Unless you are building a new dealership, or renovating your Parts Department, most Parts Managers have what they have as far as the space allotted for parts storage and the positioning of the parts currently in their inventory. That being said, these parts are where they are now and perhaps always will be.
But, have you ever thought for a moment that we don't have to continue with the "status quo" as far as where our parts are located? Have you ever thought that there may be a better and more efficient way to position, or "bin" our parts? Have you ever even considered that there is a "science" on how we should store and stock parts?
The Parts Department is unique in the fact that we get accustomed to what we see every day, or perhaps what we have been used to as where parts are located. This complacency has led us to brake pads go here, filters go here, spark plugs go here, bumpers go upstairs, cases of oil go here and on and on it goes because that's the way it's always been.
Positioning parts efficiently isn't something that's new as most "Smart Parts" Managers will position fast moving parts close to the back counter for technicians along with perhaps packaged oil, sealants, clips, connectors and such, but are we really utilizing our parts space efficiently? Even more important, are we utilizing our "air space" efficiently?
We will explore more on this topic and end the excuse mongering such as....
"I Can't Stock All The Parts We Need Because We Don't Have Enough Space!"
I would have to say that my first response to that comment would be in the form of a question...
"How Much Parts Inventory Space Is Currently Occupied By Obsolete Parts?"
Let's Begin...
The proper positioning of parts begins with stocking parts "back to front" in the way of individual parts space requirements and sales movement. In other words, bigger parts in the back and smaller parts to the front. Keep in mind that fast moving, overstock parts also fall into this category.
"Back to front" also includes any upper level parts space capacity on mezzanines or second floor parts space capacities. These larger, bulkier parts items also tend to be slower moving parts and are less likely to interrupt technician efficiency.
As I mentioned most "Smart Parts" Managers already do have their faster moving parts closer to the front and back counters, but after that...parts could be anywhere depending on space restrictions or Parts Department demographics and logistics.
This is where the topic of this issue all begins...
Here's what many Parts Managers don't consider and should start to consider when maximizing their Parts Department's efficiency and space capacities. Keep in mind, the following considerations, or recommendations will work no matter how much parts space you have , or perhaps don't have.
Obsolescence:
First and foremost, all parts that are considered obsolete, (no sales over 12 months) should be in a separate parts source, shelved in the furthest most bin location from the front and back counter, regardless of the size of the part. Being that the chances of selling these obsolete parts is 98% or worse, they should be shelved in outside storage units, or at the furthest point from the front and back counters.
You would be surprised at how much parts storage space can be freed up when obsolete parts are out of the current active parts inventory storage space. Once completed, active parts can be re-binned in a closer area to the front and back parts counters. Even bulk items can be repositioned closer and more efficiently.
Fast Moving Parts:
As we move on from the slowest, or obsolete parts that don't sell, we have to position our fasted moving parts closer to the front and back counters. These parts will not only be more available for efficient sales, they will also be in a position where Perpetual Inventories can be performed on a monthly basis.
Fast moving parts that are positioned closer to the front and back counters can also provide the "Smart Parts" Manager a much better view on Stocking Levels. After all, stock out situations are more apt to happen on faster moving parts.
"Back To Front" Mentality:
Now that we reviewed that slowest and fastest moving parts, it's the "in-between" parts that cause the most confusion. After taking care of the slowest and fasted moving parts, the "back to front" mentality must take over, meaning that the biggest go to the back and the smallest to the front.
This also includes any overstock items such as packaged oil, filters and bulk fluids. Each of these items should carry two bin locations, both primary and secondary. The primary location would precede with only sufficient shelf space given. There is no need to have one part number, let's say an oil filter occupying several bin locations.
Fast moving parts need only occupy a four days sales supply and can be replenished from secondary locations as needed from either back locations or outside parts storage facilities rather easily. Many Parts Departments may not have ample interior bin space, but if researched, outside parts storage via Pods or Storage Trailers are simple solutions.
Adjustable Bins/Parts Drawers:
These "in-between" parts should also occupy 80% of the active part number inventory as adjustable shelves and parts drawers offer the highest of ease in adjustability. These parts are constantly moving, changing in size and quantity as well as utilizing as much "air space" as possible.
These adjustable shelf bins and drawers are also much easier to manage around the front and back parts counters and can be moved much more easily as needed. These "in-between" parts are also much easier to access and perform Perpetual Inventories, or regular bin counts.
