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Sept. 1, 2008: Action items for improving the parts department

September 1, 2008
Filed under Archives

These articles recap some of the opportunities uncovered by Gart Sutton & Associates’ powersports specialists during consulting visits. These are followed by recommended actions that address the issues. Our goal is to provide ideas to help improve your dealership.
Dealership Details
This multi-line dealership has been a family owned business for more than 30 years. The owner is not involved in the business on a regular basis. His son and general manager took over the daily operations of the dealership several years ago. The dealership has a history of involvement in motorcycle racing, and still avidly supports the sport. The owner and his son were both successful motorcycle racers.
The dealership is located in a rural market with a population of 4,000. They have used discount pricing to attract customers from a metro market of more than 400,000 less than an hour away. Their annual unit sales are 700-800 units. They have operated on very small margins. They are hoping to find ways to increase floor traffic and sales while holding better margins. They are open to improving the structure and processes of their business.
The first part of this series looked at the store’s sales department. The second part described the action items for the overall dealership as well as the sales and F&I departments. This part reports on the store’s parts department.
Analysis
The clothing and accessory displays are clean and organized. However, there are no theme displays of clothing and accessories relating to unit displays. These types of displays increase sales by creating visualization and mental ownership for the customer. Developing basic and advanced riding gear packages utilizing mannequins also will lead to increased sales opportunities. Add monthly payment signage to stimulate add-on sales with unit purchases.
The parts department has been discounting P&A to the sales department. This inflates the profitability of the sales department while deflating the profitability of the parts department. To compare with industry standards and benchmarks, each department needs to be established as a stand-alone retail operation.
The parts department appears to be short-staffed. For four of the six days they are open, there are only two people, including the parts manager, available to service customers. On Fridays and Saturdays, one additional counter person is available. This does not provide adequate time for the parts manager to complete all the required duties of his position.
They have been trying to rearrange their inventory and finalize bin locations so they can implement the cycle-counting process. Because of the lack of adequate staff, progress in this area has been very slow. Additional part-time help would provide a possible solution.
Most of the hard parts are in geographical bin locations, but the floor stock (clothing and accessories) is not. These should be assigned categorical bin locations so they can become a part of the cycle-counting process. Many external employees have access to the inventory. This includes sales and service personnel. Controlling access will help to ensure inventory accuracy and increase efficiency.
The parts manager is not using an open-to-buy system to control the inventory levels. This process was discussed, and necessary tools and guidelines provided. Implementing open-to-buy will ensure a constant level of inventory valuation to assist with departmental budgeting.
There is no assigned parts-to-service person. Typically, this person also handles shipping and receiving. This is a necessary position that can dramatically increase the efficiency and productivity of the service department.
Implementation of the recommended processes, proper staffing, sales training and ongoing coaching of the parts counter staff will provide opportunities for increased sales and improved customer satisfaction.
Action Items

  • Put all processes in writing.
  • Begin charging all internal billing at retail in order to compare with industry benchmarks.
  • Implement the open-to-buy system and continually monitor inventory value.
  • Discourage unauthorized access to the parts stocking area to minimize shrinkage and confusion.
  • Create a parts-service liaison position. This person will respond to service parts requests and deliver parts to the technicians’ benches.
  • Develop categorical bins for accessories and implement cycle counting of one parts or accessories bin every day.
  • Develop theme displays of clothing and accessories.
  • Develop basic and advanced riding gear packages. Use mannequins for display. Add monthly payment signage to stimulate sales with unit purchases.
  • Develop department sales goals and review sales and gross profits on a monthly basis.

    Gart Sutton has been a leading provider of on-site dealer consulting, dealer 20-groups, online financial composites, accounting rescue services, and OEM and dealership training solutions for nearly 30 years. For additional information on these services, visit www.gartsutton.com

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