Improving Parts Mix in the Parts Dept.

Improving Parts Mix in the Parts Dept.

Take a good look at the mix of parts in the parts department. Pay close attention to non-seasonal parts whose most recent sales activity happened four to six months ago. They may not have reached their time limit on the shelf, but are they really parts that should be stocked? Look at those parts as –potential” obsolescence.

A good place to start reviewing the inventory mix is with the fill rate, or level of service, which measures how well you fill your orders or, put another way, how effective your parts department is at meeting your primary customersê demands. With most dealerships, the primary customers are their own service and body shops, although occasionally a dealer may do more wholesale than internal parts sales. Itês important to maintain a high fill rate (8595 percent), which is calculated using the demand history in the following equation:

Fill rate =

total demand

Total demand is the total number of customer requests you receive during a given period. Emergency purchases are orders placed for parts that arenêt available through regular stock orders or special orders. Lost sales are those parts that arenêt in stock when the customer makes the request.

Any request for a part, whether or not the part is in stock, creates a demand history. When a partês demand history shows a certain number of demands over a given period of timeãtraditionally, demands in three of the most recent 12 monthsãthat part might be phasing in and should be watched closely. (The number of demands and the time period will vary based on such factors as the type of part and whether itês a seasonal part).

The best way to improve parts mix is to track customer requests for parts that arenêt in stock, along with the sales activity for the parts that are. Review the fill rate and other tracking information weekly to see which parts are most in demand. The dealership can then improve its parts mix by ordering the needed parts based on demand history.

The more quickly the department recognizes the need to get certain parts in stock, the more quickly the parts mix improves and the level of service and departmental profitability rises.

Tracking demand can also help reduce or eliminate orders for parts that are likely to become obsolete. The traditional phase-out criteria are no demands during the last six months.

This article is excerpted from Top Five Ideas for Managing Parts Department Inventory Performance (SP30). The publication can be ordered online at www.nada.org/mecatalog or by calling NADA at 800-252-NADA,

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