Category Archives: Parts Department

You Can’t Sell What You Can’t Find

In the last issue we talked about the need to reconcile your parts inventory (PAD) with the general ledger (GL), but we didn’t get into the “what to do” when they don’t match up. One of the most common problems comes from an inventory that is so out of place, you really don’t know what you’ve got until you take a full physical inventory, and that is expensive and time consuming.

Location, location, location…
As the title of this article states, you can’t sell something you can’t find. One of the most pervasive problems in parts departments are parts that are not where they’re supposed to be. Why is this an issue?

[list:z2ynn6lr]• First of all, even if the part is found there is time wasted finding it, both for parts personnel and technicians whose clock is ticking away while they wait. This can be a substantial contributor to lost workshop output.

• It’s embarrassing to tell a customer “come on down and pick it up” when the DMS says you have one, but it can’t be located when they get there.

• It’s expensive when another part has to be special ordered because the original can’t be found, only to be located at a later time.[/list:u:z2ynn6lr]
Studies have shown that approximately 3% of all parts are put away incorrectly, daily. At that rate it doesn’t take long for multiple parts to be hiding from you very quickly. This is largely a function of human error and happens to the best of us (think of your sock drawer). Have you ever noticed that right after the annual physical inventory everyone trusts the DMS count and location, but a few months down the road they start to verify the part before progressing with the sale. This is the reason why. To make matters worse, the majority of your stocking part numbers have a best stocking level (BSL) of one piece, so if it can’t be found there isn’t another to fall back on.

Solutions
Like most things in this business there’s more than one way to fix this. The common answer is “wait until we do our annual physical” and we’ll find them all when we clean up our bin locations. This turns into a monumental task in a large store. Just consider the ramifications of a 3% error rate times 225 business days, times 10,000 part numbers! It’s a mess that takes a week or more to correct with lots of overtime and infighting among the inmates who put them away wrong to begin with. Then, guess what? They let it start all over again so that next year at this time we can go through this all again. Does that make sense to you?

The alternative is to conduct a daily perpetual inventory (DPI), which means we are constantly doing bin counts and making corrections so we avoid the above issues of delays and lost parts. If we get really good at it we can even prolong or avoid the expensive annual physical. Following are the basic elements of a good DPI:

[list:z2ynn6lr]• Bins are counted every day. That’s why it’s called daily perpetual inventory. We count enough so that the entire population of parts is counted between three and four times annually. You can count bins, or drawers, or even sheds and floor locations, but the point here is to count everything, not just a sample.

• Blind counts are best for accuracy. Many dealers print out a list of the bin’s contents and have someone verify it. That’s all well and good until someone’s in a hurry and just checks the parts off to get the task done. You’re better off printing a list of part numbers assigned to that bin with no counts and letting the counter tell you what they find. In this way you know what’s really there and can also pick up inactive part numbers that appear in that location. It’s also important that the counter is not the one who verifies the bin count to the PAD. This ensures accuracy.

• Have a plan. Set up a map or planagram of the entire warehouse, and don’t forget the boutique if you have one. Check off the bins as you go along to be sure you’ve done them all.

• Make adjustments a day or two after the initial count to allow time for work in process to filter through. Check receipts before making large adjustments to be sure they were accurate, otherwise you could be creating a variance with the GL. If the parts are really missing a corresponding entry to the GL must be made to keep it in balance with the PAD.

• Count special order bins monthly. These bins have the most activity of all and are the most likely to have problems.

• Try to do the counts at a time of the day when there is little or no activity in the bins. The end of the day usually works best since most picks are done and receipts have been put away.

• Everyone counts every day, except for the person who verifies the counts. Figure out how many locations need to be counted and divide them up by the days in the counting cycle and the number of counters available. If you’d like a simple calculation spreadsheet for this, contact me at jrichter@DFO-magazine.com and I’ll send it to you.[/list:u:z2ynn6lr]
Done correctly you may be able to dispense with the dreaded and expensive annual physical inventory, comfortable in the knowledge that instead of knowing where and what you actually have once a year, you have that information every day. Believe me, it’s a comforting thought.
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Jim Richter is a fixed operations consultant and trainer with Net Profit Inc., an international company working with dealers, distributors, and manufacturers. He has spent over 40 years in the automotive and marine industries analyzing and assisting parts and service operations throughout North America. His work experience includes dealerships, field and management positions with major manufacturers, and his own consulting company.

Let’s Talk Accessories Sales

People love to personalize, whether it is the color of their cell phones, their coffee concoctions, or their vehicles. As a new-car dealer, you are in an envious position to help consumers modify their vehicles just the way they want them.

The problem is, even if your dealership actively displays and sells vehicle accessories, the fact that you’re in the accessories business is probably not being communicated to potential buyers in a way that will bring them back to your store to spend their accessories dollars.

