October 2026: "Beating Obsolescence & Choosing the Right Obsolescence Vendor

As we move on to our 201st Issue of ACG "Smart Parts", we will continue to provide our Dealers & Parts Managers the latest Parts News, Updates and Personal Insights. Even though we all know that "Parts is Parts", there is always something new to talk about.

In our October issue will be focused on a topic we are all familiar with and that is Parts Obsolescence. We also know that Parts Obsolescence is one of the top issues our Dealers are concerned about in Parts, second only perhaps to Parts Sales & Gross Profits.

Controlling Parts Obsolescence is one of our toughest jobs each day and one that can keep us awake at night. But imagine or perhaps "dream" if we had a process that could eliminate Parts Obsolescence all together?

Even though we can never really prevent Parts Obsolescence from happening as parts will go obsolete at an average rate of 5%-10% each year. But what if we could have a process that could keep our Parts Obsolescence at a minimum of less than 5% all the time?

If we don't have a process or "game plan" to manage Parts Obsolescence, the obvious result is that it will just keep piling on each month and year. Pretending it's not there will just end up out of control.

Increasing Acquisition & Holding Costs, lower Gross & True Turns, higher Days Supply as well as higher variances on the Ledger Balance Inventory. The list of ramifications of excess Parts Obsolescence goes on and on.

Achieving this goal of 0%-5% Parts Obsolescence is not a myth as many of our "Smart Parts" Managers are experiencing these low Parts Obsolescence Percentages each month. To achieve this feat, we have to have a "recipe" which includes five important factors.

Number One: Commitment

Number Two: "Don't Buy Obsolescence!"

Number Three: Utilizing Your Parts Return Reserves

Number Four: Choosing the Right Obsolescence Vendors

Number Five: "Protect Yourself!"

"So!..How Do We Accomplish All This and Be Free of Obsolescence and Keep It from Coming Back?"

Let's Begin!

Number One: Commitment

The Parts Manager needs to be committed to achieving essentially "Zero Obsolescence". This mindset is first and foremost by realizing that there is a 98% chance of not selling parts that have not sold over 12 months.

Initially, it may seem tough as it was for me as letting go of a part that you've known very well and have sold for months or years may not make sense. It was almost like saying "good-bye" to an old friend.

Sticking to the plan is crucial and must be our very first step. Otherwise, all the rest that follows won't matter if we have a tough time letting go. We must stick to the facts and go with what the math tells us.

Number Two: "Don't Buy Obsolescence!"

Special Orders and some of the Manufacturers Vendor Managed Inventories, (VMI's) are notorious for building Parts Obsolescence. Without a Special Order Parts Process and managing our Manufacturers’ VMI Program, we could be just adding obsolescence.

Without a Special Order Parts Process, or "Policy", Special Orders can be considered "Purchased Obsolescence". They call them "Special Orders" for a reason as we do not stock these parts as they have not met initial Phase-In Criteria. 

If these parts do not get installed and/or sold, they could become "Purchased Obsolescence". The ironic thing about "Purchased Obsolescence" is that many Parts Managers avoid stocking the "right parts" because they think they are buying obsolescence.

Even though a part meets Phase-In Criteria, they shy away from stocking it because it may be too expensive, or they think they may get stuck with it. Totally opposite from what we are referring to as "Purchased Obsolescence" above.

Special Ordered Parts should also be returned, (if not sold) after 45 Days, no matter what the return costs. Return Fees should be applied to responsible parties who authorized the Special Order. If not returnable, they should be sold to Obsolescence Vendors.

As far as the Manufacturers' VMI Programs, being "compliant" is one thing, but being "obedient" is another. Simply approving Daily Proposals without "drilling down" each part number can and does lead to "Purchased Obsolescence".

Number Three: Utilizing Your Parts Return Reserves

May seem obvious, but you would be surprised at how many Parts Managers do not utilize all of their Manufacturers' Parts Return Reserves. Even worse, they don't take advantage of all their opportunities to build even more Parts Return Reserve.

The lack of creating and sending Stock Orders, especially Supplemental Stock Orders on the DMS, (if the math is set up correctly). This lessens the opportunity for higher Purchase Discounts and Return Reserves.

Unused Return Reserves are not so uncommon and if not taken or utilized will be eliminated after the first few months of each year for the previous year. It ends up as wasted cash in the long run.

Number Four: Choosing the Right Obsolescence Vendors

First and foremost, we all need to know that a starting price of $.50 cents on the dollar is not a "made up number". Most don't realize that the IRS Standard Accounting Method states that the value of any inventory or commodity that has not sold in 12 months has an estimated worth of half its initial value.

Second, we should start looking at Parts Obsolescence at 10 Months - No Sales and start shopping these parts out to Obsolescence Vendors. Waiting until 12 Months or Over before shopping them out lessens the chance of getting rid of them or getting the best price.

The most important part of choosing the right Obsolescence Vendors is to have more than just one. We need to take advantage of all of our Obsolescence Vendors and all of the offers out there.

We also must realize that some Obsolescence Vendors may not accept or offer as much as another vendor. This is why we need to use as many as we can to find that are reputable and pay the highest return.

We also must include added costs and shipping of course in our final "net return". In many cases, it may not be wise to use different vendors as added costs and shipping make it worthless to send back, and this is why our Number Five is so important.

Our "Top Five" Obsolescence Vendors are as follows, but keep in mind there may be many others. Again, most important is to have several to work with to weigh all of our options;

dealermine.com

oeconnection.com, (Parts Broker Direct)

partsfisher.com

findrareparts.com

youngautomotive.us

Number Five: "Protect Yourself!"

