Obsolescence left unaddressed can tank profits, take up precious shelf space, and harm service efficiency. Managing obsolescence is paramount for turning the second largest investment a dealer makes (the parts inventory) into profit. Streamline your obsolescence, increase profits, and take your inventory to the next level by following these 4 steps.
Step 1: Start with the data
To start reducing obsolescence, you first need to know what you’re dealing with. We recommend requesting reports from your DMS, and specifically, make sure you’re comparing 13-Months No Sale to 13-Months No Receipt, more on that in our Sales vs Receipts eBook. Though it’s a simple step, we find Parts Managers often struggle to get the data they need as DMS and Manufacturer reporting isn’t always easy to navigate. Another important metric is technical obsolescence. Be sure you’re tracking this number so that you know how much your obsolescence is going to grow each month.
Step 2: Offload obsolete inventory online
As soon as you figure out which parts are obsolete, the next step is to get rid of them as fast as possible and for the best price possible. The best way to do this is by selling those parts online through places like eBay Motors, Amazon, a custom parts web store, or through your own dealer website is a great way to recoup (most) funds on obsolete parts.
However, all this can take a lot of work unless you are using an eCommerce platform like RevolutionParts. They are completely changing the online retail game by helping dealers extend their reach of sales and connect with shoppers across the nation. Last year, dealers on the RevolutionParts platform saw an average of 27% growth in revenue. This powerful platform gives dealers the ability to improve customer experience, increase parts and accessory sales, and rule the aftermarket.
Visit their website for more information on selling auto parts online or to schedule a free demo.
Step 3: Prevent obsolescence
Some amount of obsolescence is unpreventable, and while auditing and flushing obsolescence is a great start, preventing it in the first place can save thousands. The DMS is fickle and manufacturer programs aren’t always made with the benefit of the dealers in mind so while it sounds simple on paper, Parts Managers know preventing obsolescence is anything but. Demand-based decision-making for stocking parts in a dealership must now consider, among many other things, manufacturer programs, compliance, & guidelines, stricter return policies, diminishing margins designed into suggested retail prices, and endless DMS manipulation. All these obstacles and complexities have started a trend in the industry of increasing obsolescence and damaged profit margins. There’s more pressure than ever for Parts Managers to manage effectively, but, with limited tools or support to aid with the ever-increasing complexity, they’re often falling short. More than 20 years ago, Cliff Cope, a DMS specialist, and Chuck Hartle, a Parts Manager, saw this problem and created a tool that monitors the DMS’s sourcing, source accounting, and settings daily to revolutionize the way Parts Managers manage their inventories.
Step 4: Give your parts operation the support it needs
Truth be told, most Parts Managers just don’t have the tools needed to optimize their inventories for obsolescence prevention. PartsEdge monthly service maximizes gross profits without sale-proofing parts with a custom, expert pricing matrix. Our custom reports give you the detailed data you need to make an impact on obsolescence and the big-picture reports to prove it’s working. Dealerships who work with us 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.
Contact us to get a free inventory analysis and learn more about how we can transform your parts operation.