Thursday, May 9, 2024

May 2024: "Parts Life Cycles"

In this issue of ACG "Smart Parts". we will continue with a theme, although similar to last month's theme of "The Lifespan of a Part Number", we will actually break down that "Lifespan of a Part Number into different stages, which is referred to as "Parts Life Cycles".

Much like our own lifespan where we tend to go through different cycles, or "stages" of life that consists of "peaks and valleys", "good times and maybe not so good times", and times in our lives where we are more active than others.

The "Parts Life Cycle" is very similar over the course of the "Lifespan of a Part Number", which we featured last month. In continuing with last month's theme, we will actually break it all down and transform these different "Parts Life Cycles" as how they tie into our current Industry Guidelines on Parts Inventory Management.

Managing the Parts Inventory much like any other department in today's Automotive Dealership requires a certain skill for sure.  Although, when it comes down to managing the dealers' assets, only the Sales Department and the Parts Department are involved.

That being said, and as in the Sales Department, certain Industry Guidelines are applied that do not affect other dealership departments. But when you break it down even further, managing the Parts Department Inventory gets even more complicated and involved as compared to managing the New & Used Vehicle Inventories.

Managing the New & Used Vehicle Inventories involves a much shorter "lifespan" and fewer "life cycles". It would be kind of like comparing the lifespan of a fly compared to our own lifespan as the fly has a much shorter lifespan.

Therefore, the fly is less likely to have as many "life cycles" as we have in our own "life cycle". Thus, the "Parts Life Cycle" stands alone in comparison and requires their own specific measurements and guidelines as to how we manage the dealers second highest business asset.

The "Lifespan of a Part Number", as we discussed last month is broken down into "Parts Life Cycles". As "Smart Parts" Managers, we have to maximize these "Parts Life Cycles" in order to "turn" the Parts Inventory to Industry Guidelines.

"So What Industry Guidelines are Directly Impacted by Parts Life Cycles?"

As we go through our own lives and our own life cycles, one thing is for sure is that there will be change in each life cycle. Much is the same for parts as there will be "peaks and valleys", but in the case of the parts life cycle, we have more control of how we shape that "Parts Life Cycle".

As opposed to our own "Life Cycles" where we may not have as many choices, in Parts, we can choose our Stocking Levels, our Pricing Levels, and we can choose when and how much of a part we want to stock during these "Parts Life Cycles".

As we mentioned earlier, the "Lifespan of a Part Number" is broken down into "Parts Life Cycles" that are "governed" by a certain number of Industry Guidelines" that will help us maximize our parts sales and gross profits over the course of this parts lifespan.

All this being said, we now have to ask....

"What is a Parts Life Cycle Anyway?...and How Are These Life Cycles Measured?"

The first answer to the above two questions is a "Parts Life Cycle" is measured in 90-day periods, or three months. That doesn't mean that the part is only alive for three months, it just means that a "part" cycles through or cycles out every three months.

We will provide evidence of this as we go through the following Industry Guidelines and how they revert back to these three-month periods. Whether the part is "phased-in", or "phased-out", these cycle times play a huge role in the overall "Lifespan of a Part Number".

Number One: Parts Phase-In

The first "Parts Life Cycle" measurement, or Industry Guideline starts with the Parts Phase-In Criteria. Normally, parts are "phased-in" by a number of parts demands, usually 3 hits over a course of 3 different months over a certain number of months, usually 3, 6, or 9 months.

Here is our first bit of evidence of the 3-month Parts Cycle of every 3 months. In other words, parts "cycle through" every three months, or "trimester". Once total parts demand meets the initial phase-in criteria, it now has to survive the next "Parts Life Cycle".

Number Two: Parts Sales Activity

Parts Sales Activity Guidelines are another piece of evidence of the "Parts Life Cycle" periods of 90 days, or three months. Industry Guidelines for Parts Sales Activity starts with 0-3 Months, 4-6 Months and then 2 cycle periods in the 7-12 Months Sales Activity.

Although, Industry Guidelines have been recently updated in the first two Sales Activity, combining the 0-3 Month Sales Activity and the 4-6 Month Sales Activity into one Sales Activity range of 0-6 Months. Once again, measurement guidelines in 3-month, or 90-day increments.

Each Sales Activity segment with Industry Guidelines of 85% in the first 0-6 Month Sales Activity, then 10%-15% in the 7-12 Month Sales Activity, then finally 0%-5% Over 12 Months Sales Activity. Over 12 Months Sales Activity is also measured in 3-Month Increments in many Dealer Management Systems...12-15 Months and so on.

Number Three: Seasonal Parts Sales

Another bit of supporting evidence to these 3-Month "Parts Life Cycles" are Seasonal Parts Sales, even though seasonal parts sales may not be the same everywhere. Even though that may be true, parts demands do tend to follow a seasonal trend, regardless of yearly temperature swings.

In other words, no matter where you are, summer is summer, and winter is winter, and we tend to see more seasonal sales in the peaks of these seasons. It may just be that some experience more demand than others depending on the location.

Number Four: Parts Phase-Out

Once the "Lifespan of a Part Number" reaches its final "Parts Life Cycle", it is extremely important to "let it go". Parts Phase-Out is also triggered in stages of 3-month cycles as previously mentioned in our Sales Activity segment.

Once a part reaches that "In-Active" point of either 6 months, or even 9 months, the chances of selling those parts drops drastically. To the point that if a part does not sell after 6 months, it's a 50-50 chance that it will never sell again.

At 9 months, pretty much a 67% chance it will never sell again, and then finally at 12 months, pretty much a 100% chance of no future sales. Once again, statistics carried in 3-month intervals.

Number Five: Gross & True Turns

Even though Gross & True Turns are measured annually, we always tend to break down each year into "quarters"...first quarter, second quarter, third and so on. Even Gross Domestic Product, (GDP) is measured on a quarterly basis, or every 90 days. Most businesses are measured and forecasted in 4 periods of 90 days, or every 3 months.

Annualized Gross & True Turns are key factors in determining how well the dealers Parts Asset is performing from an investment standpoint. It's also an indicator of how "fluid" the asset is, and how much the asset is truly worth and profitability potential.

All in all, managing the Parts Department and the dealers' number two asset requires the knowledge and skill in managing every part. From the time it's born, through the "cycles of life" and throughout the parts "lifespan" in order to maximize the investment.

If we do this, we will be more able to provide the "right part at the right time" through the "peaks and valleys" in the life span of a part number. Much like our own lives, we have to enjoy life while we can and make the best of all our opportunities.

"Everything Goes in Cycles...So Does the Life of Today's Automotive Part..."


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...





Sunday, April 7, 2024

April 2024: The Lifespan of a Part Number: "Back Then & Today"

Over the past 40 years or so, the number of part numbers in some automobile manufacturers' parts catalogues has grown as much as 25 times the number of part "numbers" today versus back then. This is simply evident by the increased number of manufacturers and increased number of vehicle models.