Every Dealer should have an "In-House Parts Scrapping Program" as well as the right Parts Phase-In & Phase-Out Parameters in their DMS. Prevention is key, but we also need to have that "Parts Kitty" to get rid of what's left after utilizing all the above four factors.

Building an "In-House Parts Scrapping Program" allows us to use this final option to get rid of all Parts Obsolescence. Much like having a Used Vehicle In-House "Bruise Account", we can tuck away some money aside to scrap these parts after all the above options have been utilized.

This final option is not new as many Dealers tuck a set amount aside for "Parts In-House Scrapping". What may not be new is how we determine the amount and how much we set aside each month.

By setting aside a certain percentage of Customer Pay Repair Order Parts Gross Profit, it becomes much easier to manage and build our "In-House Scrapping Program". If we were to take 1%-2% of our CPRO Parts Gross Profit and charge it back to Cost of Sales, we can put that money into our "In-House Scrapping Program".

We can easily manage this CPRO Gross Profit deduction by increasing our Parts Matrix by 10% Above Cost, which will net a 2% gain in Parts Retained Gross Profit Percentage. This would result in a "wash" and allow month-to-month fluctuations that will flow with Gross Percentages as opposed to one flat, set amount each month.

I can only say from experience that there is no better feeling than being a Parts Manager that does not have to worry about Parts Obsolescence. It also changed me from being a "cautious, worrisome" Parts Manager to an "aggressive" Parts Manager.

It changed me from not buying parts because I was too worried if they didn't sell or too expensive, as I felt they would just add to my obsolescence. Once I didn't have to worry about Parts Obsolescence, my First Time Off Shelf Fill Rate took off.

I had more of the right parts and magically, my Parts Obsolescence was shrinking as I had more of the right parts. They then "phased out" when they got to the end of their "life cycle". Even though I had my Scrap Account, less fell into obsolescence

 Last Question...

 "Would You Like to Sleep Better at Night and Not Worry About Parts Obsolescence?"...Maybe It's Time to Take That Giant Leap of Faith!"

  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...

 

 

 

 

 

 

 

 

 

September 2026: "Working With Our Technicians"

Let's begin our September Issue of ACG "Smart Parts" by "painting a picture" of a typical day at the Parts Department Back Counter. Everyone starts showing up around 7:30 or so and the Back Parts Counter window is opened for yet another day.

Initial daily greetings start between Parts Counter Staff and Technicians, drinking our first cup of coffee, or perhaps a preferred energy drink to kick the day off. Conversations start with some talking about the game last night, or perhaps some techs looking for parts to get the day started.

The "Back Counter" is almost like the water cooler where people come to chat, have conversations in general and eventually get on with their work. I've often said some techs are like bananas as they come in a bunch.

When the Service Manager sees a stack up at the Parts Counter and wants to know what's going on, the answer is usually the same. That answer is "We are Waiting for Parts!" and now the blame gets shifted to the Parts Department.

This daily routine is not only typical, but also unavoidable as the relationship between Parts Counter Staff and Service Technicians is necessary. In most cases, vehicles cannot be repaired or maintained unless we have a part and a technician.

This interaction at the Parts Counter involves constant communication, understanding and an overall objective over and over throughout each day. In other words, everyone has to get along on both sides in order complete this repair process.

This one simple daily interaction between Parts Counter Staff and Technicians happens over and over each day. If the overall outcome of these countless interactions throughout the day are not positive, they could lead to what we all know as a wall between Parts & Service. 

We all know from our side in the Parts Department what our role is supposed to be. We are supposed to provide what the technician needs in order to complete most of the repairs on the customers vehicle.

Sometimes though, if not most often, we look at it from our perspective and not theirs. In other words, we may think that we are in control because we have something they need as opposed to the other way around.

In my opinion, we all need to stop and think what the technician sees and not what we see. Can you imagine coming in each day, (if you are a flat rate technician) and not knowing how much you are going to make each day?

In the Parts Department, we pretty much know what we are going to make as most Counter Staff are paid either hourly, or perhaps a salary with incentives. Flat Rate Technicians on the other hand depend on us heavily in order to achieve their monetary goals.

In this issue of ACG "Smart Parts", we are going to break down this relationship and hopefully, we will see how much we actually depend on them. We will also see how valuable our technicians are to us.

Furthermore, we will actually see how certain techs can actually help us get better in having the right part at the right time and be more profitable. We will break down each Technician Skill Level and how they actually help us achieve our Parts Department Goals.

We all know that overall, we all need each other, but we will take it further and answer what I believe is the main question...

"How Can Our Technicians Help Us Get Better in the Parts Department?"

Here We Go!

In my opinion, the Parts & Service Relationship is one of the most important relationships that may be overlooked in many dealerships today. We can tell though which dealers have a great relationship between these two departments as these are the dealers that have great "Service Absorption".

We often tend to look at the success of our Fixed Operations by individual departments and their role in the dealership. What we don't often look at is our Fixed Operations as one department.

Even though all of the Fixed Operations Departments factor into the "Service Absorption" Category, we may tend to look at them individually. In my opinion though, we will never achieve "Bullet Proof" Status of 100% or more in Service Absorption unless they all work as one.

In this issue though, I want to address the issue of "dependency" as in who is more "dependent" on the other in Fixed Operations. Even though we may all feel that we are all independent, I want to "flip the switch" and look at how we, in the Parts Department need or "depend" on our technicians.

Keep in mind that I'm not referring to the obvious where we need our technicians to install the parts that we sell. What I'm referring to is how they can help us sell more parts and most importantly, how we can have more of the right parts at the right time.

We will break down each Technician Skill Level starting at the lowest Skill Level, usually "D" Level Technicians, all the way to the top with our "A" Technicians. Believe it or not, we need each Skill Level, and each one can contribute and help us get better in the Parts Department.

