Thursday, February 3, 2022

February 2022: D.M.S. Utilization: "Are You Getting You Money's Worth?"

Since the evolution of Computerized Dealer Management Systems, (D.M.S.) way back in the 70's, many Parts Managers weren't even born yet. Even though new systems continue to evolve, D.M.S. Utilization Factors still fail to reach expected levels.

In my opinion, the main reason for these low percentages is a lack of training, understanding and overall Parts Manager Training. Even though new systems offer more and more depth to what the D.M.S. can offer, the basic D.M.S. capacities are under utilized.

Up to this point, I am fluent in over 10 different D.M.S. "languages" and the one common denominator with all of them is that they all provide the basic necessities in Parts Set Ups & Controls, even though some are better than others.

Unfortunately, many Parts Departments have the wrong Set Ups & Controls because the D.M.S. Vendor doesn't even know what the proper Set Ups & Controls should be. Installers and Trainers most often haven't even worked in the dealership environment and basically just get the system up and running without doing the math, especially in the Parts Department.

It seems like the only dealership department that gets set up even close to accurate is the Accounting Department as "integration" is key in making all the dots connect in the dealership. However, in the Parts Department, basic, standard Set Ups & Controls are "cookie cutter" at best, including D.M.S. Parts Manager Training.

All of the above has led us where we are today, which is no further than we were back in the 70's when the first system was introduced. Well over 40 years and dozens of Dealer Management Systems out there to choose from and we are still under utilizing the D.M.S.

In the Parts Department, under utilization can't be more evident as Parts Managers have so much information at their fingertips to manage their Parts Department more efficiently, but they still scratch their heads when I show them what they have available. Over and over, the response I receive after revealing the D.M.S. capabilities is..."I didn't know my D.M.S. could do that!"

The key to understanding and learning any D.M.S. is actually "knowing" what you are looking for in a D.M.S. to begin with. They all have the basics from Phase-In/Phase-Out Set Ups, Stocking Levels, Min-Max Set Ups, Source Ranking by Piece Sales, Lost Sales & Emergency Purchases Reports, Stocking Status such as Normal or Active vs. Non-Stock and In-Active, etc.

All that being said!...."What Are We Missing?!"

Let's Begin!....

Based on our experience in hundreds of automotive dealerships, we have compiled quite a list of "under utilized" D.M.S. Functions and Reports. Each of the following "under utilized" D.M.S. Functions and Reports provide vital information in managing the Parts Department to it's fullest potential even though they are not listed in any particular order.

Each of the following "under utilized" Functions and Reports are available in all D.M.S Systems, even though they may just have a different name to the function, or report. The most important thing to remember is that we need to know what we are looking for and if we can't find it?...ask someone who does.

 Here We Go!

Ordering/Receipting Practices:

It all starts here as the way we order and receipt parts determines the outcome on our Monthly Parts Inventory Management Reports. For example, if we order a Special Order Part on a Stock Order, it will give us inaccurate reporting as to what parts we have on the shelf that are considered Normal Stocking Parts or Non-Stock Parts, or otherwise referred to as Active, or In-Active Parts.

Every D.M.S. has different order types and receipting options that will determine the actual status of each part. Order and Receiving type codes are easily accessible and should be utilized properly. Emergency Purchases, Outside Purchases, In & Out Purchases, Special Order Purchases and Stock Order Purchases need to be utilized accurately.

Lost Sales & Emergency Purchases Reports:

Believe it or not, and even though we are all familiar with these reports, many Parts Managers still do not run these reports often enough in order to see if we are within industry guidelines, or even reporting them accurately. Both reports are crucial in the Parts Phase-In Process as well as managing "stock out" situations.

Zero Stock Reports:

This report is another report that should be run often, especially those parts at zero quantity and considered as Normal Stocking Parts, or Active Parts. Especially in these times with all the supply chain issues. The last thing we want to see or hear is that we ran out of a part that we normally stock at "point of purchase".

Override/Exception Reports:

This is one report that I hardly ever see a Parts Manager run. Does it not make sense to look at this report daily to see if anyone is overriding parts prices, changing bin locations, and most importantly, removing parts from a Repair Order or Invoice?

Demand Fill Analysis/Piece Sale & Cost Analysis:

Once again, another extremely important report as each D.M.S. will "rank" our sales from a cost of sales perspective, or a piece sales perspective. This information provides the Parts Manager vital information on the parts we sell the most and at what cost range in order to adjust Stocking Levels, and/or adjust our Parts Matrix.

