Parts inventory management has changed considerably over the past decade and the data presented during our latest PartsEdge webinar highlighted one particularly significant shift.
When Chuck Hartle compared the current analysis with the manufacturer study he conducted approximately 12 to 13 years ago, he found that obsolescence at the average dealership in the dataset had more than doubled.
But the bigger story isn't simply that obsolete inventory increased.
It's where the problem is occurring.
Automatic stock replenishment programs are designed to manage a portion of dealership inventory. But dealerships also carry inventory outside those programs.
According to the webinar, the ability to return those non-ASR parts has declined significantly.
When PartsEdge removed ASR-controlled inventory from the analysis and looked specifically at obsolete inventory as a percentage of non-ASR inventory, nine of the 16 manufacturers included in that portion of the analysis were above the longstanding 10% benchmark discussed during the webinar.
At the same time, opportunities to return obsolete non-ASR inventory have continued to shrink.
That's an important combination: inventory can continue aging while dealerships have fewer options for returning it.
One of the major themes of the webinar was understanding exactly what your manufacturer's program controls and what it doesn't.
ASR programs can help manage and protect portions of dealership inventory. But as Chuck summarized during the presentation:
Manufacturer programs manage their portion of your inventory, not necessarily your entire investment.
That distinction becomes especially important when Parts Managers assume the manufacturer is effectively controlling everything sitting on their shelves.
Dealerships may not be able to change the rules of their manufacturer programs, but they can manage the inventory surrounding them.
The webinar outlined several strategies, including stronger special-order controls, better customer follow-up, comparing manufacturer stocking recommendations against actual demand, strategically managing compliance requirements and creating an accrual process for purging aging inventory.
Obsolescence doesn't begin when a part crosses an aging threshold. Understanding how inventory gets onto the shelf and whether it ever had enough demand to belong there—can help Parts Managers address the problem much earlier.
Watch the full Ultimate OEM Inventory Showdown webinar to dig deeper into the data and see how inventory performance varied across manufacturers. Register for the next webinar so you don’t miss a single webinar!