exit wholesale? What happens to the $1,000,000 in inventory you currently stock? And what kind of ramifications with GM and RIM would you have?
This is a big question and I can only tell you how I did it. They're two sides to this not just inventory but personnel as well. The decision, once made, is easy but to do it with a minimum of financial disposal takes time to put into effect. Ours was a six-month plan. First thing I did was change the parameters on all wholesale parts so upon sale they would self delete. The only things reordered for stock were ultrafast moving product's.
At the 90 day mark a letter was sent out to all long distance routes about our intentions to stop delivering to them. We gave them all 45 days notice +2 weeks for final pick up of all any and all returns. As you can imagine this created quite a stir but prior to this we'd already stepped up our efforts on collections so there was very little outstanding money at this point in time. Now depending on your employees this notification either scares them into looking for another job or consolidated them into working hard. At this time I also notified my manufacturers representative as to our intentions. I did not do it prior to this as many of them will tell your competitors what's going on. It is necessary to notify them because depending on your manufacturer you may have to redeclare how your purchases are classified: wholesale collision, retail, body shop, wholesale mechanical.
At the 120 day mark your collision inventory should be more than halfway gone, I would say 60% gone. You now have a good handle on what you have and can make the next decision. Do I get about out of wholesale totally or do I just have a nice small profitable operation? We went with a small profitable operation and I retained four drivers for my six franchises. All the employees who stayed with me we found positions for them, we did not cut anybody! You'd be surprised how the skill sets can be applied to many different departments and how loyal employees become when they see first-hand that you're going to do everything you can to help them.
For those wondering my wholesale inventory levels prior to this were 2.3 million with 27 delivery personnel and 15 months after the decision was made my bottom-line profit was exactly the same.