Our series on the "Top Ten Indicators" to a more successful and profitable Parts Department continues this month with our second indicator, which is "Level of Service" or as some refer to as "Overall Fill Rate". Keep in mind, each month we are climbing the ladder to our overall number one goal which is higher net profits.
Last month, we featured our number one indicator which was "First Time Off Shelf Fill Rates", not to be confused with this months "Top Ten Indicator", though quite often it does.
Having the part on the first visit to the counter is extremely important, but we also have to meet the overall demand 85% - 90% of the time and that's where "Level of Service" comes in.
Having the part on the first visit to the counter is extremely important, but we also have to meet the overall demand 85% - 90% of the time and that's where "Level of Service" comes in.
The "Level of Service" (Overall Fill Rate) is an important indicator because it measures how well we are meeting the demands of the customer and not losing sales opportunities. The problem is, often times Parts Managers don't post all their demands properly which leads to an unrealistic measurement percentage on the Monthly Management Report.
In my opinion, filling the overall demand is not the main issue. Any Parts Manager can order a part and fill the customer demand...I can do that without even stocking a single part.
To me, the real issue here is to make sure the Parts Manager is "seeing" all the demand opportunities in the first place. Many opportunities go "unseen" and the Parts Manager doesn't even get a chance to fill the demand, such as "Lost Sales Posting" or as I refer to them as "Potential Missed Opportunities".
To me, the real issue here is to make sure the Parts Manager is "seeing" all the demand opportunities in the first place. Many opportunities go "unseen" and the Parts Manager doesn't even get a chance to fill the demand, such as "Lost Sales Posting" or as I refer to them as "Potential Missed Opportunities".
If there is one issue that I get challenged on the most, it's definitely the "Lost Sales" category. More and more Parts Managers are telling me that they don't post "Lost Sales" because they either don't have any, or they are concerned about posting too many demands to their Dealer Management System, (D.M.S.).
I can understand why many parts managers feel that way, but I would challenge those who do to the following little task.
I can understand why many parts managers feel that way, but I would challenge those who do to the following little task.
Devote about an hour each day, preferably in the morning, just to listen to your parts staff when they answer the phone. Not only listen to how they answer the phone, but also "listen, watch and see" if they are just giving out information, or if they actually make the sale.
I can guaranty you that you will be amazed on how many "Potential Missed Opportunities" go unrealized.
- Did the customer on the other end of the phone just call for prices?
- Did we have the part they were asking about in stock?
- Are they really going to call back to order or buy the part?
- How many phone calls do we take on a given day?
So, what does the proper posting of all demands have to do with our "Level of Service" or "Overall Fill Rate"? First of all, a "demand" is defined as a "Sale" or a "Lost Sale" and the posting or reporting of these two lead to the "Level of Service" or "Overall Fill Rate" calculation.
With that said, I would have to ask this question:
With that said, I would have to ask this question:
"Are we really posting ALL of our Potential Missed Opportunities"?
With this thought in mind, I'm wondering if our number of demands could be increased and filled instead of being more concerned about the Level of Service or Overall Fill Rate percentage.
The NADA guideline for this category is 85% - 90% and most often times, I see Parts Monthly Management Reports in the mid to upper 90% bracket. When I see these high percentages, I often wonder if the Parts Manager is reporting ALL "Potential Missed Opportunities".
The NADA guideline for this category is 85% - 90% and most often times, I see Parts Monthly Management Reports in the mid to upper 90% bracket. When I see these high percentages, I often wonder if the Parts Manager is reporting ALL "Potential Missed Opportunities".
Personally, I would much rather be at the lower end of that percentage with more demands than I would at the higher end with less demands entered. In other words, I would much rather fill 85% of 100 opportunities instead of maybe filling 95% of 50 opportunities.
If I don't enter ALL of my potential demand opportunities, I would really never know what my market potential is.
If I don't enter ALL of my potential demand opportunities, I would really never know what my market potential is.
By posting as many demands possible, I would not only have a better "vision" of my marketability on my Monthly Management Report, I would also increase my potential Gross Turn numbers.
Gross Turns are also a big indicator of market potential as it determines the inventory "dollar value" needed to meet demands and maintain a (45) days supply available. We will explore more about Gross and True Turns when we reach our Number Seven Top Ten Indicator in a few months down the road.
Gross Turns are also a big indicator of market potential as it determines the inventory "dollar value" needed to meet demands and maintain a (45) days supply available. We will explore more about Gross and True Turns when we reach our Number Seven Top Ten Indicator in a few months down the road.
As you can see, being true and honest in our posting and reporting procedures can make a huge impact in planning our marketing strategies. Whenever I see a Monthly Management Report that shows a "Level of Service" or "Overall Fill Rate" higher than 95%?...I know that there are "Potential Missed Opportunities" not being posted.
One of the biggest indicators that can measure our market opportunities and impact the size of our customer base is our "Level of Service" or "Overall Fill Rate".
Increasing the number of demands posted along with the right Phase-In/Phase-Out and Days Supply Criteria can and will increase market potential. Don't let these "Potential Missed Opportunities" slip away from sight as they will ultimately lead to higher sales and profits!
Increasing the number of demands posted along with the right Phase-In/Phase-Out and Days Supply Criteria can and will increase market potential. Don't let these "Potential Missed Opportunities" slip away from sight as they will ultimately lead to higher sales and profits!
