Wednesday, June 13, 2012

Is Your Dealer Management System (D.M.S.) Telling The Truth?

Recently, I was asked by a Service Manager to perform an evaluation of his dealership's Parts Department. He  was very concerned because it appeared to him that they never seem to have the "right parts at the right time" and he was tired of putting his customers in rental cars while they waited for parts to come in the next day.

On top of that, his shop productivity was suffering because of all the technician "down time" going back and forth to the Parts Department, bringing vehicles in and out of the shop or just waiting for the Parts Department to chase down a part.

Unfortunately, I have heard this from MANY Service Managers' around the country and led me to the title of this month's "Smart Parts" article. It all begins with the Parts Manager's "belief system" and just how he or she is  reporting to the Dealer Management System. (D.M.S.)

In this particular dealership's Parts Department Evaluation, I first noticed that ALL D.M.S. parts orders were receipted as STOCK!...No "Customer Orders" reported, No "Emergency Purchases", No "Lost Sales", or as I refer to as "Potential Missed Opportunities".

The only "clue" or variation that I detected was that over 50% of the receipts were "Outside Purchases"! Aha!....a little bit of the actual truth is coming out now! 

In this case, less than HALF of the parts orders are being filled by STOCK, let alone the "Customer Orders" that are being ordered, receipted and classified as STOCK as well. These "Outside Purchases" are receipted differently because the original order was not generated by the D.M.S., they were purchases through other vendors or dealers to fill a potential "Emergency" situation.

Here's where the "Common Sense" of this evaluation is now coming to a head! Does it make sense that ANY Parts Department would have NO Customer Orders, Emergency Purchases or Lost Sales? Better yet, have you seen ANY Parts Department fill over 99% of their orders from STOCK, or at least, that's what this report indicates.

This would mean that over 99% of the time, this Parts Department fills the order from STOCK on the first demand for a 99% "First Time Off Shelf Fill Rate". I guess the old saying is true..."Garbage In, Garbage Out"! Remember, just because the information is on the report, it doesn't necessarily mean the information is true or accurate. 

Many Parts Managers report in this same way because in their minds, that's the way they order ALL their parts to get the best discounts and allowances. They don't realize, or often care about the adverse effects their reporting procedures have on CSI, additional expense, lost productivity and most important, profitability.

On most dealerships, Service Departments' lose at least 15% in shop productivity, not counting the added expense due to these improper reporting practices, which by the way, highly outweigh a little extra parts discount.

Lastly, many of these types of situations are becoming more common because of what I call the "Double Edged Sword" which is the manufacturers' "over night dedicated delivery service".

 It's obviously a good thing because parts are more available with shorter lead times, but the bad thing is that more and more parts managers are stocking less, overriding basic set ups and controls because they don't have to stock it now...they will just order it overnight!

The D.M.S. Parts Monthly Analysis Report can tell us a lot, or expose a lot. Bottom line is that we need to be reporting correctly and honestly in order to have efficient and proper "First Time Off Shelf Fill Rates" and a higher parts "Return on Investment"
Need to know more?....Contact us at

Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTM.  Dave can be reached at Cell 786-521-1720 or E-mail at Vist our Website at

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