That being said, the "Lifespan of a Part Number" has drastically changed over this span of 40 years and beyond. But when we talk about the lifespan of a part number, there are actually two different meanings, or definitions of this lifespan.

When we talk about the "lifespan" of a part number from the manufacturer's standpoint, we are referring to "how long" the manufacturer will carry this part in their Master File before it becomes discontinued and it's "shelf life" has expired.

When we talk about the "lifespan" of an automotive part from a consumer standpoint, the "lifespan" of an automotive part means "life expectancy". How long will the part last before it breaks or wears out.

Back in the day, the "lifespan" of an automotive part from the manufacturer's standpoint was actually much longer than it is today. Years ago, many part numbers fit several vehicle applications for several years and often times we could memorize part numbers because of the frequency of use in multiple applications.

For example, one set of brake pads could fit seven different applications for several years where as today, this is quite the opposite. We could have seven different brake pad numbers for just one model vehicle application over a much shorter time.

The result of this swing increases the number of total part numbers that a particular manufacturer carries in the breadth of their inventory. More increases are even realized by the increased number of vehicle models with the addition of hybrid and electric vehicles.

With this increased number of part numbers also comes the "decrease" in the lifespan of the "individual" part number. The result of increased inventory breadth and fewer individual part demands as opposed to multiple model and year utilization as mentioned above 40 years ago results to the "shrinking" of the lifespan of the "individual" part number.

"So, Just How Does One Definition, or Meaning of the Lifespan of a Part Number Affect the Other Definition or Meaning?"

The answer to that question is that the "Lifespan of a Part Number" is highly impacted by both definitions, or meanings. One affects the other in the opposite direction as one increases, the other decreases.

This may sound confusing, but after we break this down, we will see that it all makes sense, especially from a mathematical standpoint. As mentioned, the "Lifespan of a Part Number" can also be referred to as the "Life Expectancy" from either side, meaning how long will a part last on the vehicle, or on the shelf.

So, we actually have two scenarios involving this term of "The Lifespan of a Part Number". One being how long will that part last on the vehicle before wear and tear takes its toll. The second being how long will the part number last on the shelf before becoming obsolete and/or discontinued due to lack of demand.

Now, let's get into it and find out how each meaning affects the other in a huge way. We will see when one definition goes on the upswing, the other one tumbles.

Let's start with the "Lifespan of a Part Number" from a "life expectancy" standpoint, meaning how long a part will or would last after it is installed in a vehicle today versus 40 years or so ago. 

The technology in automotive manufacturing has certainly risen drastically over the past 40 years which is one main reason why the "life expectancy" of an automotive part, or automotive parts has increased. 

Many automotive parts have also been replaced with components versus "moving parts" that are more efficient and dependable. Some parts today actually have a "life expectancy" of the actual life of the vehicle with no expected replacement interval.

For example, 40 years ago, parts such as fan belts, radiator hoses, steel exhaust systems, biased tires, non-platinum spark plugs, and wheel bearings had shorter "lifespans". They either wore out or had to be replaced on a mileage or time interval basis.

Even vehicle fluids last longer today as opposed to years ago with longer life engine coolant, transmission fluid and synthetic engine oil. All going way beyond the old "life expectancy" of years ago.

Other parts that now have extended lifespan are belts and hoses as years ago, there were as many as 4 drive belts per vehicle. Fan Belts, A/C Belts, Power Steering Belts and some vehicles with Air Pump Belts have been replaced with just one Multi-Ribbed Serpentine Belt with a much longer life.

Radiator Hose replacement has almost become a thing of the past as these hoses, as in the previous mentioned "V-Belts" of the past would only last approximately two years or 30,000 miles much like steel exhaust systems, versus "stainless steel" exhaust systems today.

On the other hand, the "shelf life" of many parts years ago would have a much longer "shelf life" than parts today. This may sound weird, but it is true from a standpoint that many parts years ago fit for many years and fit multiple vehicle models and applications. The end result is the "need" for these parts lasted for a longer period of time.

As mentioned earlier, and for example, a set of brake pads for one manufacturer fit many models and for many years as opposed to today when we could have several different sets of brake pads that would fit just one year vehicle model due to various vehicle options and requirements.  

With more vehicle manufacturers, more vehicle models and more technology, the end result is that we have many more part numbers and a wider "breadth" of parts inventory within each manufacturer than we had several years ago.

That being said, more applications mean less overall "individual" part number usage even though the "overall" part usage may be the same. In other words, we could sell 10 sets of 10 different brake pad part numbers versus 10 of one part number, both equaling 10 total sets of brake pads.

In a similar comparison, in the airline industry, Southwest flies Boeing 737's exclusively. There for, the chance of having the right part for repairs and maintenance is more likely to be available than Delta who flies Boeing 717's, 737's, 747's, 767's and 777's for a longer period of time. Not only that, Delta also flies jets manufactured by Air Bus, McDonald Douglas, (bought out by Boeing) and Canada Regional just to name a few.

This means the likelihood of Delta not having the right part for repairs or maintenance is more likely to occur than with Southwest. It is also more likely that Delta has to have more "breadth" of parts inventory to maintain its fleet of various jets.

Back in our industry and way back in the beginning of the automobile assembly line, Henry Ford kept it very simple. One part fit all, and the Model T was only available in one color which was black. Mass producing of original equipment and replacement parts was definitely not an issue, especially in later years in the automotive parts aftermarket.

The number of vehicle applications that required the same part number years ago was much higher than it is today, even though there are far many more vehicles on the road today versus "back in the day".

When you have as many part numbers as we have today, it's really no wonder why there are more back ordered parts and supply chain issues. Even though some manufacturers do it better than others, it's quite clear that the manufacturers with more total models have more shortages and less parts availability than manufacturers with less models.

The "Lifespan of a Part Number" is affected by both definitions, and they actually play off one another. When one lifespan definition is extended, the other lifespan definition is diminished. The difference between the two again is how long will the part last on the vehicle versus how long the part will last on the shelf from an availability standpoint.

A part can be discontinued or go obsolete no matter what the part fits no matter what the year, make or model. I personally know of parts that are still available from a manufacturer that fit vehicles back in the 70's. On the other hand, I know of parts that have gone obsolete, with the part being discontinued, and the vehicle is less than 10 years old.

It all comes down to part demand and longevity from either one of our definitions of the "Lifespan of a Part Number". The definition of each terminology simply indicates demand is going to determine the fate of a part number or dictate the overall outcome of the individual part number.

One thing for sure is if we were to compare the "Lifespan of a Part Number" to our own lifespan, there are definite similarities. Each part number is really just a name, just like any one of us. A part is born, a part grows in demand, just like we do over a course of time, goes to work for a while, then demand slows down until we eventually retire.

