Parts Management - March 27, 2024
In 2016, service and parts sales hit nearly $110 billion according to the National Automobile Dealers Association, making it a critical aspect of any dealerships service offering.
An important part of maintaining productive service and parts departments is inventory management. Without it, you will spend an unnecessary amount of time looking for and waiting on parts, minimizing efficiency and reducing income.
But how, as a Parts Manager, do you effectively manage your automotive parts department?
Here are four ways to get you started.
Most auto manufacturers offer programs that can be very beneficial, if they are properly managed. Ensuring you have a full understanding of their loyalty programs, return policies and order minimums can ensure that you optimize each program to the fullest. The reverse can happen if you don’t manage them properly!
As the Parts Manager, it is important for you to know what inventory is in stock, how old it is and how it sells. In most cases, you can depend on your inventory management software for this information, so long as it is properly and accurately maintained and updated throughout the year.
In addition to this information. It is critical that you know when a part must go. The older a part gets and the slower it moves, the less value it maintains. If you sit on it for too long, you may have to absorb all of the costs associated with that part, minimizing profitability.
As mentioned above, many OEMs have return policies. When used effectively, these policies can ensure that you minimize your losses on obsolete or slow moving parts. Knowing what these policies are is critical as they often have strict timelines and eligibility rules that must be followed.
If there is no return program available, it is important to be aware of other means of unloading old and obsolete parts.
3. Purchase Strategically
OEMs often have minimum ordering requirements and loyalty programs that offer valuable incentives and discounts to your Parts Department. Being fully aware of what is available to you allows you to optimize your ordering so that you take advantage of the most lucrative programs.
Another way that you can purchase strategically is to be aware that the parts you sell quickly may actually be slow movers at other shops and dealerships. As such, these locations may be willing to sell them to you at a discount. Network with local and national parts and repair service providers, reach out to a reputable inventory management firm or look for a service that will help you locate these parts and purchase them at a reduced cost.
Maintaining an accurate and efficient automotive parts inventory is crucial to the success of your parts and service departments, but it can be a complex and grueling task. While we commend you for wanting to do it all internally, this isn’t always possible.
Knowing when you should invest in inventory management products and services is key to managing your parts inventory and ensuring that you are successful.
Take the time to look at ways that you can improve your inventory management and analyze you team’s skills. Determine what tasks can be easily taught, which ones you are already equipped to do and which ones require more resources. Once you have done this look at you budget and schedule to determine which of those are best completed in house and which should be outsourced.
By taking these steps, you can ensure your parts department operates effectively and that your bottom line continues to grow.
At Pro Count West, we have years of experience in the automotive industry. We know how to effectively manage parts departments based on your specific needs and can help implement strategies that will help you manage an accurate record of inventory, minimize losses on your obsolete and slow moving parts and ensure you and your department are successful.
