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The Indy 500: The Greatest Spectacle in Inventory Control
The 500 Days of May
The Indianapolis 500 is one of America’s biggest sporting events, and this day of racing reckoning is important not just to racing fans, but to drivers, pit crews, vendors and everyone involved in making sure the Indianapolis Motor Speedway can accommodate and entertain the more than 300,000 estimated attendees each year. With the spectacle likely to be bigger than ever in 2016, which marks the 100th running of the race, and the amount of food and merchandise that will be sold, inventory control is as necessary as the tires on the car.
Though the 500-mile race is televised, it’s said that nothing compares to attending an Indy Car race in person. The excitement of watching the cars speed through 200 laps whether you’re in the 250,000-person capacity stands or in the stadium’s infield, is what makes the it “The Greatest Spectacle in Racing.”
While the drivers and their vehicles rightfully take center stage during the race (not to mention the moments leading up to the start and afterwards), the unsung hero of many events of this caliber is logistics. The atmosphere of the race would be greatly diminished if attendees were unable to buy merchandise to commemorate the event or food and drinks to tide them over during the long day, or if pit crews found themselves lacking the necessary equipment to send their drivers back out onto the track. Businesses of all sizes deal with this issue every day, and customers are similarly disappointed when the products they want to purchase aren’t available.
Think about all the things there are to do at the Speedway that don’t involve watching the race: shop at track side gift shops; buy something to eat (that is, if you don’t bring your own food and grill out while tailgating); purchase memorabilia from the photo shops, which have archives of negatives of the races throughout the years; play 18 rounds of golf; and take tours of the pits, garages and the museum. All of these things require some measure of inventory control.
Inventory Control Pit Stop
Inventory control or management is the process of maximizing a company’s products, receiving the maximum profit possible from the least amount of investment (while maintaining customer satisfaction). This takes the form of balancing inventory turnover ratio, cutting down on the holding costs of inventory, tracking the location of inventory from its time as raw materials to the point of delivery to a customer to identify bottlenecks and more. At its most basic level, it’s ensuring that you have enough stock on hand to meet demand, and nothing more.
Though only a small percentage (7 percent) of small businesses around the country don’t track their inventory at all, a more substantial portion those polled in the Wasp State of Small Business Report say they use a manual process to do so. For many business owners, an upgrade to an automated inventory management system sounds like a large investment, and an unnecessary one at that, Excel or even old-fashioned accounting by hand has done the job for years, so why change now?
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The truth is there are lots of hidden costs to using a manual process to track inventory, including: manual input errors are shockingly common and can lead to stockouts or overstocking; issues with customer service when you’re unable to locate a package; costly employee turnover when workers get fed up with keying in hundreds of SKU numbers.
The most devastating cost is actually more like a lack of profiteering, such as showing up to an event with what you think is enough product, only to fall short and not be able to capitalize on enormous demand. Take Kobe Bryant’s last game before retirement, which took place at the Los Angeles Staples Center: the arena set an industry merchandise record by selling $1.2 million in Kobe-related items that day (though to be fair, some of those items were hats made with cashmere and diamonds that cost $24,008). If the business is there, you want your company to be able to take it.
The Indy 500 will be similarly historic this year, and will also reportedly have special merchandise to commemorate the occasion. With that kind of limited-edition merchandise, it’s crucial to have a handle on what items are in stock, where they’re located and where they’ll need to be come race day.
Don't Get Lapped With Poor Asset Management
Pit crews will have a job resembling that of vendors on race day. Though the crews don’t actually sell items to customers, they need to provide a service to their driver as quickly as possible: When a car pulls in, the crew needs to change the tires, refuel the gas tank, clean the windshield and more, all in a matter of seconds. If this process has any hitches at all (a missing wrench, a misplaced air hose, a bad tire), it could mean the difference between winning and losing the race.
These items and tools have more in common with a company’s fixed assets, the long-term pieces of property used in the production of income, such as computers and vehicles. Asset management is also an area of concern for many small businesses, which is why it’s puzzling that 55 percent of them also fail to track assets or use a manual process. The costs of losing or rendering unusable these large investments can be a killer, just like on a racetrack.
When it comes to the kind of automated system to use to track both inventory and fixed assets, many are finding that while one decades-old technology is no longer up to the task, another is showing its flexibility and ingenuity: barcode-based systems are used by smaller retailers and corporate behemoths alike, since they are easy to use and integrate with existing systems, such as cloud-computing. Often used at the point of sale in supermarkets and big box stores, barcodes (both the traditional and more modern 2D varieties), barcodes and barcode scanners (or even just mobile devices with downloaded apps) are used to update databases on the fly, without the need for cross-referencing or the fear of an incorrect count. If a t-shirt style is running low, the system will let you know; ditto for when a fixed asset has fully depreciated and needs to be written off and disposed.
Indianapolis Motor Speedway on race day will resemble a microcosm of our economy. There will be buyers, sellers and the thrill of a race to top it all off. It will be important for sellers in this market to treat their customers and their system like any other small business would, and ensure that people who want hats, hot dogs or tour passes get them with as little delay as possible, at a decent (if slightly inflated) price. By using inventory and asset management systems to track their products and tools, vendors and pit crews alike will find themselves moving at the speed of the drivers themselves.
How could an inventory management system change the way you do business?
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