Wednesday, October 12, 2016

October 2016: Inaugural NADA Parts Summit - September 27-28, 2016

Back in April of this year I had the privilege to meet with Chris Bavis and Mark Michalski, both NADA Academy Instructors in their booth at the NADA Convention in Las Vegas. As "Parts People" do, it wasn't but a minute or two when we were in deep discussions about parts in general.

It was at that time they both mentioned that they were putting a meeting, or "summit" together at the NADA Academy with a format that I think was not only a great idea, but also much needed. A format that would invite those of us working and training "in the trenches" along with the people responsible for most of our industry standards today.

I was not only fortunate enough to get invited to this inaugural event, but I was also encouraged to contribute and bring my own ideas from ACG "Smart Parts". I can't remember a time or if I've ever seen a time where the people responsible for our industry standards "opened the door" to new ideas and concepts.

Chris Bavis and Mark Michalski, NADA Academy Instructors facilitated the summit along with a host of NADA Instructors, 20 Group Facilitators, Directors and Marketing Staff. NADA was well represented right from the start and as I noticed from day one, this was going to be great! NADA's vision for the summit was as follows;

"To invite leaders in the parts consulting and education venues to NADA to discuss the critical issues facing today's dealers in their Parts Departments, so we can collectively provide current and relevant answers to those critical items and improve all educational offerings to NADA members."

I want to start out with listing the other names of those attending and contributing to this Inaugural NADA Parts Summit along with their affiliations to our industry. Some came with presentations to share on various topics and some, like myself, came to listen, share and comment on all topics.

Invited Attendees;

Robert C. Davis, CPA & Partner at Dixon, Hughes & Goodman, (DHG), Memphis, TN
Mark De Lucia, Inventory Management Specialist, Dealermine Corporation, Clackamas, OR
Keith Ely, Commercial Dealership Consultant, KEA Advivors, Lawrence, KS
Carroll "Scooby" Barbre, Commercial Dealer Consultant, KEA Advisors, Lawrence, KS
Kent Ely, Commercial Dealer Consultant, KEA Advisors, Lawrence, KS
Greg Finn, Commercial Dealer Consultant, KEA Advisors, Lawrence, KS
Frank Burrows, Partner, Automotive Business Solutions LLC, Haymarket, VA
Kevin Burkhimer, Partner, Automotive Business Solutions LLC, Haymarket, VA
Mark Garafoli, Consultant, ADMI, Inc.
Richard L. Owen, Regional Fixed Operations Director, Group 1 Automotive, Kennesaw, GA
Dave Piecuch, Vice-President, Automotive Consultants Group, Inc., Pembroke Pines, FL

Topics of discussion and individual presentations included the following;

Obsolescence - How we got it in the first place, how do we get rid of it and how do we keep it from happening over and over again? Mark De Lucia's presentation illustrated how to actually turn dealers' "garbage into gold" by reinvesting cash received from bought up obsolescence back into active inventory that turns at a much higher rate.

Vendor Managed Inventories, (V.M.I.) - Chad Royston from NADA provided us all with great information on how to get the most out of individual manufacturer vendor managed inventory programs. Further discussions with those attending also brought out that too many Parts Managers are relying exclusively on the manufacturers' to control their inventories through these various programs and excluding their own Dealer Management Systems. Combining both the manufacturers' V.M.I. Programs AND the dealers' D.M.S. for optimum ordering procedures was the general consensus in the group.

E-Commerce & Wholesale - Is it right for me?...and just who benefits? This open topic for discussion brought out a LOT of information in my opinion. Many, including myself, offered various calculators to see if wholesale and/or utilizing companies like E-Commerce and Ebay are actually worth it to begin with. Are we actually considering all the costs including acquisition and holding costs?....obsolescence?....personnel?, etc. Great topic with great results from the group as the answer to this question can be easily determined and available to those "Smart Parts" readers out there.

Obsolescence in "Buy/Sell" Agreements - If anyone would have told me going into this Summit that I would be totally "blown away" by talking about obsolescence in a "Buy/Sell" Agreement, I would have bet against it. Robert Davis from D.H.G. had a great presentation loaded with factoids, information and comment on the "legal" side of things when it comes down to dealers in a "Buy/Sell" Agreement. I also didn't realize how evaluating and putting a cost on inventory that includes obsolete parts inventory could be so intense. Great stuff and great job Robert!

