Outdoor equipment dealerships are moving with the times. Generally thought of as a little behind automobile dealerships in modernizing their facilities, many are now actively looking at emulating auto dealerships in terms of maximizing revenue from parts and service departments.
At the same time, industry trends are creating fewer and larger dealers. Bigger dealerships are getting bigger and smaller dealerships are becoming less common. Many outdoor power equipment dealerships are finding that maximizing space and increasing volume are critical to growth and improved profitability.
For Ahearn Equipment Inc., replacing 300 existing storage shelves with 14 new high-density drawer storage units allowed them to reduce their parts department footprint by 50%, while increasing the number of parts stored. The system helped them decrease average transaction times, better manage inventory and expand sales, all without having to incur the bricks and mortar expenses of an addition.
Expand without adding real estate
Ahearn Equipment, located in Spencer, MA, offers a broad product line, selling everything from push mowers and chainsaws to specialty $150,000 excavators. Its customers are about 60% homeowners and 40% contractors; the dealership is moving to adjust the mix to be 50-50.
Mirroring the industry trend of fewer, larger outdoor equipment dealerships, Ahearn has tripled in size and simply run out of space to stock the inventory they need to support the rapidly increasing number of lines they carry. This was despite the fact that a new building was built only five years ago.
“We were in a bind and were seeking ways to expand our parts department to accommodate the larger equipment and larger parts we were bringing in,” says Jeremy Ahearn, general manager of the busy dealership, charged with making sure day-to-day dealership operations run smoothly in all departments and facilities. “With the high cost of going the bricks and mortar route, we needed another option.”
In addition to being cramped for space, the existing storage system was extremely inefficient and unorganized. Thousands of parts were stored in more than 1,200 plastic bins (300 metal shelves, with four bins per shelf).
“We frequently were losing parts that would fall out of the bins or were of odd sizes and would not fit well into the bins,” says Ahearn. The shelves were 36 inches wide, a foot deep and spaced about 12 inches apart vertically, leaving a tremendous amount of space between the top of the bin and the shelf above it.
In addition to overflowing bins and wasted space, the system left the parts vulnerable to a significant amount of dust. Though the facility was extremely clean, parts sitting in bins collect a lot of dust, so packaging is subject to fading.
Seeking to achieve a reduction in the square footage of the parts department, Ahearn also wanted to become much more efficient in finding parts and reducing lost sale numbers due to missing parts.
“We had been plagued by the fact that a customer would come in, our inventory system would indicate that we had a particular part, but we couldn’t find it when we went in the back to look,” Ahearn explains. “It may have fallen out of one bin and ended up in a different one. We really wanted to eliminate this issue.”
The freed-up space would also allow Ahearn to expand display and showroom space to accommodate their continually expanding wholegoods inventory, without adding new buildings.
Big dealer, small footprint
Ahearn worked with outdoor equipment industry consultant Bob Clements International, Inc. (BCI) to help them figure out a way to reduce their parts department footprint while still allowing them to expand the number of parts they could carry. BCI suggested installing a high-density storage system made by Lista International, a leader in the manufacture of modular drawer storage systems. Lista is BCI’s industry-approved supplier of service and repair shop and storage systems.
Fixed shelves spaced 10 to 15 inches apart contain a considerable amount of air. In fact, shelving 18 inches deep and 84 inches tall usually offers no more than 50% of its capacity, and sometimes as low as 30%. Three to five sections of shelving (about 9-15 linear feet) can usually be condensed down to a single cabinet measuring about 28 by 28 inches. Using the complete cubic storage capacity of each drawer allows the parts department to store the correct parts in the correct drawers.
Lista began by conducting an inventory of all the manufacturing lines and parts that Ahearn carries to identify how many drawers would be needed for the inventory carried, the best drawer sizes, and other storage needed for Ahearn’s particular inventory.
Based on the inventory, Ahearn installed 14 cabinets (including two counter units), each 5 feet tall. Each of the cabinets has a variety of drawer heights. “This type of storage unit best suited us because we deal with a lot of different-size parts, the majority of which are smaller than a basketball,” shares Ahearn.
Gains in space and efficiency
With multiple vendors and multiple part number codes, Ahearn needed a system that would enable them to place all the parts in the drawers using a consistent numbering system, so they could find parts more easily.
Ahearn also took advantage of Lista’s drawer divider design to remove parts from their packaging and place the parts in drawers in a way that they can be easily found. “It’s manageable and aesthetically pleasing,” he explains. “The dividers make everything uniform. When we open a drawer, it is impressive to see 40 parts in divided compartments, and all labeled. Being able to remove parts from plastic bags offers a slight space savings and gives a real uniformity in parts storage.”
The parts department has reduced its footprint by 50%. Plus the location of parts in drawer cabinets keeps the parts looking new and dust-free. It also enabled Ahearn to organize multiple manufacturers with similar parts together for easy cross referencing. When customers come in looking for parts, the parts clerk can open up the drawer that has all of that particular part from a variety of manufacturers stored together. They can select the correct one without having to rely on what can be a time-consuming parts lookup function.
Purchasing a high-density drawer storage system is a significant investment. As a result of the efficiencies achieved by the new cabinet storage system, Ahearn now plans on staffing one less person in its parts department, making the return on investment only about six months.
Article contributed by Lista International. For more information, visit listaintl.com.