Lastly, and before we get started, keep in mind that all technicians have eyes and see what we don't see in the Parts Department. That being said, I would like all "Smart Parts" Readers to perhaps try and see what they see and perhaps learn something from their perspective.

"D" Skill Level Technicians:

This Technician Skill Level is usually the "Entry Skill Level" where all technicians usually start their careers. Even though some of these "D" Techs have attended tech schools prior, they still have to come in at "D" Level and work their way up the ladder.

Most common Labor Operations they may perform include Minor Maintenance Operations like Oil Changes, Mount & Balance Tires, Tire Rotation, Air & Cabin Filter Replacement, Battery Replacement, etc.

One of the most important operations that the "D" Level Technician has to perform and, in my opinion, the most important is to perform a "Quality" Multi-Point Inspection. Even though they may not be qualified to perform some of the repairs found on this inspection, they can surely identify what's needed if trained properly.

Now, think about how this can help and impact Parts Sales and how many of these inspections these "D" Technicians perform each day. The most common Service Operation is a Lube, Oil & Filter Service and how many do they perform each day?

With the majority of vehicles that come in each day to have a Lube, Oil & Filter Service with well over 60,000 miles. That being said, it's pretty obvious that the Multi-Point Inspection, (MPI) is probably the most important operation that "D" Level Technicians perform.

Just think about the opportunities out there that they see for the Parts Department to increase Parts Sales & Gross Profits. Of course, we need the Service Advisors to have proper Presentation Skills and a High Closing Ratio with our Customers to realize these opportunities.

"C" Skill Level Technicians: 

As the technician works up the ladder from "D" Skill Level into the "C" Skill Level, they also graduate up into more capable Labor Operations. Labor Operations like Front End Alignments, Minor Brake Repairs, Fluid Exchanges, Minor Diagnosis, etc. are now added in this Skil Level.

Once again, first and foremost, performing a quality MPI is the most important Service Operation. Next, and when we think about Wheel Alignments, Suspension & Brake Components are now in play as Upsell Opportunities increase.

Not only that, the Technician "Efficiency" also becomes more important as Service "Cycle Time" helps sell more parts more often. As the "C" Technician moves up the ladder in Skill Level, having the right part becomes even more crucial.

Also, at this stage with the "C" Level Technician, they now become a "resource" for Parts Lost Sales Reporting. Even though all Technicians Skill Levels are a resource for Lost Sales Reporting, "C" Level Technicians are becoming more productive and see more vehicles than "A" and "B" Technicians.

"B" Skill Level Technicians:

Moving up to the "B" Level Technician, this is where we see these techs are now moving up to more Diagnostics & Repairs. Powertrain & Driveline Repairs, Minor & Major Brake Repairs, Suspension Repairs and Heating & AC Repairs.

All of these repairs tend to include what I call the "Meaty Parts" that allow us to utilize the Parts Matrix to increase Parts Retain Gross Profit Percentages. Captive Parts are usually our biggest opportunity to utilize the Parts Matrix to increase gross percentages.

They also see more and replace more of the same parts over and over again. They will tend to see trends of what parts were available and which parts were not on "first visit" to the Parts Department.

At this point and at this Skill Level, we tend to see these techs turning more hours with the Parts Department being a big player in what they earn from Billed Hours. At this Skill Level and as a "Smart Parts" Manager, we need to be more aware of how they can help us grow in the Parts Department.

This is also where we should be more reliant and depend on them for information that can lead to more Parts Sales, Higher Gross Profits, (Matrix Parts) and Higher First Time Fill Rates as well as Higher Gross & True Turns.

In my opinion, I want these techs to turn more hours by having more of what they need at the right time. It's also at this point that we see these "B" Techs, (and "A" Techs for that matter) saying that we should stock this part or that part.

This is a "crossover" point for Parts as we all know that many techs think we should stock everything not realizing the ramifications of obsolescence, overstocking and space issues on our end.

This is also where we need to start thinking about meeting somewhere in the middle of what these techs can offer us. We can listen while still being cautious of the above ramifications as well. Lastly, the "B" Skilled Technician, (as well as the "A" Skilled Technicians) can provide us more Lost Sales Opportunities.

"A" Skill Level Technicians:

Now we are coming to the "cream of the crop" as the "A" Skill Level Technician is probably our biggest asset and partner in having the right part at the right time. They can also provide a wealth of information that we don't see on paper.

Going back to my early years as a Parts Manager, I always relied on my Master "A" Techs or Shop Foreman for this information that I don't see. Not only for having the right part, but also those "relative" parts that we will need to complete major repairs.

After all, what's the point of having a turbo in stock if we are not going to have the hoses, gaskets, nuts and bolts to complete the repair. One of the most common Parts Manager mistakes nowadays is not having those "one time use" parts in stock.

The "A" Skill Level Tech, or Shop Foreman should also be invited into what we call our "Stock Order Meetings" at least a couple times a week. As Parts Managers, we tend to look at the Stock Order much differently than they would.

We tend to look at history, how much the part costs, will we be stuck with the part and adding to obsolescence, model year usage or availability, etc. They simply look at what the part is and what parts tend to tie up lifts.

This coalition between the Parts Manager and the "A" Skilled Technician, Shop Foreman or Service Manager in these "Stock Order Meetings" is essential. If we choose to "go it alone" as Parts Managers, we may have a "clean inventory", but we may also have a low "First Time Fill Rate".

We can have Higher First Time Fill Rate, Controlled Obsolescence, Higher Sales & Gross, Higher Gross & True Turns and Higher Service Absorption. There should never be a wall between Parts & Service, only a door that that opens both ways.

Achieving a High Service Absorption Rate only comes from the Fixed Operations working as one and utilizing all of our Fixed Operations Employees and Assets. Our Service Technicians should be our first "go to" for information as we need them as much as they need us.

