What is the true cost of maintaining and stocking a physical inventory? For both new products and spare parts?

For example in the auto industry … individual repair shops always seem to be able to get spare parts on demand from some source and usually in a few hours but in the IT/Computer hardware industry, spare parts always have to be ordered and shipped over long distances. If you want something right now, then you better be prepared to pay a premium.

Everytime I had to take a car to a mechanic, it’s been extremely easy for them to get a specific part at a standardized price (meaning, I couldn’t have gotten it for much cheaper had I purchased it online from a wholesaler). But if you ever go to a store to buy a computer part, it always costs 2x or 5x for the same part in store compared to an online retailer. And this wasn’t even for an obscure or hard to find part.

Same thing when buying a new car vs. buying a new computer. Auto dealerships are flowing over with hundreds of cars. You could go out and buy 50 cars in a few hours if you so desired and have them all ready to drive in a few more hours. But with computers, even though the individual cost is lower and stocking cubic footage is lower, none of the big retailers will stock more than 1 or 2 pieces of a specific model. It’s not like walmart or BestBuy sells a different model of laptop each week … they sell the same thing for atleast a few months. Imagine an auto industry upstart like Dell was for the PC industry. Entire business model based solely on on-order manufacturing and delivery as opposed to the current model of keeping dealerships stocked with pre-manufactured pieces.

In India, thankfully, the dynamics are a little different. You have your SJP Road shops in Bangalore or Nehru place in Delhi or MG Road in Calcutta. You can get most parts at a decent whole-like price without killing yourself in the process.

Still, part of this is a question and part of it is marveling at how the automotive parts industry has such a informal ordering and delivery mechanism in place.

logistics inventory control spare parts