Experienced Parts Managers know properly configured sourcing can make a world of difference in inventory health. We’ve seen time and time again improper sourcing setups tank inventory productivity and profitability. With guidance and proper implementation, source optimization can help eliminate excess value, promote inventory breadth, help with quick identification of forced stock, save time calculating the right stock order, and so much more. To learn all about sourcing, read on!
What’s included?
When auditing your sourcing strategy, the first step is to identify what’s included. Sources are:
- Pricing
- Master Pricing
- Escalator
- Matrix
- Phase In Criteria
- Sale Accounts
- Economic Order Settings
- Phase Out Criteria
- Source Accounting
- Days Supply
- Price Code Adjustments
It’s simplest to think of sources as main file cabinets with many folders contained: what you have for sale (Captive Parts, Competitive Parts and Accessory Parts), what you need to stock (Special Order Parts and Non-Stock Test Parts), and what you need to get rid of (Forced Stock Parts and Obsolete Parts). Next we’ll dive a bit deeper into each of these files to give you a rubric for organization and optimization.
Captive
Captive parts are manufacturer specific with other dealerships as your competition and they have escalated pricing. These parts are reviewed daily for Stock Order Replenishment. Source these parts by movement to reduce excess depth and create different days supply settings to control depth going forward.
Competitive
This is NOT manufacturer specific and thus every parts supplier is your competition. These are often sold at suggested retail or a “Fixed” or “Family Menu” price and typically sell the most of all parts groups. To optimize sourcing, we recommend creating multiple sources within for different part groups (i.e. oil filters, air filters, brake pads). You’ll want to source by movement to control depth and create custom pricing strategies.
Accessories
These parts are NOT typically manufacturer captive and are true “Impulse” retail. They are usually sold at suggested retail and are model specific and date specific. Getting creative can help sourcing these parts immensely. We recommend creating multiple sources for movement and a source for special pricing and for idle accessories
Special Orders
Special order parts are in stock for a specific customer and not usually stocked, waiting for more demand to phase in. We recommend isolating Special Orders for customer contact, that way it’s easy to create aging reports.
For specific definitions and guidance on Non Stock, Non Stock Phase in Process, Forced Stock, Obsolete Stock, and a complete guide to sourcing optimizing, download our free Sourcing Guide ebook. To browse the entire ebook library, click here.
PartsEdge was designed by a Parts Manager and a DMS specialist who saw the gap between the demands on Parts Managers’ and the lack of resources to get everything done. We take all the guesswork out of DMS management and sourcing setup and optimization and, as a result, our clients see on average a 20% drop in total inventory, 15% less idle inventory, a 50% increase in ROI, and a 20% increase in parts sales. 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 and our testimonials speak for themselves.