November 21, 2017

Profit in the Auto Retail Sector: Centralisation, Analytics & Communication

auto retail

Profit. Once you are an established business, it’s the name of the game.

When you think of profit, do you immediately think of increased sales, maybe a new acquisition or company growth? Maybe investment?

Presumably so, after all, that’s how most people think, it’s instinctive.

It’s the fun part of building any business, something we all aspire to achieve.

That being said, it is important to remember that when an organisation is expanding at speed, there is little need or time to ensure that this is done seamlessly and with processes of outlandish efficiency. So whilst you are growing your turnover year on year, you could well be missing out on opportunities that arise from simply prioritising efficiency and technology.

It is also important to take into account that economies of scale become more and more of a factor.

Understandably, my focus here is on the supply chain. As such, when we think of profit, we think of productivity, efficiency, savings and strategy.

Which begs the question, what kind of advice would we give to businesses in the Auto Retail arena or other low margin sectors?

The issues:

Centralisation:

When working in the Auto Retail sector previously, the initial stages of planning have always brought the same issue to the fore. The number of alternate systems across multiple dealerships means that inputting data in a uniform manner is nigh on impossible and from that point, bringing the data together into one centralised hub is extremely problematic.

Analytics

As you’d expect this leads onto problems with analytics. The two most important moments in a piece of data’s life are when it is created and when it is used. If the initial step doesn’t occur then the latter can’t. Frustratingly, this makes it hard to truly understand the trends that are occurring, to spot areas for improvement and to report on savings/improvements to the bottom line. This is a big issue in Procurement with the vast majority of Finance departments distrusting Procurement’s numbers.

The solution:

Communication

It does all come back to the idea of ensuring that data is of a high quality. Take for example this idea. If said systems were all communicating beautifully, then all the supplier information would be available to all buyers throughout the business. Thus, they would be able to leverage the economies of scale that are available to any successful business. Not doing this, is simply adding costs where they just don’t need to be.

It’s simple really. Upload all your supplier data in one centralised place and thereby allow analysis at a high level whilst empowering your buyers on the frontline. It’s all about ROI and being ahead of the competition. Technology is where those gains can be made and high quality data is where the opportunities are.

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