PSB 123s: What your parts manager should be doing that he’s not
1. Merchandise and rotate product.
“This idea is as old as retail itself,” said Tim Calhoun of LeoVince USA. “Not only does it give you a better understanding of what your inventory really is but what it looks like as well. Rotating the product on your floor also creates the illusion that your store always has new items and a ‘remodeled’ look on a regular basis for your customers.”
2. Take care of the customers.
“Call every special order parts customer as soon as the parts arrive,” suggested Bob Kee of Destination Cycle in Kerrville, Texas. “This does a ton for P&A department CSI.”
3. Evaluate your parts inventory.
“Failing to properly analyze your parts inventory will cost you money – not just because of idle dollars sitting on the shelf, but also, they confuse buying strategies while increasing employee expense and income tax liability,” explained Robert Herbers of The Dealer Team. “Remember that a non-moving part sitting on the shelf has to be maintained. This can cost as much 30 percent of its original value annually. In other words, a $10 part costs $3 per year to store, insure, count and make ready for sale.”
4. Get your hands on the product that is obsolete.
“This can be the hardest part at times,” said Sam Dantzler of Sam Dantzler Powersport Consulting. “Sometimes swap meets are a good way to blow out the parts. Grab bags are another way, yet limited success ensues. When considering the payroll involved in listing the products and accounting for it, oftentimes the best solution is to write it off and throw it away.”
5. Make an investment in yourself.
“Read a book or take a class! You get bonus points if it is about retailing, merchandising or differentiating your business,” Calhoun said. “This one small investment in yourself can give you fresh perspective, improve your service level or possibly create an incredible shift in your business paradigm for the good of all.”
6. Help the service department.
“Run reports every month to find what your fastest moving parts for service are,” Kee advised. “These change with the season. Attention here will help service with quicker turnaround times for customer units.”
7. Have realistic expectations.
“Realistic expectations improve success,” Herbers said. “When it comes to the parts department inventory, make sure your expectations are realistic. Know that obsolescence will happen and develop a plan to deal with it. Now is the time to establish your 2012 inventory targets. Recognize the 80/20 rule – 20 percent of the yearly purchases will be miscalculations and outright mistakes. Get over it and set a plan to recognize it.”
8. Create a plan to reduce obsolescence.
“There needs to be a system to ensure that you don’t get in this position again,” Dantzler explained. “Who is authorized to order? Are special orders 100 percent pre-paid? Is there an Open-To-Buy system in place? If there is no system to prevent it from happening, it will continue to become an issue, and margins will ultimately suffer.”
9. Survey your customers.
“More importantly, ask the questions that sting because those are the ones that matter: ‘How is our customer service? Do we carry the products you want? Do you like our store?’” Calhoun recommended. “Deliver this at the counter, via mail or email blast and include your youngest customers because they often drag mom or dad in if you matter in their world. Be responsive and make the necessary changes.”
10. Merchandise the parts counter.
“Pick four to five impulse items to have on the parts counter by the cash register,” Kee suggested. “It’s amazing how much fuel additive you can sell this way!”