Starting on October 15th, for 30 days, we’ll publish 30 posts on ideas to help you with your 2019 Parts Forecasting and Planning. You N.E.E.D. to tune in.

In the last post we talked about how Parts over 9 Months old are only 50% of the Idle Parts Inventory dollar value. The other 50% is in Special Order Parts that are not yet aged over 9 Months, that most don’t know about. A rule of thumb is - whatever parts you have over 9 Months old, double it. This is typically what we see as a total Idle Parts Inventory amount in Parts, without doing any analytics, or understanding Parts Reports.

When we have Parts Inventory that is considered Idle, or aged Parts Inventory, many only look at parts over 9 Months Old. Yet, that is only 50% of the parts which are Idle. The other 50% of the Parts Inventory that is Idle are Special Order Parts, which haven’t aged out over 9 Months.

You’ll find 4 Used Dodge Caravans in Parts Department, but in a 1000 pieces, called Idle Parts Inventory, which will be written off or sold at 10 cents on the dollar when it reaches 12 months old. If this happened in Used Car Dept – what would you do? I speculate, not what you do in Parts.

It’s time to understand that the Parts Department is a major department, that needs as much attention from upper management, including the Controller as any other department. Fixed Ops is half of your business, and the Parts Dept has their hand in all of it, but I’d venture to say gets less than 5% of your time and attention.

With the lack of OEM Return Allowance, it's critical that your Parts Manager has all the tools to succeed, including training. What if we wrote off Used Cars and tossed them in the garbage? Or received 10 cents on the dollar? Parts is no different, except it’s a Dodge Caravan in thousands of pieces.

Parts inventory isn’t floor planned, meaning every dollar tied up in Parts Inventory is the dealer’s own money, and funded by the Dealer’s bank account. It’s important on many levels why parts inventory must “turn”. Especially with a large amount of dealer capital invested.

On top of getting Special Order Parts Pre-Paid in service, a better way to ensure your customer will return and get the parts installed, is to pre-book the customers next appointment. This is possible, and should be done for every customer, who’s part isn’t on back order.