In the end, just like us, parts are discontinued, and we move on past this life. And much like our own lives, some live longer than others as the part numbers do depending on the overall part demand.

So, next time you walk down that aisle and pass by some of these part numbers that you know and may we have in your parts inventory, just remember...it may be the last time you see each other, only just to remember that part number down the road when it becomes your time to look "back in the day"!

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...








...


Wednesday, March 13, 2024

March 2024: Vendor Managed Inventories, (V.M.I.): "How to Play the Game"

Since the early to mid 90's, many of us have gotten used to working with the Manufacturers' Vendor Managed Inventory, (V.M.I.). Prior to the V.M.I. Introduction, Parts Managers like myself relied totally on our own Dealer Management System, (D.M.S.) to run our Daily and/or Weekly Stock Orders.

Fast forward to today, and if your manufacturer offers their own V.M.I., we are now subjected to these Manufacturers recommendations on just what parts we should stock. Even though these V.M.I. Programs do utilize individual dealers' sales information as well as the dealers recommended Stocking Levels as set up on the D.M.S.

In this issue of ACG "Smart Parts", we are going to drill down and break down just how these V.M.I. Programs work and more importantly, "How to Play the Game" in getting more of the rewards from these programs with less risk.

Even if your manufacturer does not offer a V.M.I. just yet, don't be surprised if they do in the near future as many manufacturers are joining in such as VW, BMW, Ford just to name a few. Software Programs such as RIM, ARO, Partseye, SRD, and others are now the tools manufacturers are using to create their Stock Replenishment Programs.

Even though the individual manufacturers set ups and qualifications may be different, they may use the same "vehicle". For example, RIM is not just a GM Sponsored V.M.I. as Ford, VW, Mitsubishi and Nissan and others have their own versions of the same software used in RIM, (Retail Inventory Management).

There are also some V.M.I. Programs that are better than others such as PartsEye and FCA's ARO Programs. It all comes down to how they are set up initially as well as program qualifications, benefits, penalty's, guidelines and one of my favorites which is "compliance", which I actually call "obedience".

Another great selling point for these programs is the word "protection" or "inventory guaranty", as both of these terms are deceiving. If these programs offer this protection, or guaranty, then why are there still many of these "qualified" program parts still on the shelves at dealers several years later? Where is the protection, or where is the inventory guaranty?

The truth is all these V.M.I. programs include a "Return Policy", and not "Protection" or "Guaranty" Return Policy. All return parts include restrictions, guidelines, criteria and return qualifications just like any other Manufacturers Return Policies, whether regular monthly returns, or V.M.I. returns.

Let's get started on how these V.M.I. Programs work....

Creating the software V.M.I. "vehicle" such as RIM for example all starts with the collection of sales data from the dealers Dealer Management Systems, (D.M.S.). Some V.M.I.'s will also collect "total demand" data which includes Lost Sales Reporting.

This demand data is collected from dealers nationally, regionally, demographically and weighed utilizing algorithms to measure and initiate parts "phase-in" as a group. The next step, which varies from manufacturers and V.M.I., is what will "trigger" the initial parts "proposal", or recommended Best Stocking Level, (BSL).

In most V.M.I.'s, it only takes one sale in either 12 or 24 months on a "qualified" V.M.I. part that has met overall "group" phase-in criteria. For example, normal individual dealer parts phase-in criteria may be "at least 1 demand in 3 separate months over a period of 7 months to phase-in".

Group phase-in follows these same guidelines in the above example except "multiplied" by several dealers' total demand. So, instead of "at least 1 demand in 3 separate months over a period of 7 months", the demand may have to be "143 demands in 3 separate months over a period of 7 months".

Then, after "qualifying", parts are then weighted for average daily demand through algorithms and is called "Weighted Daily Demand", (WDD), or even "Cycle Demand" and "Lead Time Demand" algorithms.

This all sounds pretty complicated, but it really isn't and the problem with all this is that technically, a part may qualify with those 143 demands in the group as listed above, without any demand in my dealership. 

In other words, when we do finally sell just 1 of these "qualified" parts, the V.M.I. will recommend stocking that part after just 1 sale in either 12 or 24 months. So, then the next question would be..."Should we stock a part that we've only sold once in 12 or 24 months, and will it really be protected?"

The above example can also go in the other direction on a part that has met my criteria for phase-in with several "hits" but is still not a "qualified" V.M.I. part because it hasn't met the total group demand criteria. This is why we still need our own D.M.S. to track our own demand.

Let's now look at "The Good, The Bad, & The Ugly" on these V.M.I. Programs

First, The Good:

It's always been a good thing to see what parts are selling out there to get a good sense of what we may be selling in the future. Collective demand information will give us a "road map" for sure, but demand varies from dealership to dealership and may lead to understocking or overstocking and obsolescence.

Discounts and Allowances is also a good thing as these V.M.I. Purchase help us earn discounts and build return reserve. Depending on the manufacturer, additional "back end" money may be available as these programs may also be tied into overall dealer "cash back" programs.

Second, The Bad:

One of the first "bad things" that I see quite often due to these programs is that many Parts Managers rely on these programs 100% for all their Stock Replenishment. What they may not realize is that most of these V.M.I. Programs offered by the manufacturer only provide approximately 50%-55% of their total manufacturer parts inventory "breadth".

In other words, they cover mainly the A and B type parts and miss a lot of what I call the "meaty parts" like some sensors, gaskets, bolts, tensioners, adjusters and so on. Many of the parts that are tying up the Service Department and slowing down Service "Cycle Times".

These "meaty parts" can only be picked up by our own D.M.S. with the Proper Set Ups & Controls and running our In-House Stock Orders like we did before these V.M.I.'s were even out there. Unfortunately, many Parts Managers have transformed away from their own D.M.S. and are missing the benefits of their own D.M.S. with the right set ups & math.

Lastly, The Ugly:

The Ugly side of many of these Manufacturer V.M.I. Programs is unfortunately the lack of understanding of how these programs work and "How to Play the Game". The results of not knowing how to play the game leads to a lot of overstocking of these V.M.I. parts and more obsolescence.

Overstocking in the ways of maybe having too many Days Supply of even faster moving parts, i.e. having 10 Brake Rotors of a part number when we only need 4. Overstocking doesn't just mean having too many of a fast-moving part as having just 1 of a part number that I don't sell could be too many.

In many of the stores that I have visited, the overstock of V.M.I. parts are as much as 10%-15% of the total parts inventory. All the while, that additional investment on overstocking investment could be directed more towards parts that will strengthen the "breadth" of our parts inventory to increase overall "First Time Off Shelf Fill Rates".

