Last month, I talked about January 2012 being "A New Beginning" for Parts Managers, or what I referred to as "Net Zero" Time. This month, I want to talk about "Hope OR Change"...that's right!...Hope OR Change! I know that we are in an election year here in the United States and I'm not here to particularly endorse any candidate or party, but as I thought about it...Hope AND Change just don't go together.
Let me explain further, I was thinking last month about the new beginning and how much January really impacts the whole year ahead. As Parts Managers, we attain valuable new information on trends such as gross and true turns, first time off shelf fill rates, parts sales activity and so on.
There is no month like January to make changes or modifications to major parts inventory Set Ups & Controls. These changes we made in January will be noticeable on February 1, 2012 in our Inventory Management System (I.M.S.) Parts Monthly Analysis Report and our Sales, Gross and Net numbers realized when the first Financial is released somewhere around the 10th of February.
Here's where "Hope OR Change" comes into play. If the changes or modifications we made in January do not meet our expectations then what do we do? Do we "Hope" that these numbers will get better next month? Do we "Hope" that the changes and modifications that we made last month will be different?
Or, do we review the information, learn from what these changes or modifications made in January and "Change" the parameters with some more "tweaking" in the right direction. That's what it's all about!...it's not just the physical act of running reports and reviewing them, it's what we DO with the information and move ahead to making more "Changes".
Having a successful plan in 2012 must involve three key ingredients which are; Evaluation, Planning and Execution. I've seen many successful Dealer Managers in all departments take the first two (Evaluation, Planning) very seriously, but they don't carry it through to the Execution part which is the most important. It's the most important because it requires the "Expected Results" our Dealers and GM's are looking for.
The Execution part also requires constant "Change" moving forward, not just the"Hope" that things will happen to achieve the desired result. Many of you have may have heard the the phrase: "There are only three types of people: "Those who "WATCH" what happens, Those who "WONDER" what happened and finally, Those who MAKE things happen"! I'm not sure who the author of this phrase is, but it's so true and everyone of us should ask ourselves which one of these three best fits who we are as managers.
The most successfully run Parts Departments are managed by people with these basic core principles. Making adjustments in our Set Ups & Controls is on going and never ending. I'm not talking about simple adjustments on inventory amounts or bin locations which occur on a daily basis. I'm referring to changes and modifications to Phase-In/Phase-Out Criteria, Days Supply, Pricing Escalations and Source Ranking, just to name a few.
Although, I would recommend that any changes or modifications be done to one part or one source at a time in order to see if the results meet the expectation. Changes or modifications to a single part number, source or pricing base will reveal immediate results to review and most importantly, if the results don't meet expectation, it's much easier to go back to correct or make new modifications.
This is why "Hope AND Change" don't go together in my opinion. Of course, we can "Hope" the changes and modifications we made in January will lead us to the expected results at the end of month, but there again, we should know what the results will be as we monitor these changes throughout the month. If we don't see the expected results, we have to make a "Change" or modification.
Not only is this true about the changes and modifications we make as Parts Managers to our Set Ups & Controls, it is also true in how we manage all the aspects of our roles as department managers. Areas including personnel management, expense management and forecasting future growth, they should all follow this same philosophy; Evaluate, Plan & Execute.
If we all know that "Change" is inevitable, let's embrace it and expect it. Let it be part of "what we do" as managers to achieve our goals that lead to "desired results". Let's not just "Hope, Wonder & Watch" what happens, let's "Make" things happen by doing something with the information provided in our reporting systems.
Lastly, February is here...did the "Changes" or modifications lead to desired results? What did you do with information provided in in your January Parts Monthly Analysis Report? What worked and what didn't? These are just a few questions to ask yourself, then after this Evaluation?...Make your Plan and then, Execute your plan.
Don't put "Hope and Change" together...make a decision because "Change" will always lead you forward to desired results and if the proper changes are made, desired results will be achieved and expected, not just "Hoped" for.
Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTM. Dave can be reached at Cell 786-521-1720 or E-mail at dsp0417@aol.com Vist our Website at www.smartpartstraining.com
Wednesday, February 1, 2012
Wednesday, January 11, 2012
January 2012: "A New Beginning"
Here we are!...January 2012!...A New Beginning, or as I like to refer to "Net Zero"! A chance to rewind the clock and start over again. Whether you achieved your goals or not in 2011, we all get to start anew where we go from "hero to zero", just like that!
For parts managers though, it means much more than the obvious and much different from other dealership managers. In most dealerships, the parts manager controls the second highest dealer asset and quite honestly, the most difficult.
I know that I would get some argument from some new and used car managers and with due respect, but the parts inventory consists of thousands and thousands of part numbers with an active lifespan of less than 9 months in most cases.
That's a lot to manage, especially when dealer owners, manufacturers and industry experts DEMAND a high return on that investment, with true turn expectations at or above five turns a year in most cases.
I know that I would get some argument from some new and used car managers and with due respect, but the parts inventory consists of thousands and thousands of part numbers with an active lifespan of less than 9 months in most cases.
That's a lot to manage, especially when dealer owners, manufacturers and industry experts DEMAND a high return on that investment, with true turn expectations at or above five turns a year in most cases.
With all this said, January is the absolute BEST time of the year to make changes or modifications to the D.M.S. (Dealer Management System) Set Ups & Controls. As a matter of fact, I would go as far as to say these Set Ups & Controls NEED to be looked at for a number of reasons.
One of the main reasons why we need to review these Set Ups & Controls is because of what I referred to earlier..."Net Zero"!
Most, if not all, Dealer Management Systems (DMS) calculate monthly sales activity, receipts, purchases, returns, pricing updates, etc. on a monthly and year-to-date basis, but the "Business Ratios" which include True & Gross Turns, Sales to Stock Ratios, Stock Order Performance and Level of Service for example are "annualized" throughout the year.
This means that any changes or modifications to the Set Ups & Controls that effect these business ratios are most impacted in the first part of the year.
Any changes or modifications to Source Set Ups, Days Supply, Phase-In/Phase-Out Criteria or Price Escalation Matrix will be realized and seen in these "business ratios" at the end of January as month-to-date AND year-to-date numbers and percentages.
Most, if not all, Dealer Management Systems (DMS) calculate monthly sales activity, receipts, purchases, returns, pricing updates, etc. on a monthly and year-to-date basis, but the "Business Ratios" which include True & Gross Turns, Sales to Stock Ratios, Stock Order Performance and Level of Service for example are "annualized" throughout the year.
This means that any changes or modifications to the Set Ups & Controls that effect these business ratios are most impacted in the first part of the year.
Any changes or modifications to Source Set Ups, Days Supply, Phase-In/Phase-Out Criteria or Price Escalation Matrix will be realized and seen in these "business ratios" at the end of January as month-to-date AND year-to-date numbers and percentages.
As the year progresses, these ratios are averaged out by the current number of months in the year and then annualized over twelve months to give us "average" inventory returns on investment.
Often times, I've seen positive modifications made by parts managers, only then to get discouraged because fluctuations and improvements seem to go unrealized because they are calculated on an annual basis.
For example, if I were to make some real aggressive modifications in the month of July in my Phase-In/Phase-Out Criteria or my Days Supply, I would probably be a little frustrated because my gross and true turn numbers hardly moved.
If I would have made these modifications in January of the new year, my "Monthly Analysis" clock would have been reset to "Net Zero" and I could have measured any modifications with DIRECT results in these business ratios at the end of January.
Often times, I've seen positive modifications made by parts managers, only then to get discouraged because fluctuations and improvements seem to go unrealized because they are calculated on an annual basis.
For example, if I were to make some real aggressive modifications in the month of July in my Phase-In/Phase-Out Criteria or my Days Supply, I would probably be a little frustrated because my gross and true turn numbers hardly moved.
If I would have made these modifications in January of the new year, my "Monthly Analysis" clock would have been reset to "Net Zero" and I could have measured any modifications with DIRECT results in these business ratios at the end of January.