A multi-channel communication strategy that uses different mediums to tell your accessories story is one way to help you grow this part of your business. Such a strategy will help attract buyers who otherwise may have never known that your dealership sells auto accessories. Consider this: Twenty-five percent of vehicle owners personalize their vehicle within 90 days of purchase, spending an average of $1,000 to $3,500 per vehicle, according to the Specialty Equipment Market Association (SEMA). Unfortunately, most of this money is spent after the vehicles purchase at an independent accessories retailer or installer. Multi-channel communications from your dealership can help capture more of this business upfront, as part of the vehicle sale.

Try these ideas to leverage multi-channel communications and build your accessories business:

[list:1tybs2a4]- Create a database from your dealer management system (DMS) of vehicles purchased within the last 90 days, and send those buyers a letter, email, or phone message that promotes your accessories business.

– Purchase vehicle registration data, and create communications that target each consumer segment by vehicle type. For instance, identify buyers who want to supe-up their car and market speed and performance accessories to them. Identify sedan and SUV buyers and market custom wheels and tires to them. Segment truck owners and offer them your bed liners, running boards, and other truck-specific accessories.

– Extract service history data from the DMS, and create communications designed to increase customer-pay service dollars and promote accessory sales and installation while the vehicle is in for service.

– From your sales contact database, send all ups, whether they bought or not, a letter inviting them back into the dealership to look at how accessorizing a vehicle can help them create a truly unique version of the makes and models you sell.[/list:u:1tybs2a4]
The point here is that once you’ve established this new profit center, market it aggressively using as many channels as you can to showcase your expertise as a vehicle accessories and styling professional.
________________________________________________________________________________________________________________________________________________________

Al Babbington is the CEO of CallCommand. He can be reached at ababbington@callcommand.com, 800-464-8500, or visit http://www.callcommand.com for more information.

Parts for Profit

Part 1

Fact: The typical parts department has more investment and returns less profit than any other department. Every other department can be financed, leased, depreciated, or leveraged. Automotive parts require cash—paid in full, every month. Many parts departments are sinkholes, sucking resources from the dealer, tying up capital in un-saleable inventory, maintenance, and personnel. This needs to change. Today’s parts department must be an asset to the dealership. Analyze your parts department’s profitability. Look at the ratio of net profit to inventory. A well run parts department can generate annual net profit ratios of 50% or more, based on your inventory investment. Then show the dealer principle your inventory is an investment, better than the bank when it comes to the rate of return. This should be your goal. Every inventory dollar working to produce more profit and every employee’s time managed to maximize their productivity.

The first step is to analyze your inventory. You can easily check your month-end management report for stocking part numbers. I have found that an inventory of 1500 part numbers is all you need to cover your daily sales. This is based on a requirement that stocking parts should sell at least three times in a year, or for new models, two times, in six months. You can rationalize stocking dollars this way: After a part has sold three times, you have made enough profit to purchase the fourth part, effectively investing profit, not capital. A twenty-one day supply is more than adequate for all normal needs. All other parts should only be ordered when needed and when the sale is guaranteed. No money should be tied up in speculation. All excess inventory; all items unsold for twelve months or more, need to be converted to cash. Return them to the manufacturer as obsolescence if possible, or donate them to the nearest tech school for a tax credit. All they do now is collect dust and absorb valuable resources.

With today’s freight system, you can balance inventory vs. freight. A small dealer will have smaller inventory with higher freight charges; a large dealer will have more inventory, but smaller freight bills. Never absorb all freight charges, do the paperwork necessary to recover charges from the manufacturer and always charge your special order customers for their freight. A flat percentage with a minimum starting charge will keep your costs at a minimum. Example, 10% with a $2.00 minimum. Remember, that is ten percent of your selling price, not your cost. This should allow you to make a profit on your freight. Find out what your manufacturer charges are and post your freight policy where your customers can see it.

These simple guidelines will start you on your way to a department that is valuable to the dealer, and a steady source of needed revenue. In part two I will discuss the physical layout of your parts department, how to make it more efficient and profitable.

Part 2

A profitable parts department must be time efficient. Wasted time is wasted money. Reduce as much as possible the time required to go from the sales position to the part itself. Counter personnel must be able to go directly to the bin, find the proper location, and pull the correct part with a minimum amount of time and effort.

The most basic of all, your efficient department must start with its physical design. Preplan your bin layout. Draw out a floor plan first. Know what your plan is and locate parts only one time. You must divide your inventory into fast and slow moving sections, not just large and small. Remember only about 1500 numbers make up the bulk of your sales. These parts must be in your first section of bins.

