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.
Defining "Forced Stock"
"Forced stock" refers to parts that did not qualify for any phase-in criteria. These parts accumulate for various reasons.
Causes of "Forced Stock" Inventory
Firstly, Chuck identified overordering by technicians. Often, technicians order multiple parts to fix a problem. When only one part is used, the rest become instant idle inventory. This scenario not only clutters the parts department but also creates inefficiencies.
Secondly, returns from body shops significantly contribute to "forced stock" inventory. Body shops often demand massive discounts and unlimited returns. Consequently, this leads to a significant volume of parts returning to the dealer.
Thirdly, unclaimed special orders contribute to this issue. Parts initially ordered for repairs that customers never return to collect sit idle. This common scenario can be mitigated by improving communication and follow-up processes.
Lastly, some parts are approved by manufacturers Auto Stock Replenishment programs but end up not being used. According to Chuck, around 40% of ASR-approved parts become idle, taking up valuable shelf space.
What is Technical Obsolescence?
Technical obsolescence occurs when a part hasn't sold within a set timeframe. Mike Nichols introduced the concept of "technical obsolescence" parts aging between seven to twelve months.
Understanding the Timeline
A part reaching its seventh month unsold has an 85% chance of becoming obsolete by the thirteenth month. This likelihood increases as time progresses. Thus, managing parts within the seven-to-twelve-month window is crucial.
Proactive Measures
To manage technical obsolescence, Chuck recommends developing a game plan before parts reach the thirteenth month. This proactive approach can prevent parts from becoming obsolete.
Defining True Obsolescence
True obsolescence refers to parts that haven't seen a sale or receipt in 13 months. It's crucial for parts managers to track both sales and receipt dates.
Why Both Metrics Matter
Sales data might be misleading if a part was ordered recently but hasn't sold for months. In such cases, focusing on the last receipt date provides a clearer picture.
Managing Guaranteed vs. Non-Guaranteed Inventory
Chuck emphasizes that parts managers deal with two inventories: guaranteed and non-guaranteed. Separating these can help in making more informed decisions. For instance, dealer management systems (DMS) provide detailed metrics but often require navigation through various areas. Thus, staying diligent is key.
Educational Initiatives
Educating service departments and technicians on the impact of overordering can reduce non-essential stock. This initiative helps in maintaining a more streamlined inventory.
Improving Communication
Assigning dedicated personnel to handle follow-ups with customers can enhance special order collection rates. This approach prevents parts from languishing on shelves due to failed pickups.
Leveraging Data Analytics
Utilizing advanced data analysis tools and software can provide parts managers with the insights needed for proactive decision-making. Understanding true demand through accurate data ensures better stock management.
Incorporating Chuck Hartle's insights into inventory control strategies can significantly improve efficiency. Managing "forced stock" inventory, addressing technical obsolescence, and leveraging accurate data are key. By implementing these strategies, parts managers can optimize their inventory, meeting true market demand more effectively.
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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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“If you only got one way to look at your inventory, look at it by receipts because that's what matters to the dealer.” -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.partsedge.c