I’ve started an informal study with the ultimate goal of answering the question; “what percentage of Part Numbers, added to a Dealership’s DMS, actually achieve an active stocking status?” Here’s what I have found so far. A shocking 3.71% of all part numbers added in a twelve-month period actually qualify for active status. The lowest we have was a Honda dealer who was at .74% of parts activated for stocking. This dealer, and in all fairness, does not stock any sheet metal whatsoever.
The highest so far is a large Chrysler store on ARO that has 8.03% of the parts reaching active stocking status. Again, in all fairness, I had to look at what percentage of these parts were actually ARO controlled. The ARO controlled percentage was 6.84% of the stocking parts, and, ironically, 4.18% of these parts had a 12-month history of 2 or less.
What does this have to say about the manufacturer’s controlled inventory program? For one, you can say that they have provided more breadth or width into the inventory process. On the other hand, you could complain that of the 4.18% of these parts now on the shelf available for sales, these 315 part numbers represented only 206 sales over the past twelve months. Was there really a need to have them at all? Or is the dealer perhaps storing inventory for their manufacturer?
In the early stages of this study, I have to ask some important questions about the inventory control process and automatic replenishment programs offered by the manufacturers versus the DMS Phase-In process.
- Do manufacturer programs enhance a dealer’s inventory for better customer satisfaction results? This is and should be the This is and should be the ultimate goal for dealers.
- Are dealerships parts operations becoming a stocking avenue for the manufacturer’s supply chain process? Put bluntly, are the manufacturers using the dealer’s resources of shelf space and investment dollars rather than stocking the parts themselves?
- Are the manufacturers doing a great job of marketing and selling their replenishment programs to streamline their own supply chain?
When you think about it, the average dealership has about 4% of the entire part number population that ever reaches stocking status. If there is one point that is clear in this study so far, it is that there is a huge part number proliferation process in the dealership environment. When you think about it, that means that 96% (on average) of the parts added to the typical DMS have less than 2 sales or have actually lost sales considering a 3 in X phase-in criteria. With all of this hubbub about replenishment programs as a good way to promote width and better customer satisfaction, numbers like these have got to make you think twice about all the fuss over 4-6% of the overall inventory process.