Use at least three sizes of bins in each section. You must be able to locate all fast moving parts to the bins closest to your counters. Make breaks in your rows; don’t force your men to walk the entire row before going to the next isle. No more than five bins between walk ways. All isles must be perpendicular to the counter. All isles must be a minimum of 30” and a maximum of 36” wide. Do not crowd your walkways, no parts sticking out of bins. I found 18” deep shelves work better than 12” ones. Also, remove backs of bins and use struts for reinforcement. This allows more light on your shelves, and 20” parts are no problem. Vary your shelf spacing for small, medium, and large parts. “Front” all your parts, it makes them easier to see and reach. Mark all part locations with movable tags, because your inventory is in a constant state of change. You want to be able to relocate parts easily. Leave bottom shelves empty, this is good for temporary storage of parts you will work into position later.

Special attention needs to be made to the back counter area. Bins here must be used for fast moving filters, fluids, and other shop needs. You must also have a shelf here for your shop’s special orders, visible to your technicians. A separate special order section is also needed. These parts will also be moving out rapidly. Keep your special orders near your counters.

Avoid stocking air. The biggest waste of stocking space is trying to follow the manufacturer’s numerical sequence on your shelves. Very few manufacturers keep like sized parts in sequence. With computer controls, you can mix parts, locations, size, etc. any way you want. The time spent creating the most efficient work area possible will be repaid ten fold in increased productivity.

In part three, I will discuss further the numbering and location of bins to increase efficiency and therefore, profit.

Part 3

Quick and easy access to your 1500 fastest moving parts is your key to efficiency and profit. Bin numbers should be mental guides to the actual location, easy to visualize and travel to. Direct travel between bins and isles in easy to remember location codes, not just numerical sequence. Give your team a mental picture of exactly where the bin is and they only have to remember the part number.

The best numbering system I have found is row, side, bin. Example: Bin “3L4” is isle 3, left side, bin 4 from the front. This gives a mental picture of exactly where this bin is located in the department. When necessary, use the shelf number also. 3L42 now indicates shelf number 2 as the part location. All parts on that shelf are in numerical order. Small parts need to be in 4” bin boxes with dividers. Don’t waste shelf space going wide when you can go deep. Again, logical bin numbering, 3L4D4 means drawer 4. Use logical letters to help locate parts, R,L,N,S,U,B,M, etc. means right, left, north, south, upper, bulk, molding, etc. Put like items together, tune-up section, cooling section, fuel section, etc.

Make the job as easy as possible, the less time taken per sale means more sales per employee.

The best floor plan possible is wasted, however, if you have sloppy housekeeping. Details are important! All parts must be in sequence, with adequate room for all like parts. Every location has a bin tag, magnetic ones are best. Every bin tag is printed in the same font. All tags legible from a five feet away. Your employees must be able to scan a bin and find their part in seconds, not minutes. No multiple locations except for bulk overstock of extremely fast moving parts, filters and fluids, for example.

After working out the main bin locations, parts locations, traffic patterns, sales patterns, do the individual work stations. Again, you are maximizing the selling time per counterperson. Every employee should have all the tools he or she needs within arm’s reach. If you have three employees working at the counter, and only two catalog stations, you are cutting one third of your sales potential.

Custom tailor each workstation to the individual. Right handed persons need the phone on the left, calculator on the right. Left handed people need the opposite! Cordless phones and headsets are good ideas. Buy the extra stapler.

A physical layout plan:

1. Divide your inventory by movement

2. Divide your inventory by sales area

3. Create isles, bins, and bin numbers

4. Create work areas

5. Supply all tools for each individual

In part four, I will discuss profitable inventory control philosophies.

Part 4 – Profitable Inventory Control Philosophies

Inventory control courses have always been promoted by the manufacturer and inventory specialists know who signs their checks. As a result of this, all inventory philosophies have naturally been biased in favor of the manufacturer. Stock order vs. special orders, designated stock order days, extra days supply, inventory of new model parts, and minimum percentages are good for the manufacturer, not the dealer. None of these policies make the best use of the dealer’s dollars. A slight change of philosophy, however, will result in better profits, the dealer’s main need. New philosophy…lean and mean!

Policy and procedures sample

Parts for stock (tight control system):

· Part must sell at least 4 times in 12 months
· Part must sell at least 1 time in last 60 days
· Part must have no more than 30 days supply on shelf

Parts for stock (normal control system):

· Part must sell at least 3 times in 12 months
· Part must sell at least 2 times in 6 months
· Part must have no more than 60 days supply on shelf

As I have said before, all these parts have permanent locations, in bins close to your sales counters.

Other inventory control guidelines:

Keep all your controls as simple as possible; a manager should not spend all his time on inventory reports. Use as few sources as possible, used not only for ordering, but also for pricing. Use the min-max, per job, and full bin fields to keep your parts at the proper levels. Watch out for phase-in parts. The computer has no idea of multiple part needs. For example, shock absorbers, spark plugs, etc. will phase in as a suggested order of one only. Manage your inventory by exception and use the hi/low value on reports, the middle will take care of itself.

