After writing these Monthly Blogs for over 14 years, I never thought I would get so excited and anxious to write this one. Writing about something that hits the "core" of what I believe to be our primary reason of being a Parts Manager in the first place.
That reason is to service and provide the "right" part to our customers at a high level on the first visit to our parts counters and be profitable. We not only have to provide these parts, (according to Industry Guidelines) 75% - 85% on first visit, we also have to protect the dealer's investment.
Protecting the dealer's investment meaning we have to minimize parts from going obsolete. That being said, being a Parts Manager is not easy as we have to have the right parts and keep the inventory "clean".
I will admit that this "two-way street" usually leans to one or the other in many dealerships today. Either we have a "clean" inventory with a Low First Time Fill Rate, or we may have a High First Time Fill Rate but have issues with Obsolescence.
The truth and the fact of the matter is that we can actually have both, High First Time Fill Rates and Controlled Obsolescence. The real question is which one of these three mentioned do we want to be?
In this issue of ACG "Smart Parts", we will reveal the secret of many Parts Managers that "Choose Not" to stock the right parts just to keep their inventory clean from obsolescence. Even if it comes at the expense of technicians, dealers and ultimately, the customer.
The parts that I'm referring to that are purposely not stocked, even if they meet Stocking Guidelines are as follows. Parts such as bolts, washers, gaskets, turbos, some suspension and driveline parts, brake repair parts, emission parts, etc.
I am not referring to engines, transmissions, collision parts, recall parts and perhaps restricted parts for obvious reasons. Even though I do have many dealers that do stock some of these above parts in higher volume stores because they have met the Criteria.
Keep in mind that these Parts Managers that "Choose Not" to stock the right parts, other than fast moving parts don't have to actually face the customer. They are just sitting in the background essentially controlling the dealer's money and other people's lives.
In some respects, I hate to be blunt, but on the other hand I will be blunt as my passion has always been to be the best Parts Manager I can be. That doesn't mean our primary reason and goal as Parts Manager is to keep our inventory clean.
It's time to expose this "Parts Management Style", or preference by listing out ALL the effects of what this style or primary goal can cause. Keep in mind that I work with many Parts Managers that are doing it right, but unfortunately, I also know and have worked with many that purposely "Choose Not" to stock the right parts.
So "Smart Parts" Managers!...Let's Put All the Cards on the Table Face Up and Reveal the Effects of Purposely Not Stocking the Right Parts!
First and foremost, let's start by looking at the "mindset", or profile of many Parts Managers out there today. Parts Managers typically have personality traits that include critical thinking, are worrisome, not trusting, and always wondering what may happen.
That being said, one of the Parts Managers biggest worries is the dealer and what might happen if we end up with too much obsolescence. After all, in our role as Parts Managers', we are supposed to protect the dealer's investment and that's what they expect.
This is not a bad thing for sure, but I guess the real question or concern is what lengths they are willing to go to protect from obsolescence amounts, even at the expense of others. Even if it effects the bottom line, they will still put obsolescence protection first.
Let's Get Started on What "Choosing Not" to Stock the Right Parts Can Cause...
Service Scheduling Issues:
Service Departments that have an "Obsolescence First" minded Parts Manager seem to get used to the fact that Maintenance Parts are great and are readily available. When it comes down to repair parts though, it's not uncommon that we diagnose the problem today and repair the next day and beyond.
This obviously causes a scheduling nightmare because even if we diagnose the problem today, the repairs are put off to later that day or another day. We just seem to get used to it and schedule "around" the Parts Managers stocking preferences.
If you think about this aspect alone and the lost productivity, and time being a perishable inventory, this "down time" is costing the dealer tons of money. The Parts Manager may feel that they will eventually get that sale and that's all that matters to them.
What they may not realize is that they could get two jobs done in two days instead of one job in those two days which would double the amount of Parts & Labor Sales in that same time frame of two days.
The lost time waiting for a part that we should have on the shelf cannot be replaced, whether later that day or the next day. Customers are forced to wait longer to get their vehicle back, and/or we have to put them into a Rental or Loaner Vehicle.
Even worse, waiting to complete the repairs because the Parts Manager "chooses" not to stock the part and "order as needed" takes up more appointment slots. Diagnose today, repair tomorrow and take up another appointment slot.
Lastly on this effect, technicians now have to have two lifts as vehicles are tied up waiting for critical repair parts we should have had in the first place. This reducing efficiency and stall utilization with one stall waiting for parts and the other to complete the repairs on the parts ordered yesterday and received today.
Lack of Lost Sales Reporting:
This effect is pretty interesting as these Parts Managers that put Inventory Protection first also tend to not want to report Lost Sales on certain parts. They don't even want to stock them in the first place because they don't want to be stuck with them, potentially going into the obsolescence category.
This also leads to a major problem in Lost Sales Reporting to begin with as more and more restrictions are put on what to report as Lost Sales. The Exception becomes the Rule, and the Counter Staff doesn't even know what a Lost Sale is anymore.
Even if the Lost Sale leads to meeting Phase-In Stocking Guidelines, the Parts Manager will not accept it anyway. Parts are only going to be stocked if it is a fast-moving part such as Filters, Brake Pads & Rotors, Wipers, Fluids, etc.
Any Parts Manager can look like a hero and keep the inventory "clean" and essentially free from obsolescence if all we are going to have on the shelf are fast-moving parts. It takes a "skilled" Parts Manager to have ALL the right parts and keep the inventory clean.
