With all this said, how much does all this really impact the way we have always conducted our business as Parts Managers? Do we really have to change with the times or should we stick with proven methods that have gotten us to where we are today?
In our final issue of "Smart Parts" 2012, we are going to take a look back at this years past issues and blogs to see if we have really maximized on what we know as "good practices" in conjunction with setting the bar for the future.
We will highlight each issue's topic with some key points that have impacted the way we do business in the Parts Department. We will close each following month with a "challenge question" that relates to the topic and hopefully lead to our own self-evaluation.
Here we go "Smart Parts" readers!...it's a long blog, but it may prove worthwhile! If you have missed any of our past issues, visit our website for more information...
January 2012: 2012: "A New Beginning"
In January, 2012, we focused on our Parts Set Ups & Controls. Each year, our inventory resets to what I refer to as "Ground Zero". All of our inventory analysis information ranging from True & Gross Turns, Stock Order Performance, Level of Service, "First Time" Off Shelf Fill Rates, etc. resets to ZERO.
This means that this would be the best time of the year to review and modify these Set Ups & Controls as they will yield immediate results at the end of the first month of the year. Most Parts Managers rarely review and/or modify these Set Ups & Controls on a periodic basis which often leads to unwanted obsolescence and reduced "First Time" Off Shelf Fill Rates.
January's Challenge Question: Did you review and/or modify any of these Set Ups & Controls?
February 2012: Hope Or Change: "We have To Make A Decision!"
In February, 2012, we continued to focus on our Set Ups & Controls by reviewing the results of the changes or modifications we made in January of 2012. If no changes were made?...then how can we expect a different result?
If changes or modifications were made, then what did the results reveal and how can we use this information moving forward? Do we just "hope" that the same Set Ups & Controls will lead us forward, or do we "change" for the future? Remember, the "life cycle" of parts isn't anywhere near what it was years ago.
February's Challenge Question: Have you been doing the same thing for several years, or have you really been just doing the same thing every year, several times and expecting a different result?
March 2012: What Is My Parts Department's "Rate Of Change?"
The March issue of "Smart Parts" was one of our "most read" blogs of the year as this term is not often heard of, or referred to in the Parts Department.
I've found that the majority of Parts Managers haven't even heard of the term "Rate Of Change" Quite simply, it's the number of "add and delete" adjustments that have been made in our Inventory Management System versus the total number of part numbers in the Inventory Management System (I.M.S.).
Too many adjustments may lead to inventory discrepancies and dollar values between the controlled inventory values versus what's on the dealers financial statement. It could also indicate pilferage or accounting issues in the Parts Department if the "Rate Of Change" exceeds 10%.
March's Challenge Question: What's your Parts Department's "Rate Of Change"?
April 2012: Dealing With "The Cycle Of Change"
In April, it was the end of the first quarter of 2012, so we focused on the first "Activity Cycle" of our parts inventory as every three months completes one parts inventory "Activity Cycle".
What did the first three months indicate? What did the business ratios such as True & Gross Turn, Stock Order Performance, Level Of Service and "First Time" Off Shelf Fill Rate reveal? Do I need to go back and review or modify any of my Set Ups & Controls moving forward? Are my profit structures in line to my first quarter goals and expectations?
April's Challenge Question: Do you perform an inventory evaluation after each "Activity Cycle" in 2012?
May 2012: Maximizing Parts "In-Coming Phone Calls"
May's "Smart Parts" article also drew a lot of attention as many dealers and parts managers DO NOT track in-coming parts phone calls. How many in-coming parts phone calls are received where there is just information given with no follow up?
How many of these calls could be transferred to the service department for potential service appointments? An insurmountable number of calls are received each day by parts departments everywhere that go without an accountable follow up system.
May's Challenge Question: Do you have a follow up system in place to track in-coming parts calls?
June 2012: Is Your Dealer Management System, (D.M.S) "Telling The Truth?"
June's "Smart Parts" blog may have "touched a nerve" with some, but it was one of my personal favorites in 2012. As an industry consultant and trainer, I perform many parts department evaluations and it is quite interesting to see some of these dealers Parts Monthly Management reports.