Other inventory control issues: tape updates, part number changes, bin location changes, negative and zero on hand, phase in and out, should be weekly or monthly activities with regular schedules.

Missed sales and outside purchases are probably the second most important loss of dealer profits. You must have honest input of these parts in order to keep your inventory current. All shop purchases must be entered as missed sales. Every counterman must record every missed sale. If a man has to take the time to look up a part, it should be recorded. Buying a part from outside instead of taking it from your own supply is always a loss, a loss of time and manpower.

The many details of inventory control can take up thousands of words, but if you adhere to these principles, and keep your inventory lean and mean, profit will be the natural result.

In part five, I will begin to discuss the hardest part, managing your people.

Part 5

You now have your 1500 part numbers arranged in bins close to your counters, in easy to remember locations, correct quantities, and are ready to make some money. No, not yet. You’ve only done the easy part.

After inventory-investment control, productivity is the next issue. Productivity is limited by time. Wasted time cannot be reclaimed. Every decision, every procedure, every plan should be based on time.

Training your people will be the hardest, longest, and most frustrating part of your job.

No one wants change in their life, especially not at work. Some are actually frozen in their patterns. Your ideas will be met with resistance of all kinds. You must not quit. You must be the unstoppable, irresistible force. Here are some guidelines to help you.

Write it down.

Verbal instructions are almost useless. We use our eyes first, our ears second, our memories last. When you write down your policies and procedures, you create a lasting effect, one that cannot be forgotten.

Write it all down.

When you are ready to start your written program, write it all. Isolate yourself, start thinking about how a perfect department functions, and start writing. Don’t worry about priority, that will come later. Think about the position, not the person. Think about efficiency, volume, quick and easy procedures, and how to provide them. Create plans. Break down overall plans into separate detailed plans. Give yourself time to brainstorm, and write everything down. Let your enthusiasm be your guide, but if you start to over-detail one subject, continue. You can always go back to the beginning, if you have written it down. The important thing is to keep the ideas flowing. Stop writing only when you can’t think of anything else.

Make your list.

Now comes the time for priority. Sort all your ideas into groups. Sort all procedures by positions. List changes in order of priority, and list everything you want to do. This list will become your guide in the months to come. If you do not have a guide, you will become mired in routine, and be unable to remember the wonderful ideas you used to have, all the changes you wanted to make.

Schedule your changes.

People can only handle a maximum of three new ideas at a time. It takes twenty-one days to make or break a habit. Use these two facts to make up your schedule of changes. Take it easy, one or two steps at a time. Wait until things have settled down before stirring the pot again. That is why you must have a list of all the things you want to change. Now you see why I say this is the longest and hardest part of your job.

Change yourself first.

In part six, I will give you guides to help you lead your people, but you must be the example they follow.

Part 6 – Employee Motivation

Be a leader, a teacher, and a problem solver. Each person in your department must be as productive as possible. An unhappy employee is not a productive one. Do your people come to work with smiles? Do your people stay late to “BS”, or to finish jobs, or to prepare for the next day? If you answered yes, 90 percent of your work is going to be very easy. If you have an unhappy workforce, however, the first thing you have to do is to change their attitude.

Negative criticism is the worst tool you have. Use it as a last resort, when trying to save an employee from termination. The manager’s attitude will be the attitude of the employees. They look to their leader for clues about how to perceive their jobs. If the top man is unhappy, everyone else will follow him down the hole and so will your customers. You must be a positive leader. Smile, laugh, and joke with your people—not enough to interfere with them, just enough to get them smiling also. Create positive feelings between employees and get them working together.

Here are a few simple ideas:

Ask each employee to fill out a short form once in a while about themselves or each other. A simple questionnaire: name, position, years of experience, their own idea of a job description, their proudest accomplishment, suggestions for improvement of their job. Do not ask for criticism; ask positive or neutral questions only. Talk with each one in private about how they perceive and feel about their job and place in department. When presented with an opportunity to implement one of their ideas, do so and give them full credit for the idea. Encourage them to want to improve the department.

Create a “pat on the back” award, one that the employees themselves contribute to. Give your employees a simple form, with all employee names, and a check box for good, better, and best. Ask a simple question: Rate your fellow employees for most helpful, or most cheerful, or best problem solver, etc.—only one question, no possible negative comments, a take-home and mail in form with a stamped and addressed envelope. No ratings except for an award to the winner. Get your people thinking positively about each other.

Post all department goals based on prior years and update daily. Make every effort to praise good work publicly and if it becomes necessary to have a negative session with an employee, do it in private, behind closed doors. Once you have fully developed a positive attitude in your department, changes will be easy to make.

