Striking a match to light a fire is a pretty common thing, but when referring to the current on-going UAW Strike, this word can be used as a noun and a verb. In last month's issue of ACG "Smart Parts", we released our September issue a little earlier so we could all get prepared for what was to come.
We discussed how we could use our Dealer Management Systems, (D.M.S.) to actually add extra "Days Supply" to extend our inventory coverage for however long we needed to endure the UAW Strike. Much like preparing for a storm as we all hit the stores for added "Days Supply" of the necessities such as food and water.
Now here we are, in the midst of this current UAW Strike and it's time once again to endure another crisis like we did with Covid-19 and the previous UAW Strike. To me, what's most important is not to just endure the current crisis, but what we learn from it.
In this month's issue of ACG "Smart Parts", we are going to do a little follow up to last month's issue, but with a little twist. I have actually witnessed a "Culture Change" within our automotive dealerships this time around.
After talking with and working with literally hundreds of dealerships via online webinars, or in-dealership training, I've actually noticed quite a few things during this Strike Preparation. A shift in how we actually operate and consider the Parts Departments role in the dealership.
I've never seen actual dealer participation in the overall Parts Operations as much as I've seen these last couple of months in anticipation of the UAW Strike. Don't misunderstand, I'm not saying that the dealer doesn't "drill down" the Parts Department like any other department in the dealership, it has just gone much further than that.
What have we learned so far in this UAW Strike and how much more will we learn as we progress through it?
Let's look at the "Seven Culture Changes" in the Parts Department since we started preparation and are now experiencing in our latest automotive industry crisis. Seven Culture Changes that most may not even be aware of.
Let's begin once again "Smart Parts" Managers!....
The first of these Seven Culture Changes that I have noticed is that we, in the Parts Department are no longer at the bottom of the Totem Pole. For years, the Parts Department just existed as a "Necessary Evil" for the dealer.
As a matter of fact, back in the day, many dealers wish they didn't even have a Parts Department, or even a Service Department for that matter as all they were interested in was selling New & Used Vehicles. They didn't even want to deal with the customer after the initial sale.
Over the years, dealers have evolved to a degree as "Service Absorption" became a key part of the dealer's profitability. The "back end" now needs to carry much of the dealers' overall expenses with less New Car Dependency.
So, we have actually climbed the ladder quite a bit since those older days, but we have actually gone up a few more rungs on the ladder since Covid-19 and now this current UAW Strike.
I am actually seeing dealers, (which I never have before) take part in learning how Parts Set Ups actually work. They are now looking at the math and how Phase-In/Phase-Out works, and Reorder Points, (BRP) and Best Stocking Levels, (BSL).
I've never seen dealers go that far in the past as they are even looking at the Parts Managers Stock Orders! I've even seen some dealers actually "run" the Stock Order in their D.M.S. and going another step further by looking at how the Vendor Managed Inventories, (V.M.I.) works, such as RIM, ARO, PartsEye, etc.
The second "Culture Change" that I have witnessed is that Parts Managers in general are finally "getting it". Again, not saying that Parts Managers are not doing their job, it's just that they are gaining more confidence as dealers get more involved in their dealership roles.
So many Parts Managers are "gun shy", worrying about overall Parts Inventory Amounts, especially with the burden of carrying too much obsolescence. Unfortunately, many Parts Managers feel that the Parts Inventory is an expense, not an asset that needs to have several "Annual Turns".
Therefore, they tend to hold back from the parts they actually need in fear that the owner will get on them for spending too much on Parts Inventory. When in actuality, I haven't heard of many dealers preventing, or limiting the Parts Manager from ordering any parts.
Of course, the dealer wants his/her Return on Investment, but they really don't prevent the Parts Manager from ordering any parts. In the Parts Manager's mind though, he or she knows that ultimately, they are responsible for their actions and choices.
The third "Culture Change" that I have witnessed is that Parts Managers are getting more informed about their overall Stocking Levels. They are getting more aware of what the "math" tells them and adjusting where necessary, especially now with the current UAW Strike.
Kind of a contrast of what we thought before versus now as dealers are actually encouraging Parts Managers to come out of their shell and get the parts we need, no matter what the cost. After all, there is so much at stake in our Service & Collision "Cycle Times" waiting for parts.
Number four Cultural Change is Parts Managers are getting more "proactive" instead of "reactive". One example is parts backorders today versus in the past when a part went on backorder, we, as Parts Managers just said that the part is on backorder, and we would have to wait until it became available.
Now, fast forward to today, especially because of the UAW Strike, when a backorder hits, our job is just beginning, not ending. In other words, we have to take action when that backorder hits, we can't just sit and wait to see when it ever comes in.
Our Number Five Cultural Change is a follow up to our Number Four Cultural Change is that Parts Managers need to address parts backorders before they need them for the customer. In other words, when a part goes on backorder on the initial Stock Order, that's the best time to address it.
Why wait until the customer needs that part before we address it. If we chase down that backordered part when it comes up on the Stock Order, we will have it when we need it when the customer has demand for it.
I can tell you from experience that it's always easier to handle a backordered part on a Stock Order versus when the pressure is on when the customer vehicle is tied up in the shop. The pressure is always on us when Service is held up for a parts issue.
Stocking Parts to "Avoid" Backorders...What a Concept!
Our sixth Cultural Change that Parts Managers are now getting hungry for Gross Profit! Again, not saying that they never were concerned about being profitable, it's just that they seem to be more "bought in".
Overall Parts Profitability as far as Retained Gross Profit Percentage is at its highest peak, in my opinion then it ever has! Just achieving the basic industry guidelines of let's say 40% on Customer Pay Parts Sales is now going to the next level up towards 45%!
I guess they key word is that it seems that more and more Parts Managers are taking "ownership" of their departments. Dealers are learning more and more of the importance of how much the Parts Department plays a role in all other dealer departments.
Dealers are also incentivizing more Parts Managers to achieve higher levels and giving them more "clout" in their dealership operations. Parts Managers are no longer hiding in the back are are becoming more a part of the overall dealer operations.
This is why we are seeing more and more Parts Managers attending 20 Group Meetings as the excuses piled up. Service Departments saying that they couldn't achieve their goals because they simply didn't have the right parts.
Finally!...the Parts Department Means Something!...What an Eye Opener!
Lastly, our Number Seven Cultural Change is that more and more women are becoming Parts Managers which is a huge, welcome change. Even though it doesn't matter to me who the Parts Manager is as long as the qualifications are there, I have noticed that more and more women are becoming Parts Managers.
Not only does this add diversity, but it also most importantly adds another wealth of the people available for this position! Now, the Parts Manager position, as opposed to years ago, is not just a position that we give to for the next person in line because they have been with the dealer for many years.
It's not a position that we give to a Counter Person because they are loyal and after all, we are just talking about Parts here. Handing out parts can't be that difficult...anyone can do it...Right?
Finally, I welcome all this "deserved" attention to today's Parts Manager and what it actually takes and means to get through these times or even normal daily operations. It's about time that Dealers and Dealer Principles actually see what it takes and what's involved with managing their second highest asset.
The Parts Manager Position is one the most important manager positions in the dealership...especially today.
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...