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...

August 2026: Parts Stocking Status: " What's the Overall Impact?"

Many Dealers today are actively involved in various National 20 Groups whether NADA, NCM, or perhaps others. One thing for sure though whether they are or are not, they all have expectations, or "guidelines" that we all have to measure up to.

These "Industry Guidelines" are set for every dealership department and the Parts Department is no exception. In March of this year, we actually "drilled down" our Parts Industry Guidelines.

We went through all of these Parts Guidelines as well as providing the definitions of each one. We also touched on how many of them are related and how they tend to "trickle down" in measuring our overall Parts Performance.

What we did not focus on in March was how important it is to have the right numbers in the first place before we even start to compare and measure these Parts Industry Guidelines. After all, if our initial Parts Setups & Controls aren't accurate, there's no point in trying to "measure up" to our Parts Industry Guidelines.

In my opinion, there is one Parts Category that is Number One in determining so many Parts Industry Guidelines and that one is "Parts Stocking Status". In this issue of ACG "Smart Parts", we will go through all the Parts Industry Guidelines that can be impacted by Parts Stocking Status.

First, let's list out the Parts Categories & Industry Guidelines that can be impacted by our Parts Stocking Status. Keep in mind when I talk about "Parts Stocking Status", I'm referring to what parts are considered Normal Stocking Parts, Non-Stock Parts, Active Parts and In-Active Parts.

• Normal Stock Parts in Inventory: 75% - 85%
• Non-Stock Parts in Inventory: 15% - 25%
• Stock Order Performance: 75% - 85%
• Overall Off Shelf Fill Rate: 90% - 95%
• First Time Off Shelf Fill Rate: 75% - 85%
• Lost Sales Reporting: 5% - 10% of Total Sales at Cost
• Emergency Purchases: 10% or Less
• Inventory Gross Turns: 8 Turns Annually
• Inventory True Turns: 5 Turns Annually

After looking at all these Parts Industry Categories & Guidelines, you have to ask yourself one simple question:

"How Can Our DMS's Parts Stocking Status Impact ALL of These Parts Industry Guidelines?"

Let's Begin!

In my opinion, there is no better place to start then at the beginning, and in the case of determining "Parts Stocking Status", the beginning starts with the initial DMS System "Default" Settings, and then the Parts Phase-in and Parts Phase-Out Parameters. 

Every DMS has to be set up initially with System "Default" Settings with a Primary Source or Stocking Group for parts entering into the system from the Manufacturer. An analogy would be to consider your Parts Inventory as your "house" and all parts have to enter in through the front door.

The address on that front door is "100 Parts Drive", with the number 100 considered as our Main Parts "Default" Source or Stocking Group. This primary "Default" Source or Stocking Group also has to be set up as the main "Non-Stock" Source or Stocking Group.

When a part is born into the system, it's usually a "Non-Stock" Part purchased for the first time, it needs a place to go in the house. If the main "Default" Source or Stocking Group is set up as "Normal Stock" instead of "Non-Stock", (which I have witnessed), Stocking Status is incorrect right from the start.

Parts need to default to a "Non-Stock" Status initially before Parts Phase-In and Phase-Out can begin. They have to enter into the "house" as "Non-Stock", go into the Main "Default" Source or Stocking Group, or primary "room" in the house. From there, they have to wait for instructions on where to go next, determined by the Phase-In & Phase-Out Criteria.

The Phase-In Criteria is the Number One setting that will determine if a part will be considered a Normal Stocking Part, (Family) or a Non-Stock Part, (Visitor) in the house. After we have the proper address on the front door, (Main "Default" Source or Stocking Group), we can set our Phase-In Parameters.

The Phase-In Parameters measures the total demand required, (Sales & Lost Sales) for a part to become part of the family, (Normal Stock Parts). This total demand is measured for a period of days or months until demand has been met.

Once demand has been met, the Parts Manager then determines if they want to accept that part as a Normal Stock Part with the appropriate Stocking Status. If a part has not met the Phase-In Parameters, it will remain as just a visitor in the house, or a Non-Stock Part.

As you can see from this analogy, if the initial "Default" Source or Stocking Group is not set up as "Non-Stock" from the beginning, Stocking Status is already inaccurate. Secondly, if the Phase-In Parameters don't have the proper number of demands required over a period of time, parts can Phase-In either too early or too late.

Either one, (too early or too late) will determine the Stocking Status of that part and may be adding parts too early as Normal Stock or prevent them from ever being considered a Normal Stock Part.

The Phase-Out Parameters have to be set up accurately as well and after the initial Phase-In Period. If the Phase-Out Parameters are set up "within" the Phase-In Cycle, parts will never Phase-Out, thus remaining a Normal Stock Part forever. This example would lead to parts that are actually obsolete but still considered as Normal Stock Parts.

So!...What would be the "Impacts" on all these Parts Industry Guidelines if we don't have the right Set Ups & Controls we just mentioned?

Normal Stock Parts, (or Active): 75%-85%

If the Parts Phase-In Parameters are not set up correctly with the right number of demands over a period of days or months, early Phase-In could happen. If incorrect, parts could phase-in to a Normal Stocking Status instead of remaining a Non-Stock Part.

In addition, if the Phase-In Parameters require too many demands over too long of a period, parts that we should consider as a Normal Stock Parts remains in the Non-Stock Status. Parts that are kept in this "prison", would never have a chance to qualify as a Normal Stock Part.

Non-Stock Parts, (or In-Active): 15%-25%

This opposite effect often happens when the "DMS Language" isn't defined properly. Measuring "total parts demand" over 8 months for Phase-In is totally different from measuring "demand of at least one" in 3 separate months over a period of 8 months.