Many dealers don't even know how to read their D.M.S. Parts Monthly Analysis reports. They tend to believe what they are reading, even though the parts manager isn't reporting the information correctly. As the old saying goes..."garbage in, garbage out"!
I could go on and on with this subject, but for more information, read the June 2012 "Smart Parts" article! For you dealers out there...it's a MUST READ!
June's Challenge Question: Is YOUR Dealer Management System, (D.M.S.) Telling The Truth?
July 2012: "Shrinking Parts Gross: Who's To Blame?"
In July, we explored parts gross in general, but with the main focus on our increasing "Express Service" business. With more and more manufacturers "mandating" an independent express service department within our existing fixed operation, it has led to many challenges.
Many vehicles manufactured today are requiring less and less maintenance with fewer dealer visits.We have to remain competitive, but we also have to have the right pricing in parts that can balance these "competitive items" along with the "captive items" in order to retain proper gross margins.
The parts escalation matrix should be utilized "wisely" and like other Set Ups & Controls....reviewed and modified often.
July's Challenge Question: How often do you review your parts pricing guidelines and escalation matrix?
August 2012: Guidelines To Sidelines: "Where DO We Draw The Line?"
In August, we kind of went back to basics with a review of industry guidelines versus the goals and guidelines we set for ourselves in each dealership.
It's important that we are measuring ourselves with a combination of individual standards along with our individual manufacturers' as well as national guidelines set by the National Automotive Dealers Association, (NADA) for example.
The most important lesson in this particular issue is, if in fact we ARE measuring our performance constantly and do we set goals above normal or reasonable expectations"?
August's Challenge Question: Do you set performance goals and guidelines and most important, do you hold yourself and your staff accountable to these expectations?
September 2012: Express Service: "The Parts Impact"
September's issue was kind of a follow up to the July issue of "Smart Parts" We focused on how we can overcome some of the issues of shrinking parts gross due to the "Express Service" impact by embracing it instead of fighting it.
As we know, gross pays the bills and we have to look at this new found opportunity with some different perspectives on what our expectations should be concerning retained parts gross. Quite simply, would you rather have 30% of $20,000.00 or 40% of $5,000.00?
By selling more in volume at a more competitive rate, maybe, just maybe, we can attract and retain more business opportunities.
September's Challenge Question: Are you really maximizing the "Express Service" parts opportunity?
October 2012: Parts Inventory: "Active, Idle or Obsolete?"
Our October issue of "Smart Parts" also caught the eyes of many as we explored the three most common parts classifications. The most interesting part of these classifications is how "Idle" and "Obsolete" are often confused, or even how long an "Active" part is actually considered "Active".
By drilling down these classifications in this issue, we were able to properly identify each of these categories and how to properly manage them to maximize True Turns and most importantly, get the highest parts Return On Investment.
October's Challenge Question: Do you know the difference between "Active, Idle and Obsolete" inventory?
November 2012: O.E.M. VS. Aftermarket Parts: "The Choice Is Simple"
Last month we explored another "hot" topic that's really been around for years and that is the choice of offering aftermarket parts versus O.E.M. parts as a viable competitive option.
For the most part, we all "stick to our guns" by maintaining the image and belief that there really is no replacement for the manufacturers' replacement part and I would have to agree. With that said, I also agree that our customers deserve a choice on certain competitive repairs or maintenance where, quite honestly, the aftermarket option has similar quality, but at a more affordable price to the consumer.
I believe that if we offer more options to our customers, we have a better chance of keeping them. After all, if a vehicle needs brakes...someone is going to get the repair job...why not you?
November's Challenge Question: Do you provide other parts options to your customers on qualified, competitive repairs and maintenance?
In conclusion, for this December issue, I have one last question:
"Did you answer NO to any of the above Monthly Challenge Questions"?
If you did answer "NO" to any of this years challenge questions, maybe it's time to make a commitment moving forward into 2013. Contact ACG's "Smart Parts" and make 2013 your "Best Year Ever!"
Happy Holidays from "Smart Parts" and We Wish All a Very Prosperous New Year!
Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTM. The only "Results Based" High Return Training, Coaching, and Consulting company in the world! Dave can be reached at Cell 786-521-1720 or E-mail at firstname.lastname@example.org Vist our Website at www.smartpartstraining.com