Mezzanines & Second Level Parts Storage:
Mezzanines and Second Level Storage space seems to always be primarily a dealership dumping ground from Accounting Documents, older computer equipment, take off wheels and tires from New & Used Vehicles, older office furniture, etc....we've all been there.
Upper level storage should be for parts only and other dealership items mentioned above should be maintained in outside storage facilities, plain and simple. If these other items mention do not carry any asset risk, they don't need to be taking up the space of a liability asset.
Upper level parts storage is also where warranty parts on hold should be maintained. Even though these exchange warranty parts are not necessarily parts sales items, they still need to be maintained for warranty payment purposes and secured properly.
These upper level parts should be bulk items, overstock, accessories, (other than accessory display items) and slower moving parts. Also, these parts in upper level areas should not present any safety or health risks such as tires, engines, transmissions, etc. unless proper equipment is used such as forklifts, elevators, etc. and must meet weight restriction requirements.
Accessories:
Stocking Accessories can be a nightmare, not only do they have a short lifespan, they retain lower profits and become obsolete much quicker than normal stocking parts. Accessory displays are very popular, but unfortunately, many Parts Departments do not update their Accessory Displays often enough.
In fact, in many, many dealerships that I have visited, there is a ton of dust on these accessories that are outdated usually by a few years. Stocking Accessories has always been a challenge, whether the manufacturer has prepaid them on sold units, or if we actually purchased them for stock.
All that being said, all Accessories should be stocked in a "visual" area where the Parts Manager can keep an eye on them. Much like Special Order Parts, these Accessories can become obsolete rather quickly and often times, they are not returnable.
Accessories also come in all shapes and sizes and should not take up the space of active parts. The should only be on display and at a visual point from the Parts Manager, perhaps also near the Shipping & Receiving Area. In view, but not taking up valuable shelf space of our "in-between" parts stocking areas.
Special Ordered Parts:
Prior to contrary belief and in my opinion, Received Special Ordered Parts should be closer to the Parts Front & Back Counters and not out of sight from the Parts Manager. Special Order Parts are the number one contributors to obsolescence and should be under the watchful eye of the "Smart Parts" Manager at all times.
Especially when you consider that Special Order Parts represent sold work and should be watched daily by the Parts & Service Managers. Special Order Parts must be managed and kept to an aging of 30 Day or Less. This active visual each day by the Parts & Service Managers is crucial to on going awareness.
Shipping & Receiving Area:
Even though most shipping & receiving areas are at the back of the Parts Department, it's represents the first and foremost important areas of the Parts Department. The shipping & receiving area is where it all starts. Verifying parts orders, packing slips and invoices is where parts reconciliation starts.
Reconciling the Parts Controlled Inventory on the D.M.S. and the Accounting Ledger Balance is where the parts inventory can make or break a dealer on this very important asset. Training is crucial on proper receipting and posting parts inventory into the proper inventory accounts starts here.
The shipping & receiving area is also where most heavier bulk items such as engines, transmissions, tires, or perhaps drums of oil, transmission fluid, overstock on batteries or coolant should be stored if space allows. If space is not available, these heavier bulk items should be stored in waterproof outside storage units.
As an added note on tires, and if you have a Service Drive, this would be a great place to stock tires. They can be secured by locks and chains, easily inventoried and your Service Customers can now see that you are in the tire business. The more tires they see, the more tires that the customer perceives you sell.
If we use common sense and work "back to front", it will be much easier to perform on going Perpetual Inventories. Perpetual Inventories work great, but only if implemented after a physical inventory is performed.
Lastly, and if your Parts Department simply does not have the space, there are many Parts Shelving Companies out there that can consolidate your current Parts Storage Space down to as much as 60% with your current parts inventory.
With all the technology and space consolidation options out there, they can "map" your current Parts Department with an onsite evaluation and provide sensible alternatives. You would be surprised on how much "air space" is available!
Mapping out the Part Inventory Floor Plan should be just that...a plan. Working with existing Parts Floor Plans that have been there for years may just continue the frustration of not having enough space for the right parts and who knows?...you just may have more space than you think!
If you want to learn more about ACG Smart Parts "Eight Habits of Highly Successful Parts Managers", visit our website @ www.smartpartstraining.com, or...just pick up the phone and call me at :
(786) 521 - 1720...After all, not knowing is not worth not "fixing" it...
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