Tuesday, June 4, 2013

Dave's Top 10 Indicators: "Number Four: Lost Sales Reporting"

Our fourth "Top 10 Indicator" takes us into June of 2013 and I believe, it is one of the most highly discussed and "over interpreted" indicators of all....Lost Sales Reporting.

Some may say that I have beaten this indicator to death, but in all actuality, there isn't a better way to seek out potential sales in the Parts Department without reporting a good number of "Potential Missed Opportunities", which is my interpretation of "Lost Sales".

I also believe that it has become even tougher to properly identify Lost Sales these days due to better delivery and lead times from today's manufacturers.

Many even offer factory sponsored stock replenishment  programs that they totally manage, with the added benefit of discounts and inventory protection over a period of time.

In addition, many "out of stock" items are readily available from other sources within a reasonable amount of time, often even the same day.

So, it's no wonder that Parts Managers are posting less Lost Sales as there are "technically" less incidents that the sale was actually lost, or at least...it would appear so!

So what's my point?....

First of all, there are only two ways that may cause an "out of stock" situation. Either we never stocked the part to begin with, or we simply ran out of that stocking item. This "juggling act" has been on going for years and still continues today.

Special Order Parts will always be there as first time demands all have to have a "first time" before they begin their cycle, but there in lies the problem. Even though a sale creates a demand automatically, what about those "parts inquiries" that go unsold AND un-posted?

Here's another scenario...what happens if one counter person gets a request for a part that is not on stock, then enters the "Lost Sale" only to have that same customer return to order that same part from another counter person?

Now we have just created TWO demands on that same part! Now what are we supposed to do?

If the Parts Manager does not have a "Potential Missed Opportunities", (Lost Sales) Reporting System, there will definitely be times where either in-coming phone call parts requests and counter parts requests on "out of stock" items will not be posted as "Lost Sales"....GUARANTEED!

So how do we find a "Happy Median"?

The answer is much simpler than anyone would think. When in doubt?...post the "Lost Sale"! Here are the reasons for my simple answer.

First of all, as the Parts Manager, I see all the "Potential Missed Opportunities" on Phase-In Reports, Suggested Stock Order Reports and Lost Sales Reports.

I determine whether I want to stock a particular part or if I want to manage quantities. These parts don't just arrive on the shelf automatically, that's why I'm the Parts Manager.

On the other hand, I can't manage what I can't see if these "Potential Missed Opportunities" don't get entered! They will not show up on any report for me to make proper decisions whether to stock or not to stock. Any Parts Manager can make decisions on parts that sell, I just want more parts to get into that category. 

Second, if I have to adjust my Phase-In criteria in number of demands over a period of days, weeks or months, pending the Dealer Management System, (D.M.S.), then I can do so.

 I can also create a "Test Phase" Source, specifically for these "Potential Missed Opportunities" just to take a glance at what demands are out there that may be worth stocking.

I can also go one step further by controlling the Phase-Out criteria on these "Test Phase" Parts to insure obsolescence protection.

Lastly, if my manufacturer offers a stock replenishment program, I will still run my own Phase-In Reports and  Suggested Stock Order Reports in addition to theirs.

Many of these programs operate in the same way as our own Dealer Management System, except that their stocking criteria based on a number of dealerships. I want to make sure that my stocking criteria meets the demands of MY customers, not everyone else's.

All of this will result in higher "First Time Off Shelf Fill Rates" and much higher Service Shop Productivity as "down time" is reduced.

I will also reap higher profits from the buying power gained from stocking more of the right parts. Seeing is believing and by seeing more demands, I'm able to stock more of these "right parts".

Managing a parts inventory today is far more difficult than it was years ago, although the same principles apply today as it did then. Don't let YOUR "Potential Missed Opportunities" get away from you because if you are...someone else is cashing in on those opportunities right now!

Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTMThe 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 dave@smartservicetraining.com Vist our Website at www.smartpartstraining.com