Another "Ugly" is that many of these dealers that utilize a Manufacturers V.M.I. Program is increased obsolescence. Even though these programs promise "Inventory Protection", that is just not the case as I've witnessed over and over again.

Although, there are a couple of these V.M.I. Programs, such as PartsEye that actually "discourage" the stocking of Aged V.M.I. Parts, which is great. Maintaining the proper level of Days Supply and Aged V.M.I. Inventory is encouraged and rewarded with more Program Benefits.

Unfortunately, in some other Manufacturer V.M.I. Programs, dealers are being led to being the Manufacturers Second Warehouse and admittedly so from some of my conversations with some manufacturers.

Knowing "How to Play the Game" also requires knowledge of "Riding the Curve". Compliance Levels require the Parts Manager to know what to stock and what not to stock in these programs that lead to overstocking and accruing more obsolescence while staying "Compliant", or "Obedient" to these Programs.

Knowing "How to Play the Game" is a "juggling act", and we need to take advantage of the benefits while protecting our dealers second highest asset, which is the Parts Inventory.

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...





 



Wednesday, January 31, 2024

February 2024: Dealer Management Systems, (DMS) Rankings for 2024

In my opinion, one of the most challenging decisions that today's dealer owner has to make is which Dealer Management System, (DMS) is right for their dealership.

It was much easier years ago as their where just a handful of DMS Vendors out there such as Reynolds & Reynolds, ADP, (Now CDK), UCS, Coin Convergent Systems, and perhaps Arcona, which evolved into today's Dealertrack DMS.

The pricing of these Dealer Management Systems was just what it was as dealers didn't really have many options as DMS competition was held pretty tight with just a few systems out there.

Dealers had to have a Dealer Management System, so the choice of which system to purchase became just a matter of preference. Price wasn't a major factor on which system was eventually selected as being familiar with system operation was the priority.

Fast forward to today, Dealers have lots of options, in a way, maybe too many options. It has led to choices being made based on price, or perhaps, Office Manager, or Comptroller preference, no matter what the price.

Office Managers and Comptrollers often dictate which DMS the Dealer will choose, regardless of the price due to Conformity and Accountability to their standards they are familiar with in basic Dealer Accounting.

That being said, if Accounting is a main priority, with price coming in second, what about usability in all other Dealer Departments? What affect does this choice of which DMS have on the Fixed Operations Departments, primarily the Parts Department?

It's Time to Find Out....Let's Do This!

I will say that the choice made definitely impacts both the Parts & Service Departments. Some are better than others and many lack basic needs of each individual department.

In this issue of ACG "Smart Parts", we will break down each individual DMS out there with their "pros and cons". There may be more systems out there that are not mentioned, but for the most part, we will cover all but a few, if any.

We will not list these Dealer Management Systems in any order of personal preference as many dealers are perfectly fine with their choice. We will simply list the positives and negatives with each system out there from a Parts Perspective.

So, let's get started with our own ACG "Smart Parts" Perspective on what these Dealer Management Systems have to offer and what they lack. 

If we had the opportunity to put the best of each system wrapped all into one DMS, we would then have the perfect Dealer Management System out there, which someday, I would personally love to be a part of.

Each DMS that we review will be in alphabetic order and will not be listed in any order of preference. We will list our "Thumbs Up" and "Thumbs Down" on each DMS most utilized by Dealers today in 2024.

Although, ACG "Smart Parts" will "rate" each DMS with our "5-Star" Rating, One Star being the lowest rating, all the way up to our highest rating with Five Stars.


Let's Begin...

Adams: ★

👍: Thumbs Up

Adams Dealer Management System is not widely utilized but is an efficient DMS overall. It does provide ABC Source Ranking by Piece Sales and the basics as far as integration with Accounting are there and provisions for Matrix Pricing Options. 

Somewhat User Friendly but does require a lot of extra keystrokes to go from program to program, but not a major issue. Parts and RO billing is fairly easy, and Source Management is manageable and basically effective on Best Reorder Points and Best Stocking Levels.

Lost Sales Reporting is available but requires too many extra steps to get them recorded. Also, there are no prompts to report Lost Sales if parts aren't stocked initially.

👎: Thumbs Down

One of the main "Thumbs Down" in Adams is a lack of Reporting Options. Most of the "canned reports" lack enough significant information for daily operations. 

"Drill Downs" are just not there on Parts Gross Profit Issues, Parts Detail Information, Parts History, Supersession Links, Special Orders, Source & Batch Moves, etc.

Constant manual updating is also required for most information such as Best Reorder Points and Best Stocking Levels as real time updating is lacking.

Not a bad choice if you are a smaller dealer and just want the basics as we will see in many other DMS Options as we continue forward. 

A detailed Special Order Program is also lacking in Adams, almost like an afterthought with little detail and links to Customers and Open Repair Orders and Appointments.

AutoMate: ★★★

👍: Thumbs Up

I will say that AutoMate has come a long way in the last several years. They have "upped" their game to become a significant player in today's DMS battle.

Definitely very "User Friendly" with a very simple dashboard to direct anyone to where they need to go. All the key elements are there that a Parts Manager needs. 

Source Management with ABC Source Ranking, Batch Moves, Parts Matrix with Cost Plus, List Plus and List Pricing Options within the same Matrix, which is not common, but beneficial. Very good DMS overall with a few drawbacks they need to work on.

Lost Sales Reporting does take a couple extra keystrokes which will tend to lower the actual true Lost Sales numbers due to that extra step, but Lost Sales are easy to post in AutoMate.

👎: Thumbs Down

As mentioned, AutoMate has made many improvements, especially in Parts over the last several years. One of the items they need to work on is Parts Receipting.

In AutoMate, Parts receipts are either for Stock, or whatever else. In another words, there is no breakdown in Supplemental Stock Orders, "In & Out" Orders, Other Orders, etc.

AutoMate also lacks their own "Report Generator" that can be utilized by dealer personnel. They do have "Report Mate" where AutoMate can generate specific reports for the dealer at an additional cost.

AutoSoft:

👍: Thumbs Up

AutoSoft is very "User Friendly" with Parts Counter Tickets and Repair Orders very easy to navigate. Moving parts from RO to RO, or line to line very easy.

AutoSoft is probably one of the easiest to learn, primarily due to the fact that it's extremely simple to navigate through. The Action Buttons and Menu Driven Software is easy to read through and figure out.

AutoSoft does offer Source Movement by Piece Sales that is updated automatically in Sub-Source Management, but with limited levels of Source Movement by Piece Sale Ranges.

👎: Thumbs Down

Unfortunately, there are many negatives with AutoSoft, especially in Parts starting with the reporting. Monthly Management Reports are not updated automatically. If the Parts Manager does not archive the Month End Report?...they are lost forever.

AutoSoft has limited ABC Source Ranking Levels with only six levels offered. The minimum amount of ABC Sourcing Levels required based on the math requires at least eight levels.

