Welcome to February! The focus moves from service basics to parts basics. These two departments (and body shop if you have one), combined with the used truck department, form the backbone of the dealership (
Total Absorption.)
The parts department holds many keys to improving dealership cash flow
(inventory management), profitability
(pricing strategies and cost structure), and customer retention
(having the right part on the shelf when requested.) In addition, the parts department significantly impacts the ability of the service department to be more efficient and reduce repair order cycle time.
However, there is a belief that inventory management is “out of our control” since the “factory controls our inventory.” Nothing could be further from the truth. For your vendor managed inventory to work properly for both you and your OE, skilled inventory management is needed. In a recent study performed by KEA, we found that the more inventory that is controlled by the OE vendor management inventory program
with strong dealership on-site management, the less aging, better turns and stronger gross profit for the dealership.
Success in the parts department is based on changing bad habits and instilling the habits that lead to improved performance.
