LEAN Business Management: Avoiding Overproduction in 2009
Dave Zerfoss, President of Husqvarna Professional Products Inc., discusses overproduction in the dealership and managing inventory and turns successfully.
The second in a six-part series on LEAN business management, overproduction should be the focus of many dealers in 2009. In manufacturing, overproduction means generating more product than demand requires. For the dealer, this translates to stocking more equipment than will be sold.
The year 2009 promises to be a challenging one with consumer spending at an extreme low and credit no longer within reach for many. In a follow-up to our January article on LEAN parts inventory and management, we will help dealers increase their chances of staying profitable by carefully developing a floor plan that won’t leave them paying interest on dead stock when the year is over. Working with manufacturers and suppliers on an ordering system that gets customers what they want and when they want it will be vital.
In this ProCast we discuss smart floor planning with Dave Zerfoss, President of Husqvarna Professional Products Inc. Here a few points to take away from what was discussed:
- Dealers should start with a solid sustainable business plan and review systems and processes to prevent overproduction, simplifying processes for increased chances at success.
- Overstock leaves dealers with irrelevant and outdated equipment. Dealers are forced to discount equipment in order to sell it, damaging margins.
- Dealers should know the margins and inventory turns for each line. From there, assess the time, energy and resources spent managing each line and evaluate it against each line’s profitability.
- To be successful in 2009 dealers should remain relevant with competitive pricing and value added services. Customers will be demanding more value for their money.
- Dealers should watch their parts and wholegoods stock daily. When it comes to inventory turns, dealers should bring in fresh product, as they need it, not when the vendor wants to ship it.
To learn more about LEAN operation, watch for upcoming articles in Yard & Garden Magazine, the next focusing on transportation.
