Parts obsolescence continues to be one of the most expensive and misunderstood challenges in dealership operations. In our recent webinar, Tackling Obsolescence | Achieving 0% is Possible, PartsEdge Founder Chuck Hartle' broke down why it’s trending upward—and how smart parts managers are reversing that trend.

1. Redefining Obsolescence: It's Not Just No Sale

The industry has long relied on “months no sale” to track aged inventory. But Chuck emphasized that months with no receipt is equally critical—and often overlooked.

Why does it matter? Because you could have a part sitting in your system for months before it was ever receipted into inventory. That means your “aging” clock starts much later than your DMS may suggest.

At PartsEdge, we define true obsolescence as:

Parts with 13+ months of no sales and 13+ months of no receipts.

This more accurate approach helps uncover hidden aging and prevents misleading decisions based on incomplete data.

2. Why Obsolescence is Getting Worse Industry-Wide

Chuck outlined three major factors contributing to the upward trend in obsolescence:

• Manufacturer ASR Programs (like RIM, ARO, PartsEye):
  These automatic stock replenishment programs are designed to benefit the manufacturer, not the dealership. They often force dealers to take on parts with marginal demand to stay compliant, while return allowances have decreased dramatically.

• Warranty Uplift Without Strategic Accrual:
  Many dealers celebrated increased warranty markups but failed to reinvest a portion of that profit into managing aging inventory. That extra margin could be the perfect funding source for returns and write-downs.

• Lack of Process Around Special Orders & Returns:
  This is where dealers have the most control—and often the biggest blind spot. Unclaimed special orders, lack of follow-up, and returns that never get processed all compound into long-term obsolescence.

3. 95% of Obsolescence Comes from Forced-Stock Inventory

This stat shocked many attendees:

95% of obsolete inventory originates from “forced stock” or unfulfilled demand—parts that never met traditional stocking criteria.

Examples include:

• Overordering by techs under warranty

• Returns from wholesale and body shop customers

• Special orders that never get picked up

• Parts accepted through ASR with marginal demand

• Gut-instinct stock decisions that never pan out

When dealerships create sources to isolate these parts, they can better track aging and make smarter stocking decisions moving forward.

4. Proactive Inventory Control Starts with Source Strategy

Breaking inventory into specific sources is one of the most effective strategies for getting ahead of obsolescence. Chuck recommends:

• Separate sources for guaranteed vs. non-guaranteed parts

• A dedicated special order source for easy tracking and aging reports

• For-stock/unfulfilled demand sources to monitor high-risk inventory

• Optional: pricing-focused sources for accessories, body, and quick-turn items

Even a basic setup with 6–8 well-managed sources can dramatically improve visibility and control.

5. The Accrual Formula Every Dealer Should Know

If you’re trying to reduce obsolescence, you need to know:

• How much aged inventory you’re sitting on

• How much you need to accrue or return monthly to manage it

Here’s a simple formula:

Step 1: Pull your 7–12 month aged inventory
Step 2: Filter for non-guaranteed (unprotected) parts
Step 3: Divide the total by 6 to get your monthly obsolescence risk
Step 4: Compare that number to your actual return allowance or accrual fund

If you’re not funding enough to cover that monthly average, your obsolescence will keep climbing. If you're overfunding, you can expect to make measurable progress.

🎥 Watch the Webinar On-Demand

This was one of our most highly attended webinars for a reason—it’s packed with practical strategies, real examples, and advice you can act on today.

👉 https://www.partsedge.com/webinars

👉 https://www.partsedge.com/optimize-inventory-boost-profitability-in-30-days-partsedge

Final Thought

Parts Managers don’t control everything—but they control a lot more than they think. With the right source setup, proactive tracking, and a solid DMS strategy, it is possible to drive obsolescence close to zero.

Need help getting started? Let’s talk.