Here's another reason why we need to "get this done now" moving forward in 2012 and beyond....probably the BIGGEST "Business Ratio" percentage or number that is going to be watched and monitored closer than ever is "FIRST TIME" Off Shelf Fill Rates!
As a matter of fact, I'm going to go out on a limb, (that might hurt!) and say that we will all probably see more definitions as to "how to" calculate or "what is" the true definition of "FIRST TIME" Off Shelf Fill Rate.
Many manufacturers and industry "gurus" are already calling for these First Time Off Shelf Fill Rates to be over 90%! Let me ask everyone these two questions:
1.) "When was the last time the manufacturer provided 90% of the parts on your Stock Order or Supplemental Order from your local Parts Distribution Center the FIRST TIME?
2.) What is their FIRST TIME Off Shelf Fill Rate?"
I believe what they really mean to say is that they want to meet the "DEMAND" 90% of the time or better, without Lost Sales and Emergency Purchases. This is quite different from First Time Off Shelf Fill Rate.
As a matter of fact, I'm going to go out on a limb, (that might hurt!) and say that we will all probably see more definitions as to "how to" calculate or "what is" the true definition of "FIRST TIME" Off Shelf Fill Rate.
Many manufacturers and industry "gurus" are already calling for these First Time Off Shelf Fill Rates to be over 90%! Let me ask everyone these two questions:
1.) "When was the last time the manufacturer provided 90% of the parts on your Stock Order or Supplemental Order from your local Parts Distribution Center the FIRST TIME?
2.) What is their FIRST TIME Off Shelf Fill Rate?"
I believe what they really mean to say is that they want to meet the "DEMAND" 90% of the time or better, without Lost Sales and Emergency Purchases. This is quite different from First Time Off Shelf Fill Rate.
To me, our goal should be to provide our customers a "FIRST TIME Off Shelf Fill Rate" of 75% - 80%. In order to achieve this goal, we need to, first of all, properly calculate "First Time Off Shelf Fill Rates" where the part needs to be "on the shelf", in stock, in the first place, on FIRST demand.
Second, we need to be calculating "Normal Stocking Items", NOT Special Order Parts, Emergency Purchases and Non Stock Parts if your going to use the words "Off Shelf". Here's a simple way to calculate your "First Time" Off Shelf Rate:
Second, we need to be calculating "Normal Stocking Items", NOT Special Order Parts, Emergency Purchases and Non Stock Parts if your going to use the words "Off Shelf". Here's a simple way to calculate your "First Time" Off Shelf Rate:
"Total Sales at Cost of Normal Stocking Items (Parts) Divided By Total Sales at Cost"
One of the main reasons why this topic has become relative and extremely important is Service Shop Productivity as time is a perishable inventory which we can never retrieve.
Saving the number steps and the number of times the tech is spending to and from the parts counter, waiting for parts they probably should have received on the "first visit" is going to be a prime focus in maximizing productivity and our overall fixed operations gross profits.
Saving the number steps and the number of times the tech is spending to and from the parts counter, waiting for parts they probably should have received on the "first visit" is going to be a prime focus in maximizing productivity and our overall fixed operations gross profits.
Lastly, we have a brand new fiscal year with brand new financial statements to review at the end of January. It's the ONLY month that the month-to-date AND year-to-date numbers are the same. We can make our biggest impact on the year and on our inventory investment this one time of the year.
Don't let it pass without taking advantage of the "mathematics" of the first month of the year! Most importantly, take advantage of the Common Sense and Logic that can make the difference in making 2012 your "Best Year Ever"!!!
Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTM. Dave can be reached at Cell 786-521-1720 or E-mail at dsp0417@aol.com Vist our Website at www.smartpartstraining.com
Don't let it pass without taking advantage of the "mathematics" of the first month of the year! Most importantly, take advantage of the Common Sense and Logic that can make the difference in making 2012 your "Best Year Ever"!!!
Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTM. Dave can be reached at Cell 786-521-1720 or E-mail at dsp0417@aol.com Vist our Website at www.smartpartstraining.com
Wednesday, December 7, 2011
Reflecting Back on 2011 & Moving Forward in 2012
Here we are!...December 2011! We all know that time flies, but for me, 2011 was a little different. The best way that I could describe the past year is that it was a "transitional" year. After experiencing a dip in the last few years prior, 2011 seemed to be the year where we all got settled back in to doing business after adapting and changing to market fluctuations previous. Our belts got tighter, our market strategies changed and quite honestly...we just started to work even smarter and harder.
In 2008, we experienced a growth in our service business as new vehicles sales dropped drastically. Customers seem to shift their focus to repairs and maintenance versus buying new vehicles due to the uncertainty of our economy. A recent Wall Street Journal study through October of 2011 revealed that New Car Sales rose over 8% over the same period in 2010 and New Truck Sales rose over 12% over that same period with the biggest jump in Mid-Size SUV's of over 40%!
This "upswing" in the sales market gives us not only new opportunities, but actually "requires" us to adapt and make the appropriate changes to remain competitive moving forward. We also have to make sure that these increases in new vehicle sales customers are coming back to our dealerships.
In my opinion, remaining competitive has never been more important than it is today. Our Fixed Operations has to be poised and ready, utilizing all the latest resources as well as having a trained and knowledgeable staff to insure the utmost in Customer Satisfaction and most importantly, Customer Retention.
In the Parts Department, we have a host of new avenues for marketing parts such as "SkyParts" where dealers complete parts inventory can be a "google" click away by just entering a part number with global exposure. Many Parts Managers are also experiencing great success on sites such as eBay, Dealer Market Place, Craig's List, etc. There are also many new parts shelving systems and even "automated" bin systems to maximize storage capacity and increase efficiency.
In my many travels, I am often asked what's new in the marketplace and how business is in general in other parts of the country, both in the U.S and Canada. The first thing that comes to mind is "what's NOT new" as I believe there is no substitute for great customer service in all dealer departments. Even in this day and age, it still amazes me that many dealers look for the latest and greatest, but do not have the basic "core" processes needed for success.
Geographically, there are culture differences, various parts & labor pricing guidelines, seasonal business opportunities, etc., but when you come right down to it, we are still in the "car business" where building relationships and trust are the two main ingredients to success. Customer retention can never be over emphasized enough, as you will also see in the future as more and more manufacturers move away from CSI as we know it and shift most, if not all attention to customer retention and brand loyalty.
Looking forward to our Parts Department opportunities in 2012, I believe the combination of the right core values and processes, having "first time" off shelf fill rates over 80% or more, combined with the latest innovations via the internet, you can be assured that 2012 can be "Your Best Year Ever"!
Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTM. Dave can be reached at Cell 786-521-1720 or E-mail at dsp0417@aol.com Vist our Website at www.smartpartstraining.com
In 2008, we experienced a growth in our service business as new vehicles sales dropped drastically. Customers seem to shift their focus to repairs and maintenance versus buying new vehicles due to the uncertainty of our economy. A recent Wall Street Journal study through October of 2011 revealed that New Car Sales rose over 8% over the same period in 2010 and New Truck Sales rose over 12% over that same period with the biggest jump in Mid-Size SUV's of over 40%!
This "upswing" in the sales market gives us not only new opportunities, but actually "requires" us to adapt and make the appropriate changes to remain competitive moving forward. We also have to make sure that these increases in new vehicle sales customers are coming back to our dealerships.
In my opinion, remaining competitive has never been more important than it is today. Our Fixed Operations has to be poised and ready, utilizing all the latest resources as well as having a trained and knowledgeable staff to insure the utmost in Customer Satisfaction and most importantly, Customer Retention.
In the Parts Department, we have a host of new avenues for marketing parts such as "SkyParts" where dealers complete parts inventory can be a "google" click away by just entering a part number with global exposure. Many Parts Managers are also experiencing great success on sites such as eBay, Dealer Market Place, Craig's List, etc. There are also many new parts shelving systems and even "automated" bin systems to maximize storage capacity and increase efficiency.
