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Eight Habits
of
Highly Successful
Parts Departments
- Fundamental Beliefs: The “core” of the Smart Parts “Eight Habits” Program. It all starts with an honest DMS reporting system. Proper data entry into the DMS System will provide essential information for the highly successful Parts Manager. Learn how to make your DMS system work for you and better manage this vital information.
- Parts Definition of Terms: Proper reporting in the DMS System can’t happen without a proper Definition of Terms. What is a Lost Sale? Does my staff have the same definition? Am I posting Emergency Purchases correctly? Am I receipting Customer Orders as Stock Orders? These and many other important questions are defined in this important “Habit”.
- Goals & Guidelines: Every successful Parts Department has clearly defined, written goals in order to be successful. In this segment, we will review the latest NADA and Industry Guidelines in order to set attainable and “crystal clear” goals.
- Proper Set Ups & Controls: When was the last time you reviewed your Phase-In/Phase-Out Controls? How about your Days Supply Set Ups? Do you have the proper “Source” Set Ups? Are they current to your manufacturers Stock Order Programs? These modifications are crucial to the success AND liquidity of the Parts Inventory. This “Habit” will open the door to being “Obsolescence Free”!
- Return on Investment: In most automotive dealerships, the parts inventory is the second highest asset. In this segment, we concentrate on your parts inventory “True Turns”, not just the “Gross Turns”. How is your dealers’ parts inventory working for them? Is YOUR inventory turning at least FIVE times a year? If not, here’s where you can!
- Controlled Obsolescence: Many Parts Managers fight this “Monkey on the Back” with little success. Manufacturers’ accrual amounts never seem to be enough to overcome this obsolescence burden. In “Habit #6”, we will not only develop a plan to ELIMINATE this burden, we will also implement a plan to stop this burden from ever coming back!
- Parts Profitability: Latest industry guidelines indicate that the overall Parts Gross Profit Percentage should be approximately 35% - 37% combined AND a Customer Pay Gross Profit Percentage of at least 42% - 45%. What’s YOUR number? In this segment, we will learn how to properly implement a pricing structure that is not only competitive; it will “target” captive items as well to give us an overall profit percentage within current guidelines.
- Service Shop “Parts” Productivity: The average automotive dealership LOSES approximately 8%-10% of their Service Shop Productivity by NOT having the “Right Part the FIRST Time”. In our last segment, we will reduce that “Lost Time” by increasing your “First Time Off Shelf Fill Rate”. Technicians end up having to order the parts and push the vehicle out of their bays, only to bring it back in at a later time to complete the repairs. How much time do YOUR techs spend moving vehicles in and out of the shop because they didn’t have the parts? Remember…TIME is a perishable inventory and latest industry guidelines dictate that we should be providing the parts on “first visit” at least 75% of the time. This is measured by “Stock Order Performance” or “Sales From Stock Ratio” and NOT “Level of Service” or “Off Shelf Fill Rate”! What’s your number?
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