September 25, 2006: Focusing on a dealer’s parts, service policies
September 25, 2006
Filed under Archives
This series of articles recaps a portion of the opportunities that were uncovered by Gart Sutton & Associates powersports specialists during consulting visits.
These opportunities are followed by recommended actions that address the issues.
The goal of this series is to provide you with ideas to help you improve your dealership.
Last issue, we looked at the dealership from a customer viewpoint. This issue, we’ll look at the processes in place at the dealership.
This multi-line dealership is located in a rural area that draws from surrounding communities and an established rural market. The dealership recently moved into a new, highly visible facility, resulting in rapid growth. They have nearly doubled sales to more than 1,200 units per year. Their existing systems and procedures are not capable of supporting this volume. The focus of this report was the needs assessment of their parts and accessories departments. The goal for the recommended actions was to (a) improve displays, inventory levels, tracking systems and efficiency in the P&A department; and (b) install the processes necessary to make these departments into more profitable contributors to the dealership’s bottom line.
There are no written policy and procedure guide or job descriptions for the parts and accessories departments. The parts manager was selected based on seniority (oldest survivor). He has no management training or past experience to draw from. There is no department budget, Open-to-Buy system or inventory analysis. Lost sales are not being tracked. They do not use bin locations, and the hard parts are being stocked by brand in numerical sequence. Inventory is counted once a year. The store is closed for several days during this period. No one is held accountable for receiving or stocking merchandise.
A random audit of 25 part numbers revealed an inventory accuracy of only 73 percent. Slow-moving inventory appears to be close to 35 percent (hard to tell when accuracy is off by almost 30 percent). Some of this inventory is more than 4 years old. Due to the lack of accuracy, the current shrinkage rate is unknown.
All of the parts staff have the ability to receive merchandise and access and change stock quantities. The service staff is allowed to pull its own parts for service jobs. The parts manager is responsible for all parts orders, but there are no established ordering processes. Special orders require a 10 percent deposit. The consultant counted 82 special orders on the shelves, 37 were more than a year old.
Author, speaker and educator, Gart Sutton has been retained by every major powersport manufacturer/distributor. He is a frequent keynote speaker for national motorcycle conventions and state motorcycle dealer association events. Visit www.gartsutton.com.