I have witnessed these Phase-In Parameters being totally "misread" in the DMS. In one case, after it was all said and done, a part would have to have at least 3 demands in 3 consecutive months for a total of 9 demands in order to Phase-In.

Not only that and in case of the above scenario, these 9 demands would have to happen in 3 consecutive months. In other words, if we miss one month of at least 3 demands, the process will have to start all over again. 

This scenario actually "prevents" parts from phasing in as they remain in prison and will never get out and become a Normal Stock Part, (part of the family). This will also show a lower amount of Normal Stock Parts and would have to be Special Ordered as they will not show on a Suggested Stock Order.

Stock Order Performance: 75%-85%

In our above example when a part is kept in prison because it has not met the "incorrect" Phase-In Parameters, they will not show up on a Suggested Stock Order as they have not "technically" met the Phase-In Parameters.

On the other hand, we could have parts recommended that don't meet the "correct" Phase-In Parameters, but do meet the Manufacturers Vendor Managed Inventory, (VMI) Stocking Guidelines.

In this case, we could be buying parts we "think" ae considered Normal Stock Parts from these VMI Programs, but they are in our DMS as Non-Stock Parts. We may have purchased them for stock, but because they don't meet the DMS Phase-In Parameters, they come in the "house" as Non-Stock.

Overall Off Shelf Fill Rate:

First thing to note on this one is the word "Overall" and does not mean that this is your "First Time Off Shelf Fill Rate". Overall meaning that we sold the part whether today, tomorrow, next week or next month. We could also "fill" the order from someone else's inventory.

Quite simply, it just means that we "filled" the order minus any Lost Sales Reported at Cost. Overall Off Shelf Fill Rate includes all Parts Sales, whether Normal Stocking Parts or Non-Stock Parts which include Special Ordered Parts.

Lastly on Overall Off Shelf Fill Rate, we don't even have to have a Parts Inventory at all to measure Overall Off Shelf Fill Rate. Parts Sales can be filled from anywhere and any inventory, even if not our own.

First Time Off Shelf Fill Rate: 75%-85%

The only way we can measure our Parts Sales on "First Visit" is to determine what parts we tend to sell on first visit which are Normal Stock Parts. This one is easy when we consider the "Overall Impacts" of having the Proper Stocking Status in order to measure First Time Off Shelf Fill Rate. 

How can we accurately know what our First Time Off Shelf Fill Rate is if we don't even know what a Normal Stock Part is? We could be looking really good or really bad depending on the initial Set Ups back in the beginning.

Lost Sales Reporting: 5%-10% of Total Sales at Cost

Whether we are reporting Lost Sales or not, these demands, like a parts sale have to meet the initial Parts Phase-In Parameters. If the Phase-In Parameters are not set up properly, posting Lost Sales won't even matter.

Second, if the initial Phase-In Parameters are set up correctly, posting Lost Sales won't matter if we don't use these demands to run our Suggested Stock Orders. This goes back to my reasoning that it's not really the actual Posting of Lost Sales that's important, it's what we do with the information that's most important.

What's most important than even the definition is the reason and purpose of reporting Lost Sales to begin with. The purpose and reason are to simply track Non-Stock Parts for potential Phase-In, if of course we have the right set ups to begin with on Normal Stock Parts vs. Non-Stock Parts.

Emergency Purchases: 10% or Less

Posting "EP's" is extremely important but is not intended for posting EP's on Non-Stock Parts. Emergency Purchases are simply "Stock Out Purchases for a Customer" and not for chasing parts that are considered Non-Stock. Once again, Proper Stocking Status matters in all these equations.

If we are chasing a Non-Stock Part to begin with, maybe we should post a Lost Sale to ensure that demand is recorded. Even though the demand may be recorded when that part is eventually sold, there is no guaranty that sale will happen. What is guaranteed is the fact that we didn't have the part initially.

Parts Gross Turns: 8 Turns Annually

Technically, Gross Turns effects all Parts Sales as it measures Total Parts Sales at Cost, whether we have the parts on the shelf or not. However, it does give us a measurement of what our inventory value should be based on a 45 Days Supply.

Measuring Parts Gross Turns can help us determine what our "desired" Parts Inventory Level should be. After determining our "desired" Parts Inventory Level should be, we can break that down to what percentage should be Normal Stocking Parts. Here again, if the Stocking Status is accurate.

Parts True Turn: 5 Turns Annually

First and foremost, you can never determine your "true and accurate" Parts True Turn if Stocking Status is inaccurate, plain and simple. For example, if the initial Parts Default Settings are set to Normal Stock Parts instead of Non-Stock Parts, we would look like a hero on Parts True Turns.

On the other hand, if the Parts Phase-In requires too many demands over too many periods, (months), then these parts will never get out of prison. They will remain Non-Stock, even though we sell them as if they were Normal Stock Parts.

In this above scenario, Parts True Turn would be lower than it actually is. Many parts that perhaps should be considered Normal Stock Parts, are actually in the system as Non-Stock Parts thus not calculated in the True Turn Measurement.

They will never figure into the Overall True Turn Rate of Sales of Normal Stock Parts annually divided by the average month's inventory value over the same period. in this case, the dealer will never know how "fluid" their asset is performing.

So amazing how one simple thing as "Parts Stocking Status" can impact so many other Parts Industry Guideline Categories right from the beginning. We should always question what we see to confirm what make sense and what doesn't make sense and fix it.

So, when we are filling out our 20 Group Questionnaires, perhaps you should first understand where these numbers and percentages come from. Second and most important, they should make sense compared to the Industry Guidelines. If they don't, maybe, just maybe, your Stocking Status is not accurate... 

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...

 

July 2026: "What's Your Stock Order Closing Ratio?"

