How Do Strong Parts Departments Use Their Time?

Strong parts departments do not rely on month-end statements, outdated reports, or intuition alone. They consistently review sales, train their teams, understand how their DMS works, and separate productive inventory from capital that is no longer generating an adequate return.

Chuck outlined several practices that distinguish high-performing parts operations, including stronger department relationships, more accurate inventory reporting, regular pricing reviews, and a proactive approach to obsolescence.

Time is one of the most limited resources inside a parts operation.

Managers must balance time to sell, manage, train, and measure performance. When staffing shortages force leaders to deliver parts, receive orders, or cover the counter, the work required to improve the department often gets postponed.

Why Must Managers Understand Their DMS Reports?

A DMS can provide valuable information, but only when managers understand how its reports and settings work.

Parts departments sometimes accept that a system cannot produce a certain report when the capability may already exist. The challenge is often finding the right setup, report builder, or support representative.

Waiting until the financial statement arrives at the end of the month can reveal problems too late to correct them. Daily or weekly reviews allow managers to spot declining margins, weak sales categories, and unusual pricing activity while there is still time to respond.

DMS migrations also require careful preparation. Changing systems can temporarily reduce productivity because employees must learn new processes, terminology, and reporting functions. 

How Can Pricing Reviews Protect Gross Profit?

Parts pricing should not remain unchanged for years.

Manufacturers regularly increase acquisition costs. When dealerships leave menu-priced parts at the same selling price, gross profit gradually declines even when sales volume remains stable.

Retail matrixes must also be reviewed for realism. If advisors repeatedly override prices in the same cost ranges, the matrix may be too aggressive. Raising prices elsewhere will not solve the problem if employees and customers consistently reject the calculated amount.

Managers should review:

• Menu-priced items
• Matrix performance
• Override reports
• Gross profit by individual part number
• The percentage of retail sales actually receiving matrix pricing

Pricing should be adjusted gradually based on costs, customer response, market competition, and the department’s required gross profit.

How Should Obsolete Inventory Be Measured?

Months without a sale do not provide a complete picture of obsolescence.

A part may show no sale for 20 months but have been purchased only 60 days ago. It may be a recent special order, a newly received tire, or another item that has not had enough time to become genuinely obsolete.

Months without a receipt can also be misleading. A department may still be selling an item even though it has not purchased another unit for a year because it originally bought too much.

Managers should also separate inventory into protected, non-protected, and non-OE categories. Non-protected inventory deserves particular attention because it creates the greatest exposure to future obsolescence.

Potential obsolete growth can be forecast by reviewing inventory aged 7 to 12 months. Chuck explained that once a part reaches this range, its probability of reaching the 13th month increases substantially. 

Conclusion

The best parts departments are proactive in both sales and inventory management. They train their people, review performance throughout the month, understand the limitations and capabilities of their DMS, and measure inventory using data that reflects the dealership’s actual financial exposure.

Consistent reporting gives managers enough visibility to respond before small pricing, staffing, or inventory issues become expensive problems.

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