Parts & Labor Pricing/Inventory Mix/Guides/Theories - Another great set of topics were discussed on how we price our services, both parts and labor as well having the right mix of parts inventory in order to achieve a high "First Time Off Shelf Fill Rate" level. Richard Owen from Group One Automotive provided some great examples of utilizing a labor and parts matrix to maximize profitability while remaining competitive in the market. Even though this topic is not new to most of us, it was a great topic to discuss as far as which and what matrix works best as a general consensus in the group.

Parts Inventory Reconciliation - This topic wasn't really supposed to be a topic in the first place when I looked at the agenda, but when the topic came up?....Wow! Parts Inventory Reconciliation ended up being one of, if not the top topic when it came down to training needs. In most dealerships, the Parts Manager and the Office Manager do not speak the same language when it comes down to parts and accounting integration. There will definitely be more to come on this topic in the future as NADA, along with those at the Summit will be adding this topic to their training and educational curriculum.

Hiring and Managing the Millenneal Generation - Another great topic that was extremely informative with this presentation made by Jim Phillips and Chad Royston from NADA. As I learned from the information and facts provided, we can't take this generation lightly as it is growing each and every day. As in my "baby boomer" generation, there are characteristics to each generation and we tend to only look at how we do business through our own eyes, or "generation". Once again, information now available to "Smart Parts" Readers from any of us in attendance. 

Parts Bar Coding - Some may call "bar coding" the way of the future, but as Frank Burrows and Kevin Burkhimer from Automotive Business Solutions, LLC explained, it's actually been out there for over 35 years! Think about it, we all know what UPC Labels are, (Universal Price Code) as we see them in supermarkets, department stores and other retail outlets. It only makes sense that this technology needs to grow in our industry as well when it comes down to efficiently managing our parts departments. Great presentation and great stuff once again...I highly encourage "Smart Parts" Readers to research and check out Frank and Kevin's product.

Lost Sales Reporting & Special Order Parts - I purposely saved these two topics for last on purpose. If you can imagine, on Lost Sales for example, how many definitions we have all heard over the years? Now, can you also imagine a room full of industry leaders in the area of parts coming to a united consensus on the definition of a parts "Lost Sale"?...of course not! 

One of the most fun times at the Summit was discussing this topic and believe it or not, some left with a different definition than what they came in with. The bottom line on reporting Lost Sales, which I define as "Potential Missed Opportunities" is if whatever the definition the Parts Manager puts on it AND gets the results in at least 5% - 10% reporting (as a cost of sales), then THAT's the correct definition for him or her.

Getting that extra "demand" recorded is critical and that's really the most important part of recording these "potential missed opportunities" in the first place. Recording "questionable" or "maybe" Lost Sales won't hurt in the long run as these parts don't just jump on the shelf. They just get in front of the Parts Manager's eye in order to make the proper decision whether to stock them or not.

Special Order Parts was also a surprise to me as it's not really anything new, but it was amazing that it drew a lot of conversation in the group. It was also amazing to hear how many dealerships struggle with controlling Special Orders and how much they impact obsolescence. 

Many simple controls and processes were discussed and I believe the general consensus on this topic was to have a process and controls with consequences in the first place. As discussed, most failed Special Order Programs in dealers were actually a result of not having one at all.

In Conclusion:

In closing out this special edition of ACG "Smart Parts", I once again want to say "Thanks" to not only Chris Bavis and Mark Michalski, but also all those attending and the information shared among all of us. I know that there will be more of these to come in the future and I hope I'm fortunate to get invited as well. 

I believe that getting our biggest leader in setting our industry standards, that being NADA and those of us "in the trenches" working with you each day is definitely a recipe for success going forward. A first in my opinion, especially in a "round table", Summit format.

I know for a fact that new education and training programs from NADA in cooperation with those of us in the field will be coming soon and I recommend all of NADA's Members, especially to the dealers out there, to keep an eye on what's ahead and how you can make your Parts Department more profitable and a more "liquid" asset in the future.

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 Vist our Website at