As I was pondering the topic of our July Issue of ACG "Smart Parts", my decision was made rather quickly after I received a question from one of my dealers on a recent Parts Webinar. It was a question that I have never been asked before.

After he asked the question, I was kind of thrown for a loop, but after quickly thinking about it, his question made total sense. His question goes as follows...

"Dave, Is There Any Parts Industry Guideline That Measures Our Stock Order Closing Ratio?"

What he meant was, is there a way to measure the number of parts that are recommended on our Suggested Stock Order versus what we actually accept and submit on that Stock Order?

My first thought was that there could be a measurement, but it would depend on if the Suggested Stock Order makes sense in the first place. If the math is correct including the Parts Phase-In Criteria and the Stocking Criteria based on Average Annual Piece Sales and Total Demands, I guess the DMS would give us proper recommendations.

Unfortunately, and in my experience, most systems aren't even set up correctly in the first place, and that's not my opinion as it's just the math. But given the fact that this is one of my dealers that have the proper set ups with the right math, it's even more of a valid question.

I thought about it even further on how the correct math plays a huge part of getting the right measurements. After all, many other Parts Industry Guidelines also depend on the "right math", Accurate Reporting and Stocking Status, so why not add this one in?

Although, even if the math is correct, there are still many Parts Managers that "over scrutinize" their Stock Order Recommendations for many reasons. Maybe they don't want to stock the part, even if it meets the criteria, or perhaps the part may be too expensive to stock.

Other reasons may include; not accepting the part because they are worried they may get stuck with the part and potentially add to their obsolescence. Another could be that they may have a space issue, and they need to change the recommended quantity.

Whatever the reason, and if we take these Stock Order Recommendations at face value, the correct math does not lie. I do agree though that we should separate and perhaps exclude parts from the Stock Order that we don't want in the first place.

A few of these parts may include engines, transmissions, collision parts and accessories just to name a few. But what if we were to move these initial "unwanted" parts into a Separate Source or Stocking Group, thus only leaving us the parts that we may want to consider on our Recommended Stock Order.

The other factor in all of this if we are supposed to have a "First Time Off Shelf Fill Rate" of 75% - 85% based on Industry Guidelines, then shouldn't our Stock Order Performance, or "Stock Replenishment Rate" be the same thing?

Hmmmm...Seems Like We May Have Something Here!...Stock Order Closing Ratio!

Let's Ponder This Thought & Begin!...

Much like any other Industry Guideline that we may be considering, there has to be a "Universal Measurement" that all Dealers & Manufacturers can follow. It also has to be "DMS Friendly" where we can all access and measure the guideline equally and consistently.

I would probably start out by simply dividing the Stock Order Lines accepted by the Total Lines Recommended. I would not factor in changes in quantities into the equation due to Supply Chain Issues and Seasonal Parts Sales. I think just keeping it simple would give us the best measurement.

I also would not use "dollars spent" versus "dollars recommended" as that may sway these measurements considerably. Keeping it simple and focused on "parts numbers accepted" versus "part numbers recommended" would give us some good info to track.

The other thing that I thought of when this question was asked was that this may also be one of the reasons we are seeing lower "First Time Off Shelf Fill Rates", "Normal Stocking Parts vs Non-Stock Parts" and "Stock Order Performance".

Not accepting the math in the first place based on demand history would only make sense as to why all the other categories are lower as well. After all, the other categories come later after we make these initial decisions on what we accept and don't accept.

I would almost bet that if we start to measure "Stock Order Closing Ratio", we will probably discover that this Closing Ratio is pretty similar to the above-mentioned Parts Categories. 

It would just make sense as this would represent a "trickle down" affect as it all starts by Tracking Demands, (Sales & Lost Sales). Followed by Phasing Parts In that follow the math, then Stocking in the Parts that meet these basic guidelines and math for stock.

It also makes sense that the Industry Guidelines for First Time Fill Rate, Normal Stock Parts vs. Non-Stock Parts and Stock Order Performance is 75% - 85%. They should all follow the same path as they are all inter-related.

The remaining or opposite side of the above percentages would be the 15% - 25% of those parts we Special Order or have to chase as Emergency Purchases. Adding Stock Order Closing Ratio would just fit right into the equation, or "circle".

If you think about it, the Manufacturers that offer their Vendor Managed Inventory Programs, (VMI) are already doing this. They just happen to call it "Compliance", which I prefer to call "Obedience" on the percentage of parts they offer in their program versus the parts we accept and carry on their programs.

Each one of these Manufacturers that offer these programs have a certain percentage rate, which we could also call the "VMI Stock Order Closing Ratio" of parts accepted versus recommended.

Given the fact that many of these Manufacturer VMI Programs only offer 50% - 55% total coverage, or "Breadth" of their Total Inventory, we will never achieve a high "Stock Order Closing Ratio". We have to run our own "Supplemental Stock Orders" on our DMS in order to make up for those parts they don't cover.

Unfortunately, many Parts Managers are not running their own DMS Stock Orders and operating exclusively on their Manufacturers VMI Stock Order Recommendations. Although, it probably wouldn't matter if they did because the basic math in the DMS isn't accurate anyway.

Running a DMS Recommended Stock Order without the right math and set ups would just reveal a lot of "garbage" that wouldn't make sense. Usually, without the right math and set ups, the DMS tends to "over recommend" many parts that do not qualify.

The end results are usually the same where these dealers have too much of what they don't need and not enough of what they do need. Overstocking parts and perhaps adding to obsolescence while many parts we really need get left out.

Even though "Stock Order Closing Ratio" is not a true measurement yet, I do believe in order to maximize this Closing Ratio, we first need to make sure we have the "right" recommendations based on the math as mentioned.