Same goes for the Parts Matrix as only twelve levels are offered with no ability to add more based on different sales ranges. Monthly Management Reports lack lots of information needed for properly managing the Parts Department.

Unfortunately, there are many disadvantages with this DMS are far as Parts & Service goes beyond what we could list in this issue. They have a long way to go, but it's much more affordable for the Dealer with adequate Accounting Integration options.

CDK - Drive: ★★★★

👍: Thumps Up

Formally ADP, CDK Drive is still one of the most prominent, popular and longest lasting Dealer Management Systems out there today for many reasons.

CDK offers everything for all Dealer Departments, especially in Parts. ABC Source Ranking, Parts Matrix Pricing, Parts Ordering from Stock Orders, Supplemental Stock Orders, In & Out Purchases, E-Purchases, Lost Sales Reporting, etc.

No matter what the size of the dealership, CDK will provide all the needs. Daily & Monthly Reporting is outstanding in both Parts as in Service. Installing Parts Set Ups, though not easy and recommended for the average user, they are there.

CDK is still evolving over to their "Drive" format, but the old "Green Screen" is still required in certain Parts Set Ups. Most Parts Set Ups are fairly easy in their MSSO and IRO Set Up Functions.

CDK also provides "Weighted Price Averaging" which allows parts sales history to be "weighted" over the last twelve months. This provides the most recent sales information, especially on parts seasonal sales, not offered by many Dealer Management Systems.

👎: Thumbs Down

One of the more "pricier" systems out there, and as mentioned above, CDK is still evolving from their "DOS-Based" System from years ago over to their newer Windows Based Drive System. This process is still on-going and hopefully will be completed in the near future.

CDK does not allow the "mixing" of a Cost-Plus Parts Matrix with an "out of grid" default to List as AutoMate does, which is a great option. CDK also does not have a "Flat Price" override to Matrix Pricing as Dealertrack offers.

Flat Pricing can only be utilized by moving Flat Priced Parts into a different Source but doing that will sacrifice ABC Source Ranking & Movement. Source Ranking Movement also requires running the SCS Function Daily to allow Source Movement as it is not done automatically.

Dealerbuilt: ★★★

👍Thumbs Up

This DMS, in my opinion is one of my "Sleepers" on our list of Dealer Management Systems. I was actually surprised when I first started working with this system as it does what a basic, affordable DMS should do.

All departments will benefit from this system in a general way, but without the detailed information available in other systems like Reynolds & Reynolds, CDK and perhaps Dealertrack.

On the Parts side of things, it is pretty much complete in all aspects although some Applications require several extra keystrokes, but overall...a "good bang for the buck" in all dealership applications.

👎: Thumbs Down

Dealerbuilt does lack detailed report information if you are a manager that likes to "drill down" information as the "canned reports" have limited information, other than the basics.

Having the ability to create "specific" reports with "specific" information provided in other systems, whether Report Generator, Advanced Reporting, Dynamic Reporting, or an "English Statement" back in the old ADP days.

Today's Dealer Managers require more than just the "canned reports" that are provided by most Dealer Management Systems. Dealers in general are requiring their managers to "drill down" more and perform at an even higher level than years ago.

Dealertrack: ★★★★

Dealertrack, in my opinion, and from the Parts side of things has become one of the top, more affordable Dealer Management Systems available. Even though they are still lacking some key components as we will list, they are climbing that DMS ladder rather quickly.

As far as DMS Conversions, and in the hundreds of dealerships that I have visited over these last five years, Dealertrack has taken over more systems out there, with few converting from Dealertrack to other systems.

This alone makes a statement about this system in general. User friendly, great "drill down" features, Parts Set Ups & Controls without adding additional Sources, (Stocking Groups) for Source Ranking by Piece Sales.

Dealertrack also has one of the best Special Order Parts Programs available with great detail, more than any other system out there in my opinion.

Weighted Parts Averaging, Simplified Parts Matrix, Pricing Strategies, Lost Sales Reporting, Stocking Group Management, Parts Ordering, etc. are all top notch and easy to navigate. Definitely one of the best systems out there for Parts.

👎: Thumbs Down

As with any new Product, or Service out there, there are still some "growing pains" to work through. One of which is that Dealertrack still does not have a "Batch Move" function in a "canned report" feature.

They can do Dynamic, or Advanced Reports specific reports such as Batch Moves. In other words, we can't move all parts from one Stocking Group, (Source) into another Stocking Group. Dealertrack has to build and perform these specific reports individually. 

It requires downloading parts into an excel document and reloading into another Stocking Group, (Source). This may not sound like much, but it is a HUGE inconvenience for Parts Managers.

They also don't have a lot of Order and Receipting options with only NG, (Negative) SO, (Special Order), EP, (Emergency Purchase), or Stock Orders. The NG, or Negative Purchase Sales also have to be managed as they will remain at a negative quantity without constant maintenance.

In their Sales Analysis Section, Dealertrack does not separate Customer Pay Service Repair Orders from Collision Center Customer Repair Orders as they are looped into the same report, even though they can be separated in Accounting on the Financial. 

Lastly, Dealertrack does have great reports, but they do not have one "catch all" Parts Monthly Management Report as most all Dealer Management Reports have. Even though all the information is available in separate Monthly Reports, they are not inclusive on one Parts Monthly Management, or Monthly Inventory Management Report.

Dominion/VUE:

👍: Thumbs Up

To be quite honest, and in my opinion, this DMS is definitely lacking in so many areas, but on the positive side of things, it is a Menu Driven, Windows Based System that is easy to navigate.

It does offer ABC Source Ranking by Piece Sales, but parts that meet Phase-In Criteria have to be "manually" posted as Normal Stocking Parts as "Automatic Phase-In" is not available.

Dominion/VUE does offer all the basics such as Matrix Pricing, Lost Sales Posting, Special Order Program, Daily Sales & Gross Information and pretty much all that a DMS needs to offer, but not to any great depth.

👎: Thumbs Down

Dominion/VUE Parts Manager Reports are extremely vague and they lack the simplest information. For example, they do not have a Parts Ordering and Receipting Report at all. 

In other words, we do not know what parts were receipted as Stock Orders, Special Orders, Emergency Purchases, In & Out Orders, Other Orders, etc. 

Stock Order Performance is a Key Performance Indicator for Industry Guidelines and is not available on this system. Many of their Parts Monthly Management Reports contradict each other and lack trustworthiness.

For Parts, we could go on and on with the "Thumbs Down" categories for this system. Although, these comments do not reflect potential benefits for other Dealer Departments and Accounting, but from a Parts perspective, this system lacks quite a bit, even the simple things.

PBS: ★★★

👍: PBS is my other DMS "Sleeper" out there as this system, much like Dealerbuilt has everything a Dealer would need in a Dealer Management System for the most part at an affordable price.

