Chuck Hartle is the founder and president of PartsEdge, a powertool for New Car Dealerships Parts Operations, helping to increase DMS utilization, improves efficiency, accuracy, and profitability with solid and consistent plans for eliminating all types of idle inventory in a Parts Operations. With over 40 years in the auto industry Chuck has the know-how and love for the industry that has enabled PartsEdge to identify the biggest needs of dealerships.
What is Obsolescence?
Obsolescence, in the context of dealership parts inventories, is defined by parts that haven't sold or been purchased in 13 months. Chuck Hartle emphasizes that measuring obsolescence by months with no sale often gives a skewed perspective. Instead, he suggests considering both months since the last sale and months since the last receipt for accuracy.
Why Does Obsolescence Happen?
Several factors contribute to inventory obsolescence, commonly referred to by PartsEdge as 'for stock.' The main factors are technician errors, returns from wholesale customers, especially body shops, and unfulfilled orders.
Technician Errors
Often, technicians may order several parts to solve a customer issue but only use one. The unused parts get returned to the inventory, leading to potential obsolescence.
Returns from Wholesale Customers
Wholesale customers, particularly body shops, usually return parts that are less likely to sell, such as tape stripes and moldings. These items almost immediately become obsolete.
Unfulfilled Orders
Sometimes customers don't come back to claim ordered parts, leaving these parts to gather dust. This problem is exacerbated under warranty conditions because obtaining prepaid orders isn't feasible.
How Can It Be Tracked?
To prevent obsolescence, it's crucial to focus on 'for stock' parts. These are parts that fail to meet stocking criteria. You can identify these through specific stock groups or reports that highlight low-demand items. Chuck advises extracting parts with low sales, specifically those with two sales or fewer annually.
How Often Should Reports Be Reviewed?
Chuck recommends reviewing these reports at least once a month. However, he suggests that the best practice is to review them weekly. Regular reviews provide better insights and quicker responses to potential obsolescence issues.
Metrics to Monitor
When tracking inventory, key performance indicators (KPIs) like 'months no sale' and 'months no receipt' should be monitored. These metrics offer a dual perspective on inventory health. They help identify parts that may soon become obsolete, thereby allowing timely action.
Financial Implications
Inventory obsolescence ties up capital and occupies valuable warehouse space. Left unchecked, it can significantly impact a dealership's profitability. Chuck Hartle points out that outdated parts often remain unsold, leading to monetary losses and inefficiency.
Proactive Approach
To manage inventory efficiently, adopt a proactive approach. Isolating parts that show signs of becoming obsolete can save time and resources. You can also negotiate with suppliers about returning outdated parts or seek recycling options.
Training Employees
Employee mistakes form a small yet significant part of obsolescence. Therefore, investing in continuous education and training for parts department employees can prevent many errors.
Customer Follow-up
Finally, follow up with customers who have unfulfilled orders. This practice ensures that special-order parts don’t unnecessarily become dead stock.
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This show is powered by PartsEdge: Your go-to solution for transforming dealership parts inventory into a powerhouse of profitability. Their strategies are proven to amp up parts sales by a whopping 20%, all while cutting down on idle inventory. If you’re looking to optimize your parts management, visit 🔗 www.partsedge.com.
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“That unfulfilled parts demand is what leads to 95 percent of everybody's obsolescence.” -Chuck Hartle
Chuck Hartle
LinkedIn: www.linkedin.com/in/chuck-hartle-1923ab14
Website: www.partsedge.com
Kaylee Felio
LinkedIn: www.linkedin.com/in/gotopartsgirl
Website: www.partse