Once that is accomplished, having weekly "Stock Order Meetings" with the Service Manager always helps in making the right decisions. As Parts Managers, we tend to be more cautious and worrisome of what would happen if we don't sell these parts.

Seems like many Parts Managers have their own "Crystal Ball" and try and predict the future of many parts. The Service Manager on the other hand knows what's happening in the present as they already know what parts are tying up lifts in the shop.

Having that extra set of eyes can only help in making the right decisions and increasing the "Stock Order Closing Ratio". It would almost be like "pre-selecting" who we want to sell parts to. Why wouldn't we want to have the right parts for our customers at the right time?

In my opinion, we need to lose that attitude of "I'm not stocking that part because it's too expensive...they can just order it when they need it". This just ends up as Lost Service Productivity and Sales as "Time is a Perishable Inventory".

After all this being said, some may ask the Million-Dollar Question...

"All This May Sound Good, But Will This Only Lead to More Obsolescence?"

The answer to that one is simple as we are not buying parts to hold them and not sell them. We are buying the right parts that have a history of demands that will actually lead to even more Sales and Increased Service Productivity which is the exact opposite.

Obsolescence is going to happen no matter what we do at a rate of at least 5% - 10% each year. The "Smart Parts" Manager already knows that and will always control it, even if some may try and predict the future of parts we "think" may not sell.

Maybe if we start tracking "Stock Order Closing Ratios" we may see more of a pattern developing that we may have not noticed before. Lower "Stock Order Closing Ratio" may be one of the reasons we have a low "First Time Fill Rate".

Maybe it's part of the reason why our Stock Order Performance is low and Inventory Investment on Normal Stocking Parts is also low. It all starts with what we choose to accept based on the "right" math and set ups in the DMS to begin with.

One last thing to keep in mind is that running a Suggested Stock Order on the DMS should be done daily. After all, it's really just a report that that should be reviewed daily and it's not really a Stock Order until we submit it.

"Stock Order Closing Ratio?...Nice Idea!...Perhaps We Should Consider It"!

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...

June 2026: Special Ordered Parts: "Purchased Obsolescence Without a Process?"

As we approach the midway point of 2026, this month's issue of ACG "Smart Parts" will once again focus on the basics. That being said, it's pretty interesting that some of these "basics" we focus on each month are very relevant.

It is not our intent to bring up something new each month, even though we have introduced many new ideas, concepts and approaches in our ACG "Smart Parts" Blogs over the last 14+ years.

More importantly than all that, one of our most common phrases, not only in our ACG "Smart Parts" Training Program, but also in our ACG "Smart Service" Training Program as well is...

"Don't Ask Yourself if You Know It, Instead Ask Yourself How Good You Are at It!"

In other words, we may already know what the process is and have known for years, but how good are we at that process? Especially when it comes down to managing Special Ordered Parts and preventing Parts Obsolescence as a whole.

If You Don't Already Know It, Here's a News Flash!...

"One of the Biggest Contributors to the Dealers Obsolescence is Special Ordered Parts that Never Get Sold!"

In many dealerships today, it shouldn't be a question of "do we have a process?", it should be more of a question of "do we have the right process?" None can be truer with our "Special Order Parts Process".

Special Order Parts can be one of our biggest contributors to Parts Obsolescence and if we don't have the right process, we could be purchasing obsolescence right from the start. Even though we may have a process, in many cases there are few restrictions and most important, there is usually a lack of accountability.

In this issue of ACG "Smart Parts", we will detail our Special Order Parts Process that will help minimize obsolescence while increasing overall parts sales. Keep in mind that these Special Order Parts should be considered as "pre-sold work, or "pre-sold parts sales".

Let's Begin...

As we mentioned, having a process in many of our daily routines is not uncommon. It's more of having the right process that leads to expected results and determines the success of any process.

As we go through and detail our Special Order Parts Process, you may notice that it may contain some process items that are already being followed in most dealerships today. It's more of what we aren't doing in our current process that we should be focusing on.

Number One: Special Order Parts Authorization

Much like most problems that lead to undesired results in any process, it all starts in the beginning, and initiating a Parts Special Order Process is no different. We should be first looking at just who is authorized to order these Special Order Parts in the first place.

In many dealerships today, just about anyone can Special Order a part without any accountability or incur any consequences. In all actuality, whoever authorizes the initial Special Order should be held accountable for the sale of that part.

Authorized personnel should only include Parts Personnel, Department Managers, Service Advisors and of course, the customer. Technicians do not order parts as they are not usually held accountable. They can tell us what a vehicle requires, but they are not authorized to order Special Order Part(s).

All Special Order Parts need to be authorized and signed for to start the accountability trail. If these parts are not eventually installed, or sold, then the authorized person or department generating the Special Order should be held accountable to any return fees.

The authorizing party should also be signing off on when they are notified when the Special Order Part(s) have arrived as well. Often times, the Parts Department just lays a Special Order Part receipt on their desk and goes unnoticed and lost in a paper shuffle.

This is crucial because in my opinion, if the Special Order Part does not get installed or sold, then it should be returned after 30 days, no matter the cost. Otherwise, it will just be added to the inventory and future parts obsolescence.

Number Two: Parts Pre-Payments, Restrictions

This part of the process is usually common in most dealerships today when applicable. Problem with this one is that we can't ask for a deposit or pre-payment on Warranty Parts or Internals. These are also the parts that we are stuck with if not installed or sold, once again adding to Parts Obsolescence.

Of course, acquiring deposits and pre-payments is extremely important and involves the Accounting Department in processing these payments up front. It also requires the proper billing procedures in order to relieve these payments on RO's and Counter Tickets.

Special Order Parts "restrictions" on the other hand are not often followed enough in many dealerships. Proper signage and wording on Repair Orders and Counter Tickets have to include these restrictions, exclusions or added fees.