It does have a few flaws in the area of Parts, which we will discuss, but overall, and for the price, there is value in this system versus the big guns like Reynolds & Reynolds and CDK.

Parts Monthly Reporting is also very complete and the reports provide all necessary reporting information, or Parts Key Performance Indicators required for Industry Guidelines.

Accessibility, User Friendly and ease of all aspects of Parts Billing, Ordering, Receipting, Lost Sales Reporting have ease of functionality. For the money, one system I would consider.

👎: Thumbs Down

Parts Set Ups & Controls as we all know are crucial to getting the right information out of any system. PBS does lack the "ease" of implementing the right Phase-In/Phase Out Parameters, Low & High Days Supply, also referred to as Best Reorder Points, (BRP0 and Best Stocking Levels, (BSL)

If not done properly, as the "language" of this system is quite different from most other systems will lead to improper Suggested Order Quantities, especially in Source Ranking by Piece Sales.

Reynolds & Reynolds - Ignite: ⋆⋆⋆⋆⋆

👍: Thumbs Up

Even though this DMS is our last one listed alphabetically, it is our ACG "Smart Parts" choice as our 5-Star recipient of Dealer Management Systems available, even though, most likely to be the most expensive one out there.

Much like CDK, Reynolds & Reynolds is still transitioning over from their old "Blue Screen", DOS-Based System over to their new Windows Based Ignite Program. Even though there really isn't a perfect DMS out there, this one is the closest in my opinion.

From all the existing features still in the old "Blue Screen" to the newer on-screen features and dashboards in Ignite, they have it pretty much covered.

Order Types, Receipt Types, In & Out Receipts & Sales, Lost Sales Reporting, Batch Move Capabilities, Source Ranking by Piece Sales, Advanced Reporting all are available and more in Reynolds & Reynolds.

Their Special Order Program and Reporting is only second to Dealertrack in my opinion. The ability to bill Parts to Appointments and track by the customer is also a plus.

Reporting in Reynolds is far superior to most systems as well with their sheer number of custom, canned reports are at a very high level. This allows Parts Managers to drill down more than most other systems. 

The addition of Ignite has allowed Reynolds to become more User Friendly without all the excessive keystrokes required in the old "Blue Screen" version.

👎: Thumbs Down

The biggest downfall to this Dealer Management System is price. With new ownership in Reynolds a few years back, they have gotten even more expensive with contract requirements to system updates and even higher prices which has driven many loyal customers to other systems.

The other drawback is that Reynolds still requires the addition of Parts Sources to implement ABC Source Ranking by Piece Sales. Updating is still required manually by running Program 2105 to update Source Movement in the old "Blue Screen".

Other than the continued conversion of the remaining, old DOS Screen Programs, they still have most of what the Parts Department needs, no matter what the dealership size.

Other Systems Available: ★★★

Other Dealer Management Systems that I am familiar with include Quorom, Lightspeed, UCS and Dealer Socket. All of which, even though I am familiar with have had limited usage overall with Dealers, but with the same "Thumbs Up" features and "Thumbs Down" lack of features.

Tekion is the newest to enter into this mix of systems available.  From what I have seen thus far, they are pretty much have everything with some nice features with more they are still working on. That being said, the jury is still out on what this system will reveal going forward.

Lastly, no matter what DMS you currently have, the overall "Utilization Factors" on all of them is a staggering 20% - 25% of what they are capable of. This all reverts back to proper Installation and Training.

Challenge is, and from my experience, these DMS Vendors need to start with their own people, training them on what they are actually installing. In my opinion, many don't even know their own product well enough to the point where they are more concerned with "functionality" instead of what the system is "capable" of doing.

 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...























 













Wednesday, January 10, 2024

January 2024: 2024: "Thoughts & Predictions"

First & foremost, we would like to wish all of our ACG "Smart Parts" Readers a Very Happy, Safe & Prosperous New Year as we march into yet another year with our 166th Edition of ACG "Smart Parts". Thanks so much for your support and constant dedication to Parts Excellence!

Our first issue of the New Year, as in each year, is devoted to looking ahead to get some idea of what we may expect going forward. As in previous years, we gather our personal data along with other industry analysts to give our readers a condensed and concise analysis of what may lie ahead.

First of all, our title of our first issue of 2024 cannot be simpler. We all have our own opinions, whether based on facts, personal experiences, previous results, or whatever. Bottom line, we all could answer this simple question...

"What Do You Think Will Happen?"

The answer to that question ends up being our title of our first issue. Everyone seems to have their own "Thoughts & Predictions" of what may happen in the future. Hopefully, we can provide some insight and perhaps help shape your own "Thoughts & Predictions".

Our goal in this month issue of ACG "Smart Parts" is to provide our readers with the latest data and insight so we can all shape our own thoughts, opinions and predictions as to what may lie ahead in 2024.

How much will Battery Electric Vehicles, (BEV's) and Fuel Cell Electric Vehicles, (FCEV's) impact our future, not only in Sales, but also in the Service & Parts Departments?

The Answer to These Questions and Many More!...

Let's Begin!

We will start with research from our well-respected team of industry analysts on their forecast of New & Used Vehicle Sales, including the rise of Battery Electric Vehicles, (BEV's) and Fuel Cell Electric Vehicles, (FCEV's) in 2024.

The "rise or fall" of BEV's and FCEV's, no matter how you look at it will change our whole perspective of these vehicles in the Aftermarket. How will we be servicing these vehicles and what parts will we need? What additional safety and training will our technicians require?

When we add in these BEV's and FCEV's into the mix of our overall up-front Sales Forecasts, and eventually the Aftermarket, it's pretty obvious that the impacts will be felt overall.

Before we get the impacts of BEV's and FCEV's, let's take a look at what forecasters and analysts think about Front End Sales in general for 2024.

Analysts at Edmunds.Com forecast and expect "Clashing Market Forces in the New Year, and Forecast 15.7 Million New Vehicles Will Be Sold"

Their December 13th, 2023 article goes on to say...

"The car shopping experts at Edmunds say opposing market forces are expecting to keep new vehicle sales relatively steady in 2024, forecasting that 15.7 million new cars will be sold. The Edmunds data represents a 1% increase from their estimate of 15.5 million new vehicle sales in 2023. EV market share is expected to tick slightly higher to 8% of total new vehicle sales in 2024, up from 6.9% in through November of 2023."

Jessica Caldwell, Edmunds Head of Insights also goes on to say...

"2023 experienced improved inventory levels from pandemic-era lows combined with pent-up demand to deliver strong sales estimated up 12.7% year over year. While the year ahead holds the promise of further increased inventories and enticing deals that consumers have eagerly awaited even though 2023's interest rates are expected to linger..."

