Parts Managers are tasked with such a wide variety of responsibilities. While all areas of your parts department require regular attention, monitoring these 5 key aspects weekly can help you reduce idle inventory, increase profits, and remain focused on what makes the biggest impact on your bottom line.
1. Special orders
While special orders are very much needed in any parts department, they become a problem when the special order parts fail to make it to your customer and instead end up on your shelves. These parts are considered Forced Stock and can account for 30% or more of your on-hand, making up half of your obsolescence as it ages past the 12 months no sale and 12 months no receipt mark. To reduce forced stock from special orders, review weekly with service advisors to ensure parts are only getting ordered after the repair appointment is scheduled. You can also ask for payment up-front for non-warranty repairs.
2. Forced stock
Forced stock comes from various places, here are the top five:
- Over-ordering by technicians to solve customer issues
- Returns from wholesale customers, especially body shops
- Customers failing to return for repairs, especially under warranty.
- Order error, failing to get proper vehicle information, service diagnosis, or improperly trained Parts Advisors
- Speculation, stocking a part based on “gut instinct”, technician suggestion, or manufacturer program forces it to stock
These parts can account for 30% or more of your on-hand, making up half of your obsolescence as it ages past the 12 months no-sale mark. By checking in with your forced stock weekly, you can begin to identify the problem areas for your operation and change the way these parts are dealt with.
3. Excess stock
Excess stock is often overlooked as it’s inventory that sells regularly and well. Things like spark plugs, oil filters, and brake pads fly off the shelves so it can be easy to over-order them and disregard the impact they’re having on your overall inventory health by taking up space on your shelves. We recommend checking in with excess stock weekly and ensuring you have no more than a 60 day supply for any given part.
4. 13 MNR and 13 MNS Obsolescence
These are all your obsolete parts that have no sales or receipts in more than 12 months. Dealing with reactive retail, as we do in automotive dealerships, obsolescence is a necessary and unavoidable part of the business. It may not be unavoidable, but how much is a truly unmanageable amount? The industry standard seems to be 10%, and we shoot for 10% or lower with our clients with the exception of GM dealerships which average around 20%. Check weekly to make sure you’re in that range. Download our free ebook to learn how to better manage your months-no-receipt and months-no-sale.
While monitoring these technical aspects of your inventory is a great place to start, there is truly no match for the impact of growing your knowledge and resources as a Parts Manager. Invest weekly in yourself through manufacturer training courses, Parts Manager groups, blogs, ebooks, and web searches. Ensure your dealership is investing in education and tools for your entire parts department. After all, the parts department makes up nearly 50% of overall dealership profits.
Want to learn more about how PartsEdge helps Parts Managers and their teams manage their inventories? Send us a message.