If we are going to have this mindset, what's the point of even posting any Lost Sales? There is a reason every DMS out there has a Lost Sales Posting Function and that is to track non-stock demands of ALL parts for potential Phase-In.
Technician & Service Advisor Mindset:
This effect is crucial and shameful at the same time as Technicians and Service Advisors can develop a "mindset" working with this type of Parts Manager. They will actually NOT recommend additional work, or "upsells" because they know they won't have the part anyways, so why bother.
This is unbelievable but it happens and the sad part is that not only is the dealer losing opportunities, but the customer may also be leaving the dealership with needed repairs. The safety of that family's vehicle now falls on the dealer.
If there was one single thing that these Parts Managers with this mindset do not realize is that their decision to protect from obsolescence first can indirectly affect the eventual safety of the customer's vehicle.
Even if the Technicians and Service Advisors are on the front line, their "mindset" is shifted. They feel there is no point in making recommendations because they won't have the part anyways, so why bother and potentially affect their paychecks.
They end up going with and recommending quantity versus quality. By this I mean that they will only recommend upsells that include faster moving parts such as flushes, wiper blades, tires, alignments, etc.
Repair recommendations such as oil leaks, idler pulleys, weak suspension components, belts & hoses, etc. may be noticed, but not documented. Or perhaps documented, but not presented to the customer.
Our jobs, duties & responsibilities are to inform our customers of the condition of their vehicle, whether they choose to have them done or not. In my opinion, first and foremost, we have to have a genuine concern for our customers.
The liabilities and care for our customers alone should be reason enough to want to do what's right for our customers. On top of that, our sales and profits will also increase as it's a "win-win" for everyone.
But due to human nature, and the Parts Managers preferences, we could be responsible and liable for our choices, in-actions and preferences. The service we are supposed to provide our customers should not be determined by this potential trickle-down effect.
Lack of Stock Order Utilization:
This is another effect that goes unnoticed as this Parts Manager Mindset tends to not run their Stock Orders or Supplemental Stock Orders near enough. After all, if we are only going to carry the fast-moving parts, we can do that calculation ourselves.
Plus, the Stock Order recommendations may be more than we want as we want to keep those purchases down to make my Gross & True Turns look better. After all, why should we carry 3 cases of that oil filter when I can get by with 2 cases.
And why should I carry 3 sets of those brake pads when I can get by with 2? We can always chase a set if we run out from the Aftermarket or another local dealer. These scenarios are real and happen every day in many dealerships.
Running a Suggested Stock Order is just that, it's just a report on what the system recommends, (with the right math of course) and it is not a Stock Order until we submit it. It is not uncommon for these Parts Managers to pretty much run their own Stock Orders in their head because they feel they have better control.
The "Unseen" Effect:
If you were to ask any owner that has this type of Parts Manager, they would most likely say that they are doing a great job because their inventory is so clean and they are profitable. It's the "Unseen Effect" that they are missing even though they are still profitable.
You won't see any Missed Opportunities on any Financial or any Parts Monthly Analysis Report. You won't see the Service MPI's that do not have ALL the recommendations or items that require attention if they are not there or presented to the customer.
To reveal this one, simply run a report of vehicles that have been in your shop with over 100,000 miles and leaving with just an oil change and perhaps a tire rotation. The "unseen" would then be revealed as these vehicles are leaving our shops with needed repairs and/or maintenance.
The Only Benefits: Low Obsolescence, Clean Inventory &Higher Turn Rates
Not that these benefits are important, but if we are living and operating our Parts Departments on these two priorities, we are missing our purpose as Parts Managers. If you think about it, the Parts Manager is in control of the overall outcome.
All the while, operating in the background mostly without any customer interaction other than the Counter Retail & Wholesale Operations. Just to make things look better to the dealer on paper, which may indicate that the Parts Manager is doing a great job.
In the case of "Choosing Not" to stock the right parts has far more negative outcomes compared to the few benefits. I'm not saying that we let obsolescence go rampant by stocking more of the right parts as we should be doing both.
Many dealers that I'm associated with are doing just that by keeping obsolescence under control while having a very High First Time Fill Rate. These are the real Parts Managers that are getting the job done in all aspects and are what I call the "Real Smart Parts Managers".
We could have the best Parts Set Ups & Controls with the right math on Parts Phase-In, Parts Phase-Out and Stocking Levels, but if we have the right "mindset", it won't matter. The Parts Manager has to use the information and act appropriately to what the math is telling us.
To me, this type of Parts Management Style is "Old School" and should be addressed. If you want to know the truth, just speak with your Technicians & Service Advisors and they will agree that most vehicles are tied up because we don't have the right part.
Keep in mind that I do realize that there are a lot of legitimate reasons why they may be tied up for a part due to limited availability, restrictions, etc. Those are the normal, acceptable reasons, but the Parts Managers should still be doing their best to find these parts and not letting them sit on a backorder status.
Our real success in our Fixed Operations is determined on Quality Service and Parts and how well we cycle vehicles through our dealerships with the right processes. Quite simply, none of our customers want their vehicles tied up longer than they should be, they will simply go elsewhere.
If you are one of these Parts Managers, your secret is now out, and you may just want to reconsider where your priorities lie. My advice to dealers is to not look at your Parts Department on face value alone on the Financial and your Parts Monthly Reports.
The "Unseen" Effects of "Choosing Not" to stock the Right Parts will just end up in Missed Opportunities and unhappy Technicians, Service Advisors and most important, Unhappy Customers that may never return.
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...
