Chad Counts, owner and consultant of Counts Business Consulting, based in the US, looks at how you can assess the purchasing and inventory side of maximizing profits for your auto recycling business.
Now is always the best time to evaluate your profits as an owner and decide where you can grow the bottom line. Today’s series we are going to assess the purchasing and inventory side of maximizing profits. The core of maximizing profits is finding the right hunting grounds, seeing all the value, and funneling inventory to the right channels.
Choose The Right Hunting Grounds
Ever get the feeling that your current auctions and pools are running dry? No longer providing the returns and quality they once did? Anyone who faces the challenge of growing inventory supply must understand that you typically have to add sources to grow at a sustained rate for the cost of goods and satisfy the diversity of your customer base. It needs to be common practice to add at least one auction or inventory source annually and anyone struggling with current supply should be more aggressive in adding sources until your needs are met.
This is the number one job of the buyer – to pick and have the right sources, otherwise, you only buy what falls in your lap not what is desired by your customer base. Evaluate alternative sources, contracts, tow lots, donation cars, street purchasing, etc as needed. Each source should be specified in your inventory system so it is easy to evaluate COGs and ROI. Buyers should view inventory resources the same way salespeople view customers, I want to make sure the relationship stays positive particularly if they have other options.
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