Managing used equipment inventories and remarketing equipment is one of the biggest challenges facing equipment dealers today. Used machinery on a dealer’s lot can be a good thing when buyers are looking to fulfill specific needs, but when that inventory’s size exceeds the demand for it, it can quickly become costly in any dealership.
In this post we detail how NAXT helps equipment dealers better manage their used equipment inventory.
How do I determine the price of a certain used equipment?
The key to anything in remarketing and used equipment is the pricing strategy for the equipment. But how do we assess multiple sources to gauge the correct value for a trade? “Figuring out what the value of used equipment is will be the hardest job you ever do” – says Trent Hummel, trainer and consultant with Western Equipment Dealers Association’s Dealer Institute.
It’s hard, but it’s not impossible! There are several options, but using the following KPIs, straight from NAXT, will help with your calculations:
Aged Equipment Reporting: Aging tracking
Dealers using NAXT don’t usually set an expiration date for used equipment; instead they monitor equipment aging through NAXT. Our system employs either calculated KPIs, or complex BI reports to get accurate information. Both are invaluable tools in improving the decision-making process of a dealer on how long they should keep their equipment in stock.
Calculate real book value
Another important component of the equipment’s book value is depreciation, as the lower the value, the more important it becomes to sell the item and remove it from inventory. These two factors are monitored in parallel for both used and new machines.
Additional costs affecting the book value, such as freight or transportation fees are also tracked in NAXT. The system automatically tracks all cost information for each piece of equipment, such as import duties, deductible trade discounts or rebates, which allows NAXT to display accurate book values.
What is a “Washout Calculation”, and how can it help liquidate some of my inventory?
A “washout cycle” is a strategy that works through lower-value used inventory that can help certain dealers move the surplus in a way that promotes continuous sales growth. “Washing out” used machinery may mean selling at a lower price, but it can pay off in the long-term by eliminating the cost of maintaining higher used inventory.
NAXT calculates the washout percentages of both the asking price and the new price by gathering the washout expenses based on the charges set up by the user. This is a flexible setup that is highly customizable and can be changed at any moment at the dealer’s discretion.
The washout-calculation formula can be customized and tailored to the ever-present needs and processes of the dealership.
Does NAXT have key metrics to monitor inventory & cash flow?
NAXT provides real-time inventory tracking capabilities, ensuring that the inventory in the system is accurate and up to date at any given moment. For more detailed managerial reviewing, the system provides powerful BI reports on both inventory and sales tracking.
Users can view inventory based on division, store and location, review in stock, on order and reserved quantities.
Sales can be viewed and filtered by any and all properties that were part of the transaction, such as the equipment’s model, manufacturer, the equipment itself, customer, customer group, region, sales person, store or division.
How can I rate used units and determine how much money to put into reconditioning?
NAXT provides equipment grading capabilities, which help the users to categorize the used equipment based on their grade of usage. This functionality helps in setting up different tiers and provides a more accurate picture of the equipment’s condition and the reconditioning effort.
Users are able to grade each equipment individually and attach a condition report to the machine with the specifications of the condition and a detailed reasoning on the grade received.
There’s no easy or perfect solution for dealerships to track their used equipment, but all agree that neglecting this topic can be a ticking time bomb. We at XAPT believe that whatever tactic you choose to handle your used inventory, you can only make a good decision based on data and analytics. We built our system specifically for equipment dealers with a special focus on managing used equipment.