Source Ranking By Annual Piece Sales:

I know these items are not listed in any priority, but if we did, Source Ranking By Annual Piece Sales would be right at the top. Setting the proper Stocking Level of each part we have on the shelf by Annual Piece Sale Ranges determines having the right amount of parts on the shelf at the right time.

Every...and I mean every Parts Department I have visited has the wrong Stocking Level Set Ups. This is not an opinion, this is a fact as the math does not lie. Even if we are enrolled in a Vendor Managed Inventory, (V.M.I.) offered by the manufacturer, they are pulling our own individual D.M.S. data to determine our Stocking Levels.

Inventory Plus/Minus Adjustments:

This report category really goes without an explanation or reason as these plus/minus adjustments can play a huge role in Parts Reconciliation with the Accounting Inventory Ledger Amount. Simply allowing parts to be added in or taken out of the parts inventory is a scary subject. These adjustments, which can and do happen from time to time need to be done by the Parts Manager only.

Multiple/Duplicate Bin Reports:

Unfortunately, in most dealerships, this report only gets run once a year in most Parts Departments when the annual physical inventory is performed. This report should be run monthly and proper adjustments made in order to get accurate inventory counts when the physical inventory is actually performed.

Multiple, or Duplicate Bin Locations may also cause an overstocking issue if the Parts Manager is not aware of these secondary bin locations when ordering. It may also cause inaccurate plus/minus adjustments if not corrected.

Parts On Repair Orders/Work-In-Process Parts:

Whoa!...I shouldn't even have to mention this one, but believe it or not, there are many, many Parts Managers out there that don't even know how many parts they have billed out, but haven't been paid for yet as they are still considered "Work-In-Process". This report should be run daily and reviewed with the Service Manager.

Parts On Order/Back Order:

This is yet another report that Parts Managers don't run enough, especially in these times. What many Parts Managers may not know is that the D.M.S., or even the Manufacturer's Vendor Managed Inventory will not reorder parts that have an "Outstanding Order"status in the D.M.S.

In other words, if I have a part number out there with a quantity of four that still shows "on order", or  on "back order", and we run out of that part, the system will not suggest, or reorder because we still have four coming...eventually. 

This report should also be run at a minimum of once a month and "purged" of Outstanding Orders sitting out there that may have actually been receipted manually. If a part is not receipted to the correct order and control  number, the Outstanding Order on that part is not really "relieved", even though we received it.

Perpetual Bin Count Reports:

Here is another report that doesn't get used enough because many Parts Managers don't run Perpetual Inventories. Even though we may have a annual, physical inventory performed, we should still have constant bin checks performed each day. Constant bin counts each day, week and month can make the annual physical inventory go much smoother.

Most importantly, when it comes down to "balancing the books" between the Accounting Ledger Balance Inventory and the Controlled Inventory Balance on the D.M.S., it's much easier to keep the variances between the two at a minimum.

Dirty Core Reports:

Most D.M.S. Vendors now have Dirty Core Reports to help us "reconcile" the cores we receive back from technicians and customers. In other words, when we bill a part that has a new core amount attached to it and then taken off the repair order when the technician returns the old core, that core amount will be added to the Dirty Core Inventory.

Problem is...many Parts Managers just return their Dirty Cores once they build up and don't actually "relieve" the Dirty Core Amounts from that Dirty Core Inventory,  thus the Dirty Core Inventory just keeps climbing. This also gives false "positive" Dirty Core Inventory Amounts for Monthly Reconciliation with Accounting.

 Daily Operating Control, (D.O.C.) or, Sales and Gross Analysis:

If we are not looking at our sales and gross numbers each day, the end result at the end of each month will be what it is as we can't go back. We should be tracking our sales and gross numbers each day, along with our expenses in order to achieve the dealers expected results at the end of the month.

Believe it or not, there are still dealers out there that will not provide this information to their managers while still expecting these same managers to achieve their expectations. We can't manage what we can't see or measure and these daily reports are the only way we can meet expectations.

In conclusion, we may not know what we don't know, but we do need to know what we are looking for in our D.M.S. and what it has to offer. The challenge is to dig deep and if we don't get the right answer from our D.M.S. Vendor, keep digging as there is an answer out there and lastly...

"Yes...Your D.M.S. CAN Do That!"

If you want to learn more about ACG Smart Parts "Eight Habits of Highly Successful Parts Managers", visit our website @, or...just pick up the phone and call me at (786) 521 - 1720...After all, not knowing is not worth not "fixing" it...