Lastly, and based on their data, "Edmunds experts put together their list of three biggest industry trends they predict will shape the road ahead in 2024, along with some direct consumer shopping guidance."

  • "The Covid-19 pandemic spurred a series of significant price hikes...but Edmunds data reveals pricing has peaked, as we improved inventory has driven incentives back into the market."
  • "Shoppers seeking options on the affordable side of the new vehicle market...according to Edmunds, days-to-turn data, vehicles transacting below 50K are selling more quickly, (30 days) than vehicles above the threshold, (47 days), which is a reversal of that trend from the fall of 2020 through the fall of 2021"
  • "Lastly - Consumer Callout: Edmunds experts say 2023 models will be selling out sooner than expected as many automakers have rolled out 2024 models early and aggressively..."
So, from our perspective here at ACG "Smart Parts", we can expect a continuation and a slight rise in New Vehicle Sales in the year ahead. This news just fuels our Aftermarket Parts & Service Sales as vehicle maintenance will still be on the fore front.

But, what about Used Vehicle Sales?...

A recent blog by Anthony Allen at www.boltontechnology.com that more vehicle owners are buying older cars...

"In recent years, there has been a noticeable shift of vehicle owners, as they are increasingly opting to hold on to their vehicles for extended periods of time. However, what's even more intriguing is the buying behavior of consumers. According to industry experts, there is a projected surge in used car sales, with a robust growth rate of 9% expected between 2019 - 2025."...As a result, there is a steady and continuous demand for maintenance and repairs, creating a lucrative opportunity for service shops."


Now we come to our portion of our "Thoughts & Predictions" for 2024 as we delve into the Auto Parts Aftermarket and Service Repair side of things looking ahead.

As Anthony Allen was closing out his recent blog, he also mentioned that "as we approach 2024, it's crucial that technicians, service advisors, dealership owners, and repair shop owners stay ahead of the curve in a rapidly changing industry."

I think most of us are pretty aware of Anthony's comments, but how will the "rapidly changing industry" effect our future Parts Sales? Where will our Parts Sales come from?

Our last contributor and industry analysts may just have those answers we are looking for, databridgemarketresearch.com has provided us with some interesting facts the consider...

The global auto parts manufacturing market attained a value of 701.57 Billion in 2023, driven by a rising demand for passenger vehicles. The market is expected to witness a further growth in the forecast period of 2024-2032, growing at a Compound Annual Growth Rate, (CAGR) of 5.7% - 6.1%

The article goes on to say...

"Major factors that are expected to boost the growth of the auto parts and accessories market in the forecast period are incentives taken by the government and the rise in the regional demand. Furthermore, the easy availability of raw materials is further anticipated to propel the growth of the auto parts and accessories market. On the other hand, a global slowdown is further projected to impede this growth in this timeline period..."

"Global auto parts and accessories market was valued at 660.21Billion in 2022 and is expected to reach 877.12 Billion USD by 2030, continuing to register CAGR rates of 5.7% - 6.1%."

We also have to consider or keep in mind that these projected increases in Parts Sales also includes BEV's and FCEV's as front-end sales increase on these vehicles, so will the need for replacement parts & service.

For a more detailed report on this "EV Revolution", you can visit our website at smartpartstraining.com where all past issues of ACG "Smart Parts" are available and since April 2010. Our March 2022 issue titled "The Parts Department in the EV Revolution" was devoted completely to this new wave of vehicles.

From an ACG "Smart Parts" perspective and experiencing the "in the trenches" view with Parts & Service Managers all over the country this past year, I believe there is still more to these "Thoughts & Predictions".

Although we appreciate the expert opinions and analysis from these great sources, in my opinion, we need to include more based on what we have been experiencing now for the past few years since Covid-19.

The everyday experiences of Parts & Service Managers over these past few years can't go unnoticed and to some degree, I believe will continue into 2024, in order to keep our customers satisfied.

Supply chain issues for some manufacturers, back orders, chasing parts, continuous parts price increases, having enough techs, maintaining competitive and profitable to industry guidelines, etc. will be on-going in 2024 in my opinion.

There is no doubt that even though the future looks positive from an industry standpoint, our jobs as Dealers & Managers will continue to be tougher than in previous years.

Our "Thoughts & Predictions" are surely important as the research can surely shape them, but what's most important is how we end up at the end of it all, in this case, December of 2024 when we do it all again!

Happy New Year from ACG "Smart Parts!"

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...


Wednesday, December 6, 2023

December 2023: The Year In Review - "What Have We Learned?"

What a year it has been again for ACG "Smart Parts" Managers, and for our industry in general. From Sales, to Service, Collision Centers and our Parts Departments, 2023 has dealt quite a hand to all of us, whether dealing with the UAW Strike or not.

The UAW Strike just added to what many of us were already going through prior to and have been going through now for quite some time dating back to Covid-19. Although, I have noticed that during these last few years, we have definitely changed how we manage our dealerships, especially in the Parts Department.

The "status quo" has changed and is much different today than it was just a few short years back. In my opinion, the culture in the average automotive dealership is where the big change has evolved. Dealership managers have become even more sharper and more educated than prior years.

Department Managers are becoming more involved in other departments in multi-lateral ways and support. Parts Managers learning more about Service, Service Managers becoming more involved in Parts, and lastly, and more importantly, Dealers becoming more involved in Fixed Operations than ever before.

I'm not talking about Dealers just getting involved from the financial side, I'm talking about getting involved literally in the Parts & Service Departments. In the Parts Department, they are actually learning how to run reports and create Stock Orders. When has this ever happened?

More importantly, what have we really learned these last couple years, especially this year that has taken this all to a new level? What has changed us, and perhaps for many years to come on how we manage and run the Parts Department?

It's time to review this last year and finish it off with a bang with our December 2023 issue on the "Eight Essential Habits" of the New Generation ACG Smart Parts Manager!

Let's Begin!...

In this issue of ACG "Smart Parts", we will detail what I refer to as the New "Eight Essential Habits" of the New Generation ACG "Smart Parts" Manager. We will learn from a collective of new "tricks of the trade" from dozens and dozens of Parts Managers that I have had the privilege of working with over this past year during these tough times.

In the Parts Department, it all starts with providing the part. When that technician, advisor, customer or manager comes to that counter looking for a part, our job has just begun. The tough part is yet to come as hopefully we have that part 75% - 85% of the time, but either way having the part, or finding the part is always our challenge.

Believe it or not, this simple process is not so simple anymore as we start with our first "Essential Eight Habits" of the New Generation ACG "Smart Parts" Manager!...

#1.) Parts Ordering/Acquisition

Whether we are ordering the part from the manufacturer, or trying to locate the part, this simple task has changed enormously. This simple task just got more complicated as we now have to know what "order type" will get us that part more efficiently.

