Times have changed when it comes to inventory management. Dealerships all over the country are experiencing a trend of increasing obsolescence and damaged profit margins due to the ever-increasing complexity of their inventories, and with no extra support. It makes sense that Parts Managers are struggling to keep up- they have a lot to manage. That’s why we created PartsEdge- to take the complexity out of inventory management and give Parts Managers the power tool they need to create and maintain a lean, efficient, profitable inventory. Here are the five top reasons for investing in our parts management power tool.
1. Obsolescence is increasing
For some time, the average for non-manufacturer guaranteed obsolescence has hovered around 10-12%. Recently, it’s been trending upward towards 16-20%. Obsolescence is money left on the table and when you’re not able to understand where it’s coming from, it can be a consistent drain on profits. Even if you’re able to recoup some of the funds spent on obsolete parts through resales you’ve still spent unnecessary time managing parts you didn’t need in the first place. The PartsEdge power tool helps you identify where your obsolescence is coming from and how to prevent excess accumulation going forward.
2. Manufacturer programs add complexity
Quite a few manufacturers offer automatic replenishment programs specifically designed to eliminate obsolescence for their dealers. While these programs are generally effective dealers participating in Manufacturer Automatic Replenishment Programs can also be on their way to having the highest obsolescence in the parts NOT managed by those programs. We find the added complexity of maintaining compliance without over-stocking is a balance difficult to strike. That’s why we start by separating your non-guaranteed and guaranteed inventories. Viewing them as completely different inventories allows you to monitor what’s going on in each class of your on-hand investment to make the necessary changes in your process before parts obsolescence drags your whole operation down.
3. Parts Managers have too much on their plate
While managing a parts department has only gotten more complex with online sales and fast-paced operations, Parts Managers have been given no additional support. Most Parts Managers agree there is simply not enough time in the day/week/month to address every important aspect of their department. Our program takes a portion of this weight off managers allowing them to work more efficiently and focus on the big picture.
4. Good data is tough to come by
Many dealers we work with know what needs to happen in order to improve their inventory health, but struggle to get the granular reports to illuminate just what needs to change. While some DMS’s make reporting relatively simple, the majority require contacting support to get custom reports. Plus, inaccuracies in reporting can sink profits long-term. At PartsEdge, we know that good data is the foundation of a thriving inventory. We provide custom, accurate, and granular reports that enable Parts Managers to make data-based choices.
5. Parts departments are responsible for nearly 50% of dealership profits
The Parts Inventory is the second largest investment a dealer makes. According to NADA, dealerships service and parts sales totaled more than $120 billion in 2019 and 49.6% of the average dealership’s gross profits come directly from the parts department. With numbers like these, why wouldn’t you invest in a tool to support your parts operation? Our results speak for themselves: dealerships who work with PartsEdge experience, on average, a 20% drop in overall inventory, a 50% higher ROI, a 20% increase in parts sales, and 15% less idle inventory. These numbers translate to more profit, better service, and a proactive parts department.
If you’re ready to put our parts power-tool to work, send us a message! We’ve been helping dealerships for over 20 years to increase their inventory productivity resulting in better turns, higher fill rates, and an efficient, profitable parts department.