Scalability: A Critical Factor for Growing Dealerships


ScalabilityPursuing scalability may sound obvious and logical, but not all businesses can cope with the added complexity and volume. 

Many dealerships start with basic management systems that work well for small-scale operations. These systems typically adequately handle everyday tasks such as inventory management, sales tracking, and customer relationship management. However, as the dealership expands, the volume of data and the complexity of operations balloon exponentially making them look for a more advanced DMS system.

Existing systems often falter under this increased load, leading to several issues:

  • Data Overload: Basic systems struggle to manage large volumes of data, resulting in slower performance and increased chances of data errors.
  • Limited Functionality: Initial systems might lack the advanced features required for larger operations, such as integrated financial management, advanced analytics, and automated workflows.
  • Inefficiency: Manual processes become more time-consuming and error-prone, impacting overall operational efficiency.

These challenges can slow things down, preventing the dealership from maximizing its potential and taking advantage of growth opportunities. 

Consequences of Outgrowing Current Systems

When a dealership outgrows its existing systems, several negative consequences can surface:

  • Operational Inefficiency: Slow, outdated systems lead to longer processing times, impacting the overall efficiency of functions like updating customer records, scheduling service appointments, and tracking inventory. The lag cascades through your entire workflow, setting forth delays in sales transactions, slower service turnarounds, and less accurate inventory management, ultimately decreasing customer satisfaction and loyalty.

  • Increased Costs: Manually entering customer information into multiple databases not only drains significant employee time but also increases the likelihood of data entry errors. These errors can result in incorrect orders, billing issues, and miscommunication with customers, all of which require additional labor and costs to rectify.  You also have to factor in the cost of maintaining and upgrading outdated systems, especially if your old dealership management system requires frequent maintenance due to hardware failures or software bugs. Over time, the cumulative cost of these upgrades, maintenance, and inefficiencies can significantly strain your dealership's budget, diverting resources away from more strategic investments.

  • Lost Opportunities: Without the ability to quickly and accurately analyze data, you might miss out on critical business insights that could drive strategic decisions. For example, without data-driven insights, you might not realize that certain models or accessories are selling out quickly while others are sitting on the lot. This lack of visibility may force your team to make poor inventory management decisions, like overordering slow-moving items and understocking popular ones, ultimately causing lost sales and excess inventory costs.

  • Employee Frustration: Outdated systems often lack intuitive interfaces and modern features that employees have come to expect from modern software. For example, a service technician using an old diagnostic tool may struggle with outdated user interfaces and limited functionality, which can slow down the diagnostic process and delay vehicle repairs. This can further exacerbate issues like longer service turnaround times and reduced customer satisfaction.

Importance of Scalable Solutions for Business Growth

Enterprises across the country are looking for how to best scale their tech stacks without disruption to customers or drainage of funds. The systems that worked for a $500K/year business are no longer sufficient to contend with a $5 million business and are not even close to being enough for a $50 million company. At first, the additional sales may cause a few "leaks," but before long, your dealership will have burst pipes and water everywhere. That's where "scalable solutions" come into use.

When companies are ready to scale, part of that process means outgrowing old systems to facilitate improved outcomes. 

  • Enhanced Performance: Scalable solutions are designed to handle large volumes of data and complex operations efficiently for smooth and fast performance. You can process thousands of customer interactions per day without slowing down, while sales and support teams can access and update customer records in real time. This ensures that customer inquiries and transactions are handled as promptly as possible. 

  • Advanced Features: Real-time analytics, integrated financial management, and automated workflows are just some of the features you can use for operational efficiency. For instance, an enterprise resource planning (ERP) system like NetSuite offers integrated financial management, enabling automatic account reconciliation and real-time tracking of financial metrics. You can eliminate manual data entry and significantly reduce the risk of errors, allowing your financial teams to focus on strategic planning and analysis.

  • Cost-Effective Growth: Scalable automation reduces labor costs in the first place by eliminating the need for repetitive tasks and human data entry, freeing up valuable time. Second, employing real-time data and forecasts to reduce the possibility of overstocking and understocking leads to improved inventory control. Better purchase selections and lower carrying costs are the outcomes of this.  

  • Improved Decision-Making: Making well-informed decisions is an uphill task in traditional corporate operation processes since they frequently rely on fragmented data from various departments. This is revolutionized by a scalable system, which provides a centralized data hub. Imagine having quick access to essential information in one place, such as stock levels, sales figures, and customer insights. You can confidently identify areas for improvement, uncover hidden patterns, and make data-driven choices with the aid of the ERP's robust reporting and analytics capabilities.

Why NetSuite?

NetSuite, a leading cloud-based Enterprise Resource Planning (ERP) system, offers a comprehensive solution for dealerships looking to scale their operations. Here’s why NetSuite stands out:

  • Cloud Capabilities: Cloud computing has revolutionized the way business can operate. By running programs and storing information in the cloud, you don’t need to manage and upkeep servers on-premises. Most software as a solution (SaaS) companies run on the cloud, and NetSuite is no exception. Cloud capabilities for ERP systems allow companies to easily add more functionality as needed.

  • Global Capabilities: A common way companies scale is to expand globally, and ERP systems that support global capabilities help companies grow their international presence. Global capability goes beyond supporting multiple languages, although this is important, too. Doing business in other parts of the world means complying with local laws and tax codes, which NetSuite can help with. 

  • Adaptable Modules: A system that is highly integrated into every part of your business is an investment. NetSuite often comes in different levels of service to meet your business's current needs, with upgrades or additional modules that can be added later as you grow. This helps companies scale because they can stick with a familiar system while they grow and add functionality as needed instead of going all in or piecing solutions together. 

  • Customization and Flexibility: While NetSuite is reasonably all-encompassing, there are situations where additional third-party solutions are needed. NetSuite's ability to integrate with these other services is essential to helping businesses scale. Transparency and real-time data consistency are what allow companies to identify areas of growth and trouble spots that need attention. Multiple technology solutions that don’t interact with each other lead to data (and department) silos, making growth difficult when the big picture can’t be put together.

  • Mobile, IoT & AI Capabilities: Technology is more interconnected now than ever, and it continues to grow. NetSuite systems are connective by nature because they allow consistent, real-time data to flow into applications from a central database. However, taking advantage of or planning to implement services that leverage mobile, Internet of Things (IoT), and artificial intelligence (AI) will help companies scale into the future. Whether it’s expanded mobile functionality, IoT connectivity with devices throughout the company, or machine learning capabilities, an ERP system helps companies scale both today and well into tomorrow.

The flexibility to adjust your operations is essential as your organization grows. The more users and data you have, the more complex and costly it may be to maintain traditional SaaS ERP solutions. This is where cloud-based solutions like NetSuite shine. Because of NetSuite's adaptable architecture, adding or removing features as your business's needs change is simple. And, due to its cloud-based architecture, automatic software updates are possible, and costly hardware upgrades are not needed. This ensures that your system will always be adaptable and expandable, enabling expansion without compromising its usefulness. NetSuite's inherent flexibility makes it a future-proof investment for businesses aiming for sustained success since it enables you to expand into new areas, launch new product lines, and adapt to changing market conditions without suffering significant setbacks.

Want to learn more about leveraging NetSuite to scale your dealership? Contact our team today.