Parts inventory may not be a sexy topic however, it could not be any more critical in achieving peak performance in your fixed operations. Many dealerships make the mistake of managing their parts inventories by the number of dollars instead of having what is needed. They believe aged inventory isn’t a real cost and they refuse to discount this below what they paid for it. Today I hope to challenge this viewpoint and express the critical nature of dealing with parts inventory. It’s important to monitor the technician fill rate and understand the loss of revenue when a part is not currently in stock. Too many times the technician has to put the vehicle back together and pull it out of the bay uncompleted while they wait on parts to arrive. When the parts do finally arrive they have to pull it back in and disassemble to install the part. The real loss in revenue to the dealership is a minimum .5 of labor time whenever the part isn’t in stock. I always use $150 cost per technician hour to be conservative and calculate this loss in parts and labor sales. If you do the math and have 200 lost sales in a month the opportunity is huge! If you have parts inventory over two years old chance of you selling it is only 5%. The best practice is to discount those items at least 50% below dealer cost and aggressively bring in new items to improve technician fill rates. Most dealerships have challenges when it comes to tracking lost sales and adding inventory when considering the investment. This is why dealerships need to study their parts retail matrix program and take advantage of our Margin Plus program to get retail pricing on warranty repairs. Attractive margins are the key to your success when it comes to fixed operations!

Sincerely,   
Rob Gehring, President
Fixed Performance Inc.
rgehring@fixedperformance.com
Cell: (419) 282-1351
1-888-205-871
To receive more stories like this one, subscribe to my newsletter by clicking 
here!

Have you filed for warranty parts and labor increase yet? We will review two months of repair order data for $395. By reviewing every order, we can look for ways to improve warranty margins and at the same time take your customer pay results to new levels of profitability! When you are ready to get serious about your margins, give us a call at 1 (888) 205-8718! 

Sincerely,   
Rob Gehring, President
Fixed Performance Inc.
rgehring@fixedperformance.com
Cell: (419) 282-1351
1-888-205-871

Views: 51

Comment

You need to be a member of DealerELITE.net to add comments!

Join DealerELITE.net

Latest Activity

Richard Keeney posted a blog post
13 hours ago
Dave Anderson posted a blog post

Develop a Handful of Healthy Obsessions

Are the things that you're continually thinking about - the things that regularly preoccupy or…See More
15 hours ago
Rob Gehring posted a blog post
15 hours ago
John Sternal posted a blog post

Despite consumer demand, auto dealers struggle to provide complete digital solutions

Continue to grapple with consumer time at dealership, unverifiable credit application data, and…See More
17 hours ago
Black Book posted a blog post

Car Segments Show High Depreciation

Welcome to this week's edition of Black Book Market Insights, with in-depth analysis of used car…See More
17 hours ago
Paul Moran posted a blog post
18 hours ago
Jim Flint posted a blog post
21 hours ago
Black Book posted a blog post

BLACK BOOK AND AUTODATA SOLUTIONS PARTNER TO OFFER INTEGRATED AS-BUILT VALUATION SERVICE

New Service Automates VIN-Specific Decoding and Vehicle Options AdjustmentsBlack Book, a division…See More
yesterday
Mike theCarGuy Correra posted videos
yesterday
Walter McNulty posted a status
"Heading up North for 8 days visiting clients, old friends and making future friend. We will be in Delmarva, NJ, NY and PA."
Saturday
Walter McNulty posted a video

Waltjune20

Heading up North for 8 days visiting clients, old friends and making future friend. We will be in Delmarva, NJ, NY and PA.
Saturday
Damian Boudreaux's blog post was featured

Carlos’ 2nd & 3rd Week

Last week in our video series, …See More
Saturday
Veronica Dunford posted a video

What About Women in the Automotive Industry?

EVP Business Development for DealerBuilt, Veronica Dunford, shares her thoughts about women in the auto Industry in this video blog. DealerBuilt’s mission is...
Saturday
Jim Flint posted a blog post

Dealer Name Bidding Amplification Strategy

Jim Flint, CEO and Founder of Local Search Group, discusses how to keep competitors from bidding on…See More
Friday
Bill Wittenmyer posted a video

Freebie Friday: The Customer That Doesnt Like You

In this Freebie Friday, CDK Global VP of Sales Bill Wittenmyer gives advice on what to do when a customer doesn't like you.
Friday
Courtney Evans posted a blog post
Friday
Dave Anderson posted a video
Thursday
Veronica Dunford posted blog posts
Thursday
Stephen Coambes posted a blog post
Thursday
Asad Shoaib posted a blog post

The Long Haul: 7 Tips to Help Your Truck Run Well into Old Age

A truck also needs little care and maintenance just like other vehicles to deliver quality results…See More
Thursday

Get Newsletter

© 2019   Created by DealerELITE.   Powered by

Badges  |  Report an Issue  |  Terms of Service