In part seven:

Things to do:

· Establish inventory controls

· Establish training program

· Establish pricing policy

· Establish expense accounting

· Analysis of wholesale income

· Analysis of discount structure

· Check for maximum stock order discounts

· Check for dealer wholesale incentives

· Check fleet accounts and rebates

· Check for best part return policy

· Review possible promotions

· Review pay plans

· Create policy and procedure manual

· Establish schedules for inventory maintenance

· Schedule freight credits

Part 7 – Training

As I showed you in part six, the parts manager is the key motivator in the department. He also has the most complex job. He needs all the help he can get, and it needs to be good help.

Few employees will train themselves. Most of the time they rely on “on the job” training, and when they have learned enough to keep up with the everyday flow of business, they stop learning. The problem is “just enough” is not good enough. The parts manager must institute an ongoing training program until everyone is as qualified as possible. The more personnel know about the entire department, the better they will work with each other.

Most manufactures have a certification program of some kind. Set a goal that every employee will get the highest certificate possible. Set aside time for training. For individual employees, afternoon sessions are best. Training for a group is best done after work. Group training is difficult. None of your people are going to be enthusiastic about staying after work, but it is necessary. Let them decide together on which day they want, except for Friday, no one should have to stay late on that day. After the day is decided, have a firm goal for each meeting.

One manufacturer I worked for had short manuals, approximately thirty pages, with twenty questions at the end. Having a “classroom,” with each employee reading and answering by themselves would have been a boring and painful experience. Instead, I passed out that evening’s manual, and immediately assigned one of the questions to each person. I instructed everyone to look through the manual for their answer. When an employee found an answer, he would tell everyone on what page the information could be found, and read it aloud. That employee was then given his next question to work on. All persons were given the same amount of questions, creating a “team” effect. At the end of that session, everyone had all the answers, and all had contributed evenly. If one or two had not found answers by the end, they still contributed to the effort. Although it would seem on the surface that the employees would be skipping a lot of material, in reality they had to read the manual, cover to cover, over and over to find the answer to their own question. Reading the answer to another person’s question and writing the answer down gave them the knowledge without the “pain” of a structured class. All shared the work, the knowledge, and the reward.

Here is a general training outline:

– Training on parts system, number system, and group system

– Training on computer system-interface with accounting

– Training on posting, part number control, and dollar control

– Training on customer relations-wholesale and retail

– Training on accounting, expense and sales accounts

– Training on parts control-monthly obsolescence, parts ordered in error, part number changes, and credits

– Overall objective: have everyone know everything and why

– Create a team

Part 8 – Personnel

Making the most profit out of your inventory is easy and, once set up properly, needs minimum maintenance. Making the best profit out of your personnel is the hard part. This is why I spend most of my effort on my people.

The hardest part of any profession is learning the language. The various terminologies used to communicate needs. Parts is one of the hardest, a language of multiple words for the same item: controller, solenoid, actuator, module, ECU, etc. can all be used to describe the same object. Only a few years ago Ford started a program to unify parts terminology. Now all departments, design, engineering, manufacturing, service, and parts would all refer to a part by one name. Manufacturers have been in business almost a hundred years and only now are addressing the problem. Same thing with new models…all kinds of information for sales and service, nothing for parts education. Everyone must learn on the job.

Qualified personnel are difficult to find, so your best results will be if you train your people yourself. Promote from within on a scale of needed expertise, driver, stockman, back counter, front counter, phones. Always start new counter personnel at the back counter. They can get the most help, information, and actually see the vehicle if necessary. Technicians will educate a new counterperson better and faster than any other method. Every person has an area they are happiest working in, find the best fit for your personnel. A person is most productive when working in the area that they like. They make fewer mistakes, enjoy their work, and have less attendance problem.

Every person must know exactly what their job and their responsibilities are. Not just verbally, written down! You must create your own policy and procedure manual, with every position defined, and all duties outlined. Only with a permanent “bible” for your department can you cope with ongoing personnel issues.

A few examples:

Driver Duties:

1 Maintain a professional appearance

2 Keep my vehicle clean and maintained daily.

3 Maintain a professional attitude with all my customers.

4 Organize my deliveries in the best way for time and distance.

5 Maintain contact at all times.

6 When not delivering, assist with receiving-shipping, and housekeeping.

7 Obtain training toward further advancement.

Receiving Clerk Duties:

1 Maintain my area in a neat, clean, and organized manner.

2 Complete all receipts every day.

3 Complete all paperwork every day.

4 Complete all stocking duties every day.

5 Report all errors, mistakes, and problems immediately.

Shop Counter Duties:

1 Fill all part requests as quickly as possible.

2 Record all transactions at time of sale.

3 Attempt to fill all missed sales with local sources.

4 Verify all unfilled orders with both technician and service advisor.

5 Handle all “car down” orders as quickly as possible.

6 Process all core and warranty part returns daily.

7 Keep my area as neat as possible.

Part 9 – Your Parts Driver

Analyze and define every position and discuss with each employee exactly what you believe their job duties are. The result creates secure feelings between you and your people about their work.