In my many travels, I am often asked what's new in the marketplace and how business is in general in other parts of the country, both in the U.S and Canada. The first thing that comes to mind is "what's NOT new" as I believe there is no substitute for great customer service in all dealer departments. Even in this day and age, it still amazes me that many dealers look for the latest and greatest, but do not have the basic "core" processes needed for success.
Geographically, there are culture differences, various parts & labor pricing guidelines, seasonal business opportunities, etc., but when you come right down to it, we are still in the "car business" where building relationships and trust are the two main ingredients to success. Customer retention can never be over emphasized enough, as you will also see in the future as more and more manufacturers move away from CSI as we know it and shift most, if not all attention to customer retention and brand loyalty.
Looking forward to our Parts Department opportunities in 2012, I believe the combination of the right core values and processes, having "first time" off shelf fill rates over 80% or more, combined with the latest innovations via the internet, you can be assured that 2012 can be "Your Best Year Ever"!
Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTM. Dave can be reached at Cell 786-521-1720 or E-mail at dsp0417@aol.com Vist our Website at www.smartpartstraining.com
Monday, November 7, 2011
Dave's Eight Habits to a Successful Parts Operation
Smart PartsTM
"Eight Habits Program"
- Fundamental Beliefs: The “core” of the Smart Parts “Eight Habits” Program. It all starts with an honest DMS reporting system. Proper data entry into the DMS System will provide essential information for the highly successful Parts Manager. Learn how to make your DMS system work for you and better manage this vital information.
- Parts Definition of Terms: Proper reporting in the DMS System can’t happen without a proper Definition of Terms. What is a Lost Sale? Does my staff have the same definition? Am I posting Emergency Purchases correctly? Am I receipting Customer Orders as Stock Orders? These and many other important questions are defined in this important “Habit”.
- Goals & Guidelines: Every successful Parts Department has clearly defined, written goals in order to be successful. In this segment, we will review the latest NADA and Industry Guidelines in order to set attainable and “crystal clear” goals.
- Proper Set Ups & Controls: When was the last time you reviewed your Phase-In/Phase-Out Controls? How about your Days Supply Set Ups? Do you have the proper “Source” Set Ups? Are they current to your manufacturers Stock Order Programs? These modifications are crucial to the success AND liquidity of the Parts Inventory. This “Habit” will open the door to being “Obsolescence Free”!
- Return on Investment: In most automotive dealerships, the parts inventory is the second highest asset. In this segment, we concentrate on your parts inventory “True Turns”, not just the “Gross Turns”. How is your dealers’ parts inventory working for them? Is YOUR inventory turning at least FIVE times a year? If not, here’s where you can!
- Controlled Obsolescence: Many Parts Managers fight this “Monkey on the Back” with little success. Manufacturers’ accrual amounts never seem to be enough to overcome this obsolescence burden. In “Habit #6”, we will not only develop a plan to ELIMINATE this burden, we will also implement a plan to stop this burden from ever coming back!
- Parts Profitability: Latest industry guidelines indicate that the overall Parts Gross Profit Percentage should be approximately 35% - 37% combined AND a Customer Pay Gross Profit Percentage of at least 42% - 45%. What’s YOUR number? In this segment, we will learn how to properly implement a pricing structure that is not only competitive; it will “target” captive items as well to give us an overall profit percentage within current guidelines.
- Service Shop “Parts” Productivity: The average automotive dealership LOSES approximately 8%-10% of their Service Shop Productivity by NOT having the “Right Part the FIRST Time”. In our last segment, we will reduce that “Lost Time” by increasing your “First Time Off Shelf Fill Rate”. Technicians end up having to order the parts and push the vehicle out of their bays, only to bring it back in at a later time to complete the repairs. How much time do YOUR techs spend moving vehicles in and out of the shop because they didn’t have the parts? Remember…TIME is a perishable inventory and latest industry guidelines dictate that we should be providing the parts on “first visit” at least 75% of the time. This is measured by “Stock Order Performance” or “Sales From Stock Ratio” and NOT “Level of Service” or “Off Shelf Fill Rate”! What’s your number?
Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTM. Dave can be reached at Cell 786-521-1720 or E-mail at dsp0417@aol.com Vist our Website at www.smartpartstraining.com
Wednesday, November 2, 2011
Parts Marketing Strategies 2011 - Part Four
Marketing our products and services with today's "social media" couldn't be any easier AND at a much lower cost. If our "foundations" have been set with the right people, process and pricing structures, we can now prepare a marketing strategy that will give managers more exposure as well as keeping more customers coming back to your dealership.
Most, if not all dealerships have their own website that advertises their products and services, but once the website is set up, it really just becomes a newer, more modern form of the "yellow pages"! People only go there when they have a specific need or to find out some basic information. Some customers may use the website to schedule an appointment for service, but other than that?....how successful is the website?
Better yet...how are we measuring the success of that website as a marketing tool? I'm sure the website looks great, lots of nice pictures of the dealership and staff, pictures of vehicles, directions to the dealership, etc., but again...how effective is the website in YOUR overall marketing strategy.
In order to be successful in today's market, your "strategy" must begin with your customers email addresses. In most dealerships today, customer email addresses add up to less than 25% of the total customer base contact information.
Even though this may not be a surprise to most, but email is one of the most desired method of contact and provides one of the best forms of advertising at a very low cost. There are also many internet based companies that charge very reasonable monthly fees to market your products and services.
These social media websites allow dealers and managers to design their very own E-Newsletter to their customers on a regular basis, just as you are reading now in this "Smart Parts" E-Newsletter!
By designing your own marketing E-Newsletter, you are able to keep in touch with your customers on Service and Parts Specials, market accessories, dealership and community events, etc. Another direct benefit to the Parts Manager is it's another outlet to maintain active wholesale accounts as well as marketing obsolete inventory.
Most dealers today spend more time and money on gaining new customers instead of keeping the ones they have. The average dealer customer base is over 10,000 customer names, but only 20% - 30% remain "active" in a twelve month period.
With the combination of other social media outlets such as FaceBook and Twitter for example, along with designing your own "active" E-Newsletter, keeping in touch with your customers has never been so easy and affordable.
Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTM. Dave can be reached at Cell 786-521-1720 or E-mail at dsp0417@aol.com Vist our Website at www.smartpartstraining.com
Most, if not all dealerships have their own website that advertises their products and services, but once the website is set up, it really just becomes a newer, more modern form of the "yellow pages"! People only go there when they have a specific need or to find out some basic information. Some customers may use the website to schedule an appointment for service, but other than that?....how successful is the website?
Better yet...how are we measuring the success of that website as a marketing tool? I'm sure the website looks great, lots of nice pictures of the dealership and staff, pictures of vehicles, directions to the dealership, etc., but again...how effective is the website in YOUR overall marketing strategy.
In order to be successful in today's market, your "strategy" must begin with your customers email addresses. In most dealerships today, customer email addresses add up to less than 25% of the total customer base contact information.
Even though this may not be a surprise to most, but email is one of the most desired method of contact and provides one of the best forms of advertising at a very low cost. There are also many internet based companies that charge very reasonable monthly fees to market your products and services.
These social media websites allow dealers and managers to design their very own E-Newsletter to their customers on a regular basis, just as you are reading now in this "Smart Parts" E-Newsletter!
By designing your own marketing E-Newsletter, you are able to keep in touch with your customers on Service and Parts Specials, market accessories, dealership and community events, etc. Another direct benefit to the Parts Manager is it's another outlet to maintain active wholesale accounts as well as marketing obsolete inventory.
Most dealers today spend more time and money on gaining new customers instead of keeping the ones they have. The average dealer customer base is over 10,000 customer names, but only 20% - 30% remain "active" in a twelve month period.
With the combination of other social media outlets such as FaceBook and Twitter for example, along with designing your own "active" E-Newsletter, keeping in touch with your customers has never been so easy and affordable.
Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTM. Dave can be reached at Cell 786-521-1720 or E-mail at dsp0417@aol.com Vist our Website at www.smartpartstraining.com
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