What’s an acceptable fill rate?
The problem with “fill rate” is that it can be manipulated based on the way you receipt parts into your inventory system. A 80% fill rate is low, no doubt about that. Your particular mix of wholesale, retail, and warranty can make a number like that better or worse for you and just the opposite for other dealerships.
A better measurement is off-the-shelf level of performance or job fill. For example, if you are a large wholesale operation and you do a lot in warranty, We can guarantee that you will have a lower fill rate than say a small dealership that does very little wholesale, very little warranty, and a lot of maintenance work.
The reality in our business is that we manage a “reactive retail” inventory with a large proliferation of part numbers. How we set our phase-in and phase-out criteria will make a huge difference in inventory performance. Setting your phase-in criteria too tough, will make your fill rate suffer and too loosely, will create excess inventory. Fulfilling true demand, no matter where it comes from, should be the objective of any changes you make to these settings.
We suggest that a 90 to 95 percent fill rate would be a long-term goal for high off-the-shelf levels of service to your customers.
If you want to know how to improve your fill rate:
- Look at your phase-in /phase out guides
- Look at your days supply settings
- Look at your excess inventory report
- Review how your department tracks true demand