Restrictions and conditions should include; No Returns on Electrical Items, No Special Order Parts Returns after (30) Days, Packaging Restrictions, and Return Fees May Apply just to name a few.

Keep in mind that these Return Fees should also apply to other departments, even if these fees are charged internally to the authorized department as an expense. Even though there are really no "monies" realized, the expense should be applied, and the part should be returned to the manufacturer or scrapped.

Back when I was a Parts Manager, and when Special Order Parts reached (30) Days without being sold, the authorizing person or department was given final notification. I would then give them a two week "grace period" to get those parts sold.

Once the (45) days have elapsed, these Special Order Parts were either sent back to the manufacturer or scrapped. The return fees or scrapping fees would then be charged to the authorizing department as there has to be accountability with consequences.

I have learned over the years that if we followed these guidelines and stuck to them; the problem seemed to go away. Most importantly, the dealer had to support this part of the process with no exceptions.

Number Three: Pre-Billed Special Order Parts

In my opinion and in the past, I would never Special Order a part for Service unless I had one of two things, which would be an RO or a Future Appointment set for the customer. In most Dealer Management Systems, a future appointment can be created, attaching the Special Order Part to a customer.

Prebilling a Special Order part to an RO or a Future Appointment is essentially the same thing and "allocates" the Special Order Part to either the RO or the Future Appointment with a Lead Time of at least 3-5 days. If a Special Ordered Part is Back Ordered, Service is notified and the Future Appointment is "modified", not deleted to an alternate Future Appointment Date.

Billing a Special Ordered Part to a Future Appointment would also allow the Service Department to remove parts from an RO, which we all hate in Parts. If a part is removed from an RO for any reason, the Special Order Part should then be billed to a Future Appointment.

It's also much easier for the Service Advisors to "pre-schedule" these appointments as opposed to waiting for parts to arrive and fit these customers into their schedules. Communication is key though as we don't want customers coming in for their appointments and the part hasn't arrived for whatever reason.

The Parts & Service Departments also have to do their prework before the customer arrives to ensure the right parts were ordered and received. This "prework" should be in place no matter if the customer had a Future Appointment or not and should apply to all Special Order Parts.

Believe it or not, this happens often as Special Order Parts are ordered wrong for whatever reason or person. Another "Purchased Obsolescence" Scenario happens when the Tech Special Orders additional parts "just in case" they may need it, or the diagnosis is not clear on the needed parts.

Number Four: Special Order Parts Notification

If there was one area where the ball gets dropped in this whole process is this one as everyone seems to point the finger at someone else. Every DMS out there has a "Universal Special Order Communication System". There should not be calls going back and forth between Parts and Service to see if Special Order Parts have arrived.

Maybe the Counter Person just dropped the slip on the Service Advisors desk without personally notifying the advisor, or the Service Advisor was notified and didn't call the customer. Whatever the "excuse", this one seems to always lead to "Process Failure".

First of all, if we had set a Future Appointment in the first place and the Parts Department made sure the part was there for that Future Appointment and we verified we had the right part beforehand, things would flow smoothly.

I realize that if all that happens correctly, then things would flow smoothly, but unfortunately, when the process fails just one time, it gets dropped completely. Instead of finding out where the slipup was and fixing it, we tend drop this "good practice" process completely.

Number Five: Special Order Parts Bin Sequence

Lastly, one of the areas that most often gets overlooked is where we "bin" these Special Order Parts in the first place. In many, if not most dealerships, Special Order Parts are kept out back near the shipping & receiving area mostly for convenience. Out of sight and out of mind when they should be prioritized for obvious reasons.

In my opinion, Special Order Parts should be closer to the front counter in order to stay on top of them and reduce the chances of being stuck with them. After all, we already know that these parts could eventually be added to our obsolescence.

In addition, we should also "bin" them differently as most Special Order Bins are set up in alphabetical order sequence by the first letter of the customers' last name. This has been pretty much how we have binned Special Order Parts for years.

Quite a few years ago I happened to visit a dealer that literally had no issues with Special Order Parts Aged over (30) Days, which is the industry guideline. When I asked to see his Special Order Bins, I was confused as I didn't see these Special Order Bins labelled with the letters A - Z for the first letter of the customers last name.

Instead, what I observed were Special Order Bins with the Service Advisor's Names at the top and four shelves below. Each shelf had fluorescent tape to the left starting with green on the first shelf, yellow for the second, blue for the third and the fourth shelf labeled with red fluorescent tape.

Each shelf indicating how long that the Special Ordered Part(s) had been received and on the shelf waiting to be installed and sold. This "visual" was amazing to me as it really made it easy to manage these Special Ordered Parts.

Each day, one of the Parts Staff would update and move these Special Ordered Parts to the appropriate shelf based on the receipt date. The Service Manager also insisted that his Service Advisors walk these shelfs to make sure they did not end up on the bottom shelf, which was week four.

This "visual" Special Order Management idea was so simple to me and so practical in order to keep these Special Order Parts cycled through every (30) days. Other than the exceptions of back ordered parts, restricted parts and rescheduling customers became much easier to manage.

Everyone involved has to have a sense of urgency and accountability to this whole process. Those days of just saying..."The customer never showed up so just put it back in inventory and we will sell it to someone else"...are long gone.

Bottom line is that Special Ordered Parts that do not get installed or sold are just adding to the dealer's obsolescence and acquisition and holding costs. Most importantly, Special Ordered Parts could be referred to as "presold work" and we should consider them as such.

We all work very hard to increase Parts & Service Sales each and every day and these parts are just sitting there waiting to be installed and sold. Keep in mind that simply ordering Special Order Parts doesn't complete the task as it's just beginning.

f 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...