Ordering parts through our normal channels doesn't get us that part anymore as we have to now know the new "tricks of the trade" in order to acquire certain parts. Otherwise, they may just sit on back order for weeks and even months.

On locating parts, we now have to have all the necessary links like D2D Link, OEConnect and all the latest vendor lists to find those parts that are not available from the manufacturer. Price has become no object as cycling jobs through the Service Shop and the Collision Center has taken center stage.

Parts Departments are going out of their way more than ever to acquire parts, and Service, Collision Centers and Dealer Principle should show their appreciation for their efforts. This is also a "culture change" from what we have been used to seeing in many Parts Departments in the past.

#2.) Increasing Stocking Levels

Here's another "culture change" that has hit us these last few years, especially if you are a dealer that just endured the last UAW Strike. Even if your manufacturer was not involved, Parts Stocking Levels of fast-moving parts appear to be on the rise.

The industry guideline of 45 Days Supply is slowly increasing due to Supply Chain Issues, Strike, or no Strike. Emergency Purchases are rising as well as this industry guideline of 10% or less is also rising, Strike, or no Strike.

All of a sudden, just getting or having the part is the Number One Priority, and quite honestly, it should have always been the Number One Priority. It seems for years, and I hate to say this, but many Parts Managers have never had that "sense of urgency" until recently.

#3.) Hoarding/Hiding Parts

This new "Eight Essential Habit" has now become an "Eight Essential Daily Habit". Parts Managers have now learned how to acquire certain parts that maybe other Parts Managers have not, thus the "hoarding" begins. After all, why sell a part to another dealer that we worked hard to get at less than retail?

The New Generation "Smart Parts" Manager has also learned a new "trick of the trade" on how to hide these parts from E-Commerce sites, OEConnect and D2D Link as well in their Dealer Management Systems, (DMS) under different Parts Sources, or other means hidden from view on these websites.

This new practice is actually not uncommon for many dealers as they want to make sure that their customers are not compromised during these times, Strike, or no Strike. Thus, only releasing these parts to other dealers that "scratch each other's back" so to speak.

#4.) Profitability

Profitability in itself is no new concept and one might ask why this is our Number Four new "Eight Essential Habit", but what is new is that many, many of the Parts Managers I have worked with this past year have sustained, or even gained gross profit retention through all this.

How can that be when we have to pay more for parts we have to chase, or even pay more for shipping, drivers, different order types or any other added cost in acquiring parts?

We've all heard the term of passing on our costs down to the consumer, but we can't do that in many cases, especially on warranty repair orders. This sustainment or increased gross profit retention that these New Generation "Smart Parts" Managers are attaining simply comes from Smart Pricing Strategies.

They are always up to speed on manufacturer and vendor pricing increases and updating competitive parts, menu parts, and price matrices and modifying when necessary. It's still amazing to me that even though parts, oil and tire prices keep rising, many dealers do not adjust their prices to compensate for these cost increases.

#5.) Manufacturer Loyalty

Here is another huge culture change in our industry these past few years. In my opinion, it's actually a cultural change that has gone viral on the extreme side with both parties. Many manufacturers have expanded their grip on the dealers by requiring more qualifiers in their programs.

They are tightening their belts by requiring more parts coverage, or "breadth" by the dealer. So called "Inventory Protection" is no more than a "Return Policy" as not all purchased parts in these programs are "protected". 

If they were "protected", I wouldn't see so many obsolete parts on dealers' shelves that were purchased on these Vendor Managed Inventory, (VMI) Programs. All because they didn't "qualify" for return, resulting in increased dealer parts obsolescence as well as increased acquisition and holding costs.

Many manufacturers are also increasing their penalties for noncompliance if they don't comply. This has resulted in a lot of "pushback" from many dealers and many of these dealers have actually "backed out" of many of these programs in defiance. 

Many dealers have actually done the math and weighed the cost versus the benefits and realized that the Return On Investment, (ROI) was simply not there. For many, the added cost from the penalties was far less than the added risk of Parts Inventory Over Stock and Obsolescence.

#6.) Holding Obsolescence

Speaking of obsolescence, our Number Six "Essential Eight Habits" has to include Obsolescence Control now more than ever. With Parts Life Cycles shorter than ever and the cost of holding parts inventory rising, ridding and controlling obsolescence has moved to the forefront.

In the past, many dealers wouldn't sell their obsolescence, especially on pennies to the dollar. This is a huge "culture change" that is a welcome change for any Parts Managers. This "Monkey on the Back" for many Parts Managers is now finally being addressed.

Dealers are finally seeing the actual cost of holding obsolete inventory that prevents them from obtaining industry guidelines in areas such as Inventory Gross & True Turns, First Time Off Shelf Fill Rates and Normal Stocking Parts Percentages just to name a few.

#7.) Parts Storage Capacity

Our Number Seven "Essential Eight Habit" pertains to our ability to "house" the Proper Inventory Levels needed to meet customer demand. Often times, I witness that Parts Managers actually hold back from ordering the proper amount of parts inventory due to space restrictions.

This, to me is one of the biggest "Cardinal Sins" that a dealer could commit or allow to happen. In dealer "layman's terms", I'm quite sure if the dealer was selling lots on New & Used Vehicles, but did not have a big enough lot, they would either buy, rent or lease additional land to park these New & Used Vehicles.

Same goes for the Parts Department, and finally, we are seeing more dealers "see the light" on this issue by actually working on better parts shelving capacity. Actually, many Parts Departments already have enough "air space". They just need to be a better plan on utilizing that air space more efficiently.

There are actually many Shelving Companies out there that will perform an onsite "laser" evaluation of the existing air space in the Parts Department. Often times, existing Parts Inventory can be shelved and stocked in 40% of the existing air space utilizing more efficient, modern shelving equipment.

#8.) Management Training

Our Number Eight "Essential Eight Habit" of the New Generation "Smart Parts" Manager is probably the most essential. In my opinion, and if we look back prior to Covid-19, Parts Managers were hardly ever involved in Parts Manager Training, or Dealership Training.

Parts Managers were rarely invited to 20 Group Meetings, reviewing Composite Information, or even involved with the overall status of the dealership as a whole. Parts Managers, unfortunately, and in my opinion, were not in the same class as other dealership managers.

Parts Manager Training was also on the back burner and low on the dealer's priority list. After all, how difficult can it be to manage a Parts Department? The answer to that question has drastically changed as dealers today are definitely changing their culture and thought process, especially in the Parts Department

This welcome culture change has, in my opinion, can now bring the whole dealership into full circle. Now, the dealer's second biggest asset can now work for them with the right training, personnel and overall inclusion, along with Sales and Service.

Are you a New Generation "Smart Parts" Manager and are these "Essential Eight Habits" Part of Your Playbook?...

If Not...It's Time to Join the New Generation of "Smart Parts" Managers!"

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...