Car Repair Subscriptions: Cash-Flow Dream, Inventory Nightmare
Subscriptions aren’t just for magazines any more. Today people are subscribing to everything from meal-kit services to clothes to pet food. In addition to the convenience factor, subscriptions can be a smart way for consumers to even out their month-to-month budgetary expenses.
Auto maintenance memberships, like other types of subscriptions, are enjoying year-over-year growth. Subscribers pay a monthly membership fee that entitles them to many of the standard automobile maintenance services, such as oil changes, brake service, filters, and tire rotations. For auto repair shop owners, the predictable income of subscriptions helps them forecast their cash flow.
At first glance, auto maintenance subscriptions would seem to help auto shop owners forecast their inventory needs, too, as well as their cash flow. Owners could maintain “just-in-time” inventories of parts and materials, since they would have a clear idea of what services they would provide to their subscribing customers over a specific time, months in advance.
The reality is quite a bit different, however. Although total inventory quantities become more predictable under the subscription model, the timing of the demand for parts and materials remains unpredictable. Cars don’t always need service on a set calendar schedule, and changes in subscribers’ lives (new job, change of address, retirement, etc.) create unexpected changes in the timing of service needs for individual vehicles.
Unpredictable demand timing means auto shop owners have to be prepared for the unexpected – a sudden influx of subscribers needing oil changes, for example – and their inventory levels have to be sufficient to handle surprises: “just in case” instead of “just in time.”
And just-in-case inventory takes up valuable space that could be put to more productive uses.
Luckily there are space-efficient inventory storage options that let auto shop owners preserve income-producing space, and at the same time store larger quantities of inventory. Vertical carousels and lifts make the most of unused overhead space to store up to 80% more inventory in a compact footprint. High-density mobile shelving eliminates fixed aisles between shelving units, reducing the storage footprint by 50% or more. Add inventory management software to any of these storage systems, and you never have to worry about running low on high-demand parts.
Service memberships benefit auto shop owners by assuring a predetermined level of revenue over time. When sufficient inventory can be kept on hand to account for unpredictable demand timing, without reducing income-producing space, it’s a win for shop owners and a win for their subscribers who never have to wait for service parts to be replenished. It’s like having your cake and eating it too.
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