Here are a few thoughts concerning the parts driver:

One of the most important, yet lowest paid and least trained position. Many times, this is the only representative of the dealer to actually meet the customer face-to-face. Your driver is the symbol of your professionalism, pride, and sincerity in all transactions with your most frequent customers. These customers have the option of purchasing parts elsewhere, and if offended by a driver surely will. Let your drivers know how important they are to the image of the dealership, and that the customers are theirs as well as the dealers. Their uniforms must be clean and well kept, their appearance a credit to your business. Delivery trucks must be clean, with easily read signs, not cluttered, but with name and phone numbers clearly stated.

Make each driver responsible for their vehicle. Check all fluids, tires, gasoline, etc. each night, in order to have them completely ready for the next morning’s business. Remember, your customers appreciate early deliveries rather than late ones. It is better to have several runs each day to different areas rather than one run that will take all day. Short runs allow you to make an emergency run for that “special” customer. If you have a central location in town, divide your deliveries by area, east/west, or north/south, and set a schedule. Make sure all your customers are aware of your schedule. Always have some way to keep in touch with your driver—radio, pager, cell phone, etc.

Give your driver some discretion in the field. Allow him to make minor adjustments for damaged goods, returns, wrong parts, or other issues. Your customers will appreciate the quick handling of their problems. Drivers are responsible for obtaining all information when wrong parts are sent, since the second trip must be correct.

Part 10 – Receiving and Shipping

Receiving and shipping: stated in that order because receiving is the most common and the most important duty. All incoming freight must be checked piece-by-piece. Quantity ordered, billed, and received must match. All packing slips must be checked and turned in to the manager for final accounting. Mark all exceptions on packing slips, also a separate exception report to the manager. For extra parts, make packing slips for posting; then make all claims after checking with the factory invoice. All part number changes must be posted, any bin locations changed daily, after all the receiving is done.

Remember, you must have accuracy in three places: physical on hand stock, computer inventory information, and your accounting dollars. All three have to agree at all times.

Parts received are generally in two classifications, stocking and special orders. Stock orders are easier to handle. Every part has a location, and no pressure to deliver. Orders are received in the morning and parts are on your shelves in the afternoon.

Special orders are a completely different situation. All special orders are to be considered high priority. A $2.00 part can be holding up a $1,000 job. After checking all the parts on the packing slip, separate pieces by order type. Priority is your shop, then wholesale, and finally retail.

With shop orders, speed is your first concern, followed by communication. Take all shop orders to a designated area near your back counter. Give written notification to your back counter personnel and also to the responsible service consultant. Parts should also be visible to the technicians when they are at the back counter.

Wholesale customers are next. Notify the counterperson responsible; then place the part in either the will-call or delivery area for your driver.

Retail customers are last, but they require the most handling. A copy of the special order is attached to the part; the part is placed in a special order section in alphabetical order. A copy of the order is placed in an alphabetical file, and another copy is used to contact the customer. A phone call is best, but a post card can also be mailed.

Special orders will always accumulate. For reasons unknown, even when parts have been pre-paid, customers will not come back for them. You must clean out special order shelves on a regular basis. This is just a part of normal business.

The most important thing about shipping is keeping records. Duplicates of packing slips, carrier name, and shipping number are all necessary information to track. Shipments must be kept in an organized file, preferably kept by carrier and date. Remember, if you cannot prove liability on lost shipments, you will have to assume the loss.

As you can see, the receiving, shipping, housekeeping portion of the department’s business is critical to all sales areas. This is a good position for an assistant manager. You need someone with good organizational skills, who is good with paperwork, neat, and supportive of all the other personnel. This position is truly the foundation of a good parts department.

Part 11 – Shop Counter Personnel

As I have said before, the back counter is the best place to train a future counterperson. The technician cannot be lost or driven off by unfortunate delays or errors. The car, the technician, all of the necessary information, is here. Advice and help are available at all times. Your regular back counter personnel can always use the extra hands and feet, and the heavy volume of orders provides the greatest experience in the least amount of time.

Your back counter (service sales) is the best profit center and the backbone of all parts department sales. A good parts operation contributes to increased service and sales. Customers who have their car repaired in a timely manner return for more service, and continue to purchase vehicles at your dealership. The most important thing for service sales is the proper inventory of expected parts. You must never be out of parts for regularly scheduled service. Set minimum amounts (e.g. two services) for all part numbers. Not having simple items such as spark plugs, filters, etc. will give your customer the worst possible impression of your department and dealership.

A separate fast-moving stock area must be next to your back counter. Not only for filters and fluids, your service special order section must also be here. A separate shelf, in view of your technicians, is used for all “car down” orders. The part is a constant reminder to get the car into the shop and finished.

