How can I make the Parts Department more profitable?
In the Parts Department, items are counted by the thousands, workshop orders and counter sales are continuous, as are orders from other stores.
Parts Managers have to pay constant attention to inventory levels to avoid emergency orders, and they also have to control the evolution of each part’s activity status (high, medium, low, obsolete) so as to run an efficient and profitable warehouse.
Although the Parts Department is very complex, through best practices it can become a very profitable area for the dealer. Not only is it essential to adopt best practices (see article), but also to keep an eye on what we call “unnoticed issues”: tasks, controls, pending issues, and other matters that tend to get lost in the daily shuffle.
“Many of these controls are skipped over because they are not considered key, however they make a big difference when it comes to the profitability of the Parts Department. When analyzing the monthly and annual performance of the department, the sum of these controls have a positive effect on the dealership’s numbers.” Stefania Cicconofri, Autologica Consultant.
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What to control and how to do it
Parts backorders
Problem: When a customer order arrives at the dealership, a common can be summarized as follows: 1) Nobody calls the customers so they never receive their order, 2) If the customer gets tired of waiting, they turn to another dealership, and 3) The parts can become a part of the dealer’s growing immobilized inventory.
Solution: To ensure customer satisfaction as well as workshop efficiency, orders must be quickly delivered when they arrive. Pending orders reports in your DMS allow you to manage the delivery of parts that the dealer ordered and have recently arrived to the dealership.
Reasons for lost sales
Problem: The customer orders a part but for some reason leaves the dealership without it. Why did this happen? If the Parts Manager can’t define the reason for this lost sale then there’s no way to look for trends or possible issues so as to solve them and get the next sale. For example, if the reason is related to customer service it will go unnoticed even though it has a simple solution.
Not knowing why people doesn’t purchase
the parts they are looking for, as well as not knowing why parts sent to the workshop are being returned, generate the same consequence: working blindly and wasting time and money.
Solution: Modern dealer management systems allow you to instantly indicate the reason for each lost parts sale (with just one click as is the case with Autologica DMS), but the Parts Manager and staff must be taught to record each lost sale. This habit must be reinforced daily, and will help dealers obtain valuable information for inventory and purchase management, and identify the reason why customers decide not to buy from us.
Parts with low inventory in one warehouse, high in another
Problem: Managing inventory levels at each warehouse is vital, and is usually provided by advanced dealer management systems, but if you the parts staff doesn’t use it then 1) You end up placing orders for parts that could be transferred from another warehouse, 2) Your dead inventory, and 3) You increase unnecessary expenses.
Solution: One of the main benefits of a DMS’s Order Suggestion feature is to allow the Parts Analyst to detect parts that are in surplus at one warehouse and can be transferred to another warehouse that may need them. This helps balance inventory levels across stores, which will in turn satisfy customer needs.
Discounts granted
Problem: Granting discounts allows you to close more deals, but on the other hand if you don’t keep a thorough control, you could be losing money due to excessive discounts.
Solution: Advanced DMS solutions (such as Autologica) provide several ways to monitor discounts, allowing management to restrict the possibility of granting discounts, and controlling those that are given.
Contact us to learn more about the features, tools and smart reports for the Parts Department provided by Autologica DMS.
