One of the main goals as "Smart Parts" Managers is to always have "the right part at the right time". Believe it or not, having the "right part at the right time" in today's world is a much tougher task than it was just a few decades ago.
More and more vehicle manufacturers have jumped into the market while existing manufacturers continue to expand their vehicle model base. Along with the on-going new vehicle technology added to all these new vehicles and models, replacement part number expansion has skyrocketed.
In addition, part number coverage is not what it used to be a few decades ago. For example, "back in the day", we would have had just one part number for a set of front brake pads that fit many models for several years. Today, we could have several different brake pad numbers that fit the same model vehicle for just one model year.
All this has led to a nightmare for parts managers trying to hit that elite goal of having "the right part at the right time" at least 75% - 85% of the time on that first visit to the parts counter. Also, and to add insult to injury, many manufacturers are not making it any easier.
Since the evolution of vehicle manufacturers' wanting to control the dealer's parts replenishment inventory, otherwise known as Vendor Managed Inventory, (V.M.I.), many parts managers have abandoned creating their own stock order in the Dealer Management System, (D.M.S.)
The days of running stock orders on our own D.M.S., getting much higher return allowances and discounts, easier parts return policies from the manufacturers have been replaced by manufacturer-controlled inventories, lower discounts and return allowances, and program compliance, or "obedience" as I prefer to call it.
What many may not know is that most of the manufacturers' V.M.I. programs only cover approximately 50% of the manufacturers total inventory coverage with mostly A and B parts covered. That being said, and if we do the math, the best we can do on inventory "breadth" is about 50%. If we aren't utilizing our own D.M.S. to run our stock orders for the "rest" of the parts, increasing our own inventory "breadth" is nearly impossible.
Here in lies the big question...
"How are we going to increase our parts inventory breadth AND reduce our overall inventory amounts?"
Here We Go!...
The first thing that we have to do when considering increasing our parts inventory breadth goes back to my intro. We have to know what our customers are asking for and what they are buying as those two combined add up to parts demand. What they are asking for equals Lost Sales and what they are buying equals Sales Demand.
The second thing we have to do is manage and control our parts obsolescence in order to maintain a broader inventory breadth. There are always new parts coming in, or phasing in that meet total demand for normal stocking status so we cannot afford to hold obsolete inventory beyond the parts life span.
The life span of a part today is far shorter than it was decades ago. Here are a few facts on today's life span of a part courtesy of Mike Nicoles, Inc.
- Parts with no sales in 6 months = 49% chance of no future sales
- Parts with no sales in 9 months = 67% chance of no future sales
- Parts with no sales in 12 months = 98% chance of no future sales
- Parts Sales Activity 0 - 6 Months Should Equal 85% of Total Sales
- Parts Sales Activity 7 - 12 Months Should Equal 10% - 15% of Total Sales
- Parts Sales Activity Over 12 Months Should Equal 0% - 5% of Total Sales
- Special Order Parts before they are sent back to the manufacturer
- Aged Back Orders not received
- Aftermarket parts sold in place of manufacturer parts with a Lost Sale posted under the manufacturer's part number
- Service Quotes on unsold, non-stock 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...