The back counter is also the center for phasing in new numbers and adjusting on-hand quantities. Here is where you purchase parts from other dealers or more importantly, other parts suppliers, like NAPA and AUTO ZONE. If you have a regular monthly bill of over $1000 for your own car line, you are not managing your inventory properly. Independent part stores only carry the most popular parts, the same ones you should never be out of.

Every purchase of a part that has a factory number needs to be entered in your system. Instruct all of your countermen to use only factory numbers on purchase orders. When you do your daily review, enter all these numbers as lost sales. You should only have to do this two times before the number comes up on your suggested stock order. If you do not catch these missed sales, you will continue giving away profits that rightfully belong to you.

If your dealership includes a body shop, assign one person to handle all these orders. This position is mandatory training for a future wholesale counterperson. You must know how your best customer operates in order to work with him. Six months of dedicated involvement with a functioning body shop will give you the experience necessary to understand this customer’s point of view.

Remember, you are not just a parts warehouse. You are a partner in the auto repair business. Your people should know how their parts will be used. They should be aware of a technician’s primary needs, and which parts need to be available first. This attitude creates a bond between you and your customer that will benefit you both.

Part 12 – Retail Counter Personnel

After learning on the back counter; transfer your trainees to the front counter. By now they should be able to find the most common parts, and understand the repair procedures used in mechanical and body repair. At the front counter they will learn how to take care of a new kind of customer…the kind that can be extremely frustrating to serve.

The typical front counter (walk-in) customer is an amateur mechanic, who may or may not know the correct terminology of the part, or parts, that he needs. A trainee will learn to use illustrations, locations, and descriptions to determine the required parts. These customers need more time per sale than any other. Patience is the primary requirement for this position. Other walk-in customers will be your local

The How-To Of Accessory Sales Success

After years in the automotive accessory sales business, I am glad the industry experts, along with the movers and shakers, are now encouraging dealers to get into accessories sales. Something that delivers higher profits, motivating sales commissions, strengthened brands, and increased store recognition is just forward-thinking, and accessories sales can do all of that.

Accessory sales can recapture the easy money lost to shrinking margins and longer periods between vehicle purchases. More importantly, accessories sales are not just about increasing your gross profit per vehicle sold. It is the first step in building loyal, long-term customers who return for parts and service, not just their next vehicle purchase.

How do you get started? What tips, techniques, methods, and madness bring accessory sales success? Which attitudes, misunderstandings, or myths pop the profit balloon, and keep you from starting? How do you motivate management, sales, fixed ops, and the rest of your employees to believe in it? Glad you asked. Consider a situation ripe for accessory sales intervention- I call it the chrome-plated 15 minutes. Picture your showroom with customers sitting at tables and sales desks or wandering the showroom bored. Easy to imagine, right? Dozens of customers are probably cooling their heels in your showroom right now, with nothing to do but wish they were done.

What if I said you could entertain customers and increase profits at the same time? Skeptical? Why? You have a captive audience. All they need is something to keep them busy, and if that something is accessories sales, it could increase your profit too.

Pull out all the props

Check out your OEs accessory displays, and spread them around thickly. Placed in parts, service, and sales, POS (point of sale) displays get customers thinking accessories. It is hard not to think about it when a big, beautiful accessory cutout is all you have to look at.

No room? Try the hallway, service, outside restrooms, anywhere customers wait. Better yet, supplement POS with the real thing. Attach the display to a show vehicle or tastefully display auto-dimming mirrors, backseat theaters, and chrome, anything that helps customers relate accessories to day-to-day driving pleasure.

Buyers can also be inspired by dealer-branded online accessory catalogs that show decorative and useful accessories on the model of their choice. With or without encouragement from sales, an excited buyer can happily personalize their purchase and roll it into the deal.

Any other time, $2,000 wheels could be hard to swallow. Rolled into the vehicle purchase, however, they are affordable. As an added bonus, accessory buyers have an immediate need to cozy up to parts and service, giving you a better chance to make them customers for life.

Walk, don’t run

More and more people fulfill their new vehicle accessory fantasies every day. Why send buyers to the local performance shop or http://www.IwantAccessories.com?

Take that first step. Talk to sales and fixed ops. Set up displays and look into online accessory catalogs. Decide how your business rules will apply to your new accessory business. Then champion accessory sales in your dealership. Championing accessory sales means planting the seed in every corner of your dealership. Plant it, nurture it, and don’t let it die.

As to what system will work best for you, how to implement it, how to encourage staff and customers, and how to keep it up-keep reading my column. I will give you my methods and share with you how successful dealers do it.

Accessory sales success might mean changing the way you do business, but it will also bring back your profits. Something every dealer out there wants, regardless of nameplate.
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David Copp Stringer is president of Insignia, a provider of online accessories catalogs and sales systems exclusively for dealers. He can be reached at dstringer@insigniagroup.com or call 888-579-4458 x8603.

The Parts Team – Is yours Ready for Game Time?

