Tuesday, February 17, 2015

February 2015: "Don't Wait...Fix It Now!"

Over the past two months we have researched a lot of data from NADA and Automotive News to give us an idea on how past performance can impact our future expectations. Our year end review revealed that our industry has taken great strives forward or perhaps better defined as a "significant comeback".

This past information from 2014 and beyond gave us a lot of information and trends that point to a welcomed upward trend in our industry. In many cases, forecasts for many dealers are much stronger than they have been for several years.

The present is what we live in and with all this information at our disposal, we should be able to adapt to changes in the marketplace much quicker than ever before. Actually, in most cases, if current trends don't indicate positive results, we have to move forward with changes or modifications.

One example that I can give to most "Smart Parts" Readers is the current life span of a part. Back before the millennium, it wasn't unusual for the life span of a given part could be several years. Today, it's also not unusual for the life span of a part to be less than one year. So how does this example or analogy apply to the theme of this blog?

Quite simply, we are one month into 2015 and for Parts Managers, that's one month of data that we have access to with our Dealer Management System, (D.M.S.) Monthly Management Reports as well as one month of Dealer Financials.

Managing a parts inventory is ongoing and requires constant maintenance. Phase-In/Phase-Out Criteria, Days Supply Set Ups, Lost Sales Reporting, Stocking Criteria, etc. need to be reviewed at least once a month when the Monthly Analysis Report becomes available on the first of each month. 

Even though new & used vehicle sales as well as parts and service sales can fluctuate from month to month with several variables such as selling days, weather, holidays, etc., the parts inventory's basic Set Ups & Controls need to be managed monthly. 

Upon review of these reports, modifications need to be made immediately based on results. A good example would be Lost Sales Reporting. If Lost Sales Reporting in January 2015 were less than 10% of total cost of sales?..."Don't Wait...Fix It Now!" A process should be in place to meet NADA Guidelines. It won't fix itself and we can't just hope it will get better.

Another example would be Customer Pay Parts Gross Retention...if the retention percentage is less than 40%?..."Don't Wait...Fix It Now!"

Adjustments need to be made in the parts escalation matrix to achieve expected levels. This is factual information and adjustments need to be made immediately. Don't wait and hope for it to fix itself.

There are many other Set Ups & Controls that provide crucial information such as Obsolescence Control, Days Supply, Overall Purchases including Promo Items, etc. All of which do not require a "wait and see" attitude.

One last area that needs direct attention each month is Expense Management. Personnel is our biggest expense and also requires constant review. Especially when, in many dealerships the survival of the Parts Department depends on other departments to create most of the gross in the first place. 

Trends and past results are great to look back on to compare performance. Industry forecasts are also great to give us targets and objectives, but neither will lead to predictable results unless we make the necessary modifications and changes based on current results, especially in the Parts Department. 

Combining all the above and staying informed is a great formula for success. Even though ACG "Smart Parts" was unable to attend this years NADA Convention due to other commitments, I did spend some time to review the agenda, schedules and topics that had my attention.

I was amazed, but not shocked that so many of the topics discussed in work shops, events and exhibits seem to share the same theme.

Once again, the information age led by social media including Twitter, Facebook, Linkedin, Ebay and Website Innovations seem to dominate all other topics, products or services. 

Even though many great products and services were well represented, the basics of providing great customer service never gets old. The combination of these best practices along with all the social media outlets is definitely the wave of the future.

Another "peek of interest" for me that has led me to more research is the definition of the different types of websites. New to me, but maybe not others that the definition of different websites such as; stand alone, adaptive and responsive can make a huge difference in how we stay in touch with customers.

Responsive websites are getting the most attention and appears to be the type of website preferred by Google. Customers are more engaged and have more interactivity with these type of sites and also have a higher response and purchase percentage than most conventional websites.

Looking ahead, I believe that more and more Parts Departments are going to be heading down this same road. Online ordering is already here as "shopping carts" are taking on a whole new meaning.

So, get your "aps" ready and your websites tuned up because the future is now!

The future looks very optimistic and if you wait....you just may miss some great opportunities.!

So....."Don't Wait...Fix It 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