Rows upon rows of parts line your department, some are pristine and clean while others gather dust. Every month, quarter, semi-annually, or annually, you gather your group and count each part in your inventory. Some of those boxes are getting pretty worn out and the numbers are hard to read. When you have to blow dust bunnies off to read the part number, you know it’s been around too long.

And then there’s the dark back corner. It holds the parts to rebuild a 1985 K-Car or the like. You count them and you know deep down, you’ll never ever retail them. It’s the shelf of shame.

How do YOU Define Idle Parts?

Around the turn of the century, a normal life cycle for parts would be up to 12 or even 18 months. That’s been trimmed down significantly.

• In today’s market, you can consider a part idle at just six months. In fact, if it hasn’t sold after six months, the chance it will eventually be sold is just 49%.
• A part on your shelf that hasn’t been sold after nine months has a 72% chance of never being sold at all.
• When a part reaches its first birthday in your inventory, it can effectively be labelled obsolete. There’s only a 2% - yes, 2% chance that it will leave your shelf through the shop or in a customer’s hands.

Every Parts Department Deals with Idle Parts

No matter how well you deal with your obsolescence, you’re carrying parts in your inventory that shouldn’t be there. Old statistics indicate that, on average, a dealership’s parts department is holding onto $88,000 of parts that could be considered idle or obsolete. No matter how large your return allowance may be, there’s virtually no chance of unlocking all of that money anytime soon.

In most cases, that old inventory is inherited from a previous manager who had no right being in that role. But it’s your problem now – you don’t get to start with a blank slate.

How Can You Deal with Idle and Obsolete Parts?

Work the Return Allowance

Your options are limited. You essentially ‘buy’ your return allowance from the manufacturer, meaning you are allotted a dollar amount for obsolescence returns depending on how much inventory you purchase, right? So why not buy more so you can return those useless components on the back shelf?

That may work for the very short term but you’re going to be very heavy on current inventory. Even for parts with a short life cycle, you’re talking a half-million or more in extra purchasing to empty your obsolescence. That leads to two problems: more inventory than you can effectively carry and an extremely high chance that many of those parts you just ordered will end up on that same shelf in the back corner.

Sell the Parts at a Loss

You might have limited success in reducing your obsolete and idle parts piles by listing each one online, either on Craigslist, eBay, or an Amazon store. It opens up the market to the rest of the nation, not just your city. Two problems stand out: you’re selling at a loss with prices often slashed to half of list price or even less, and it takes an obscene amount of time to deal with online sales. The online fees and staffing costs are simply not worth it.

A Relatively New Option

Have you heard of a dealer parts exchange? It’s a method where dealers can list their idle and obsolete inventory in a forum that other dealers can access. There are only a few options for dealer parts exchanges currently available with the most comprehensive – by far – being North American Dealer Parts Exchange.

It’s a North American-wide system for dealing with that idle inventory. Upload your list of parts, then use NADPE to find the parts you might need for those special-order situations. It’s dealer-to-dealer trading with only a small fee per transaction.

Whatever method you choose, unlocking that massive $88,000-dollar albatross in your parts department can relieve some pressure. It gives you flexibility to order more inventory you’ll turn quickly and opens much-needed shelf space. Keep a close eye on the parts approaching 6 months in stock and deal with them before you lose your shirt on them.