In the last issue we asked the question; “Are you sure that what you think you have in parts inventory value is correct?” Since most dealerships today have more net working capital invested in their parts inventory than anywhere else in the business, it’s time to treat it like the valuable asset it is and not treat it like a dusty library in the back of the building.

You get what you pay for

There are four key factors involved in making sure your investment works well for you.

1. Hire qualified people. This goes for management and staff. You don’t have to have the most experienced parts manager from the start, but be sure that person can be brought up to that level.

• Quality is more valuable here than quantity here. Good people can produce much more quality work than weak ones do, and you rarely have to go back and do their work over again, and again, and again.

• Turnover is very expensive resulting in lost customers, reduced efficiency in new hires, and overall disruption of daily routines which becomes disturbing to the existing staff. Take the time to hire the right people rather than the first warm body that comes through the door.

• Invest in training once you’re sure that you have a winner. The best-trained people do the best job.

• Compensate your people fairly. Set up payplans that are achievable and affordable for the dealership. Once you’ve done that, leave them alone. There’s nothing more disruptive than the payplan of the month. Theft is usually stimulated by feelings of inadequate pay for work done so be sure that your people can work for what you can afford.

2. Provide a quality DMS which has a good parts inventory control module.

• Don’t just shop price when looking to replace or upgrade. Get references and talk to them. Some of the newer PC-based systems can be very effective and represent good value, but others are built on old technology and will not protect your investment properly.

• Interview the managers that are using the system, not just the dealer and office manager. Don’t just go by the salesperson’s demo, talk to a professional who uses it every day, and if the salesperson doesn’t want to give you at least two co-operative references you’d best be careful about the claims being made.

3. Equip your parts vault with good storage systems, quality lighting, and secure doors and counters. The easier it is to find parts the less time it takes to sell and deliver them.

• If your parts warehouse looks like a child’s bedroom after a sleepover then you’ve got a problem. That’s your money lying on the floor, hanging from pipes, and stacked up in the corner. Sometimes this can be caused by inadequate or old style bin systems, resulting in having more parts than can be put away properly. If this is the case invest in some modular storage systems that incorporate high-density drawers as well as product-specific shelving for items such as tires and batteries. There are some very creative products out there today that make brick and mortar unnecessary…up to a point.

• Dim lights make things hard to find. Be sure that overhead lighting is even and bright enough to make reading small print on labels easy. If it takes too much effort to identify a part on the shelf then mistakes are going to be made. Parts put up in the wrong location become parts that can’t be found, resulting in stalled jobs in the shop and needless special orders for parts that should have been found the first time.

4. Security needs to be everyone’s concern.

• Doors to the warehouse should only be accessed by parts personnel and dealership management.

• Do you have a key management system in place? Do you know who has the keys?

• Are dumpsters adjacent to the shipping and receiving doors where parts could be hidden for retrieval later on? Are those doors open and uncontrolled during the day?

• Who has access to what functions in the DMS? Can they control cost and sale prices? Can they minus a part out that they just put in that dumpster? Can they conveniently avoid receipting a part that they want for themselves?

Managing a profitable parts department takes more than selling parts over the phone and at the counter. It takes good inventory management skills, good people skills, constant upgrading of professional skills, quality resources to work with and retention of good people. How well does your team stack up?
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Jim Richter is a fixed operations consultant and trainer with Net Profit Inc., an international company working with dealers, distributors, and manufacturers. He has spent over 35 years in the automotive and marine industries analyzing and assisting parts and service operations throughout North America. His work experience includes dealerships, field and management positions with major manufacturers, and his own consulting company.

Increasing Dealer Direct Car Parts Sales – SEO in the Answer

In the past few months, I have been fielding calls from dealers who are looking for ways to increase revenue to offset declining car sales.

Car part sales and extended warranty sales seen to be the hot topic among the dealers that I communicate with. I’ve started a number of great projects to generate revenue from these two sources but part sales are so ripe, I just had to write about it.

For genuine manufacturer car part sales, it seems that only a few choices exist for car dealers who want to compete for online dollars. The car parts website platforms that are the most popular actually score very poorly from an SEO perspective.

When I compare these website platforms to what matters in Google they fail miserably in my opinion. This creates an amazing opportunity for dealers who create their own SEO compliant parts website pages or find a work around to these flawed databases.

One of the leading website platforms for car dealer parts websites is Trade Motion who creates “skins” for dealers and then drives parts searches to their own website database. I don’t think dealers understand that buying into this model will always require them to use Google Adwords or SEM to drive traffic and sales. The offsite hosted inventory pages in Trade Motion will never generate natural search rankings for their own main parts website let alone allow them to compete nationally via organic search.

A case in point is a site called http://www.directhondaparts.com which uses the Trade Motion parts database. This site was chosen at random. As soon as you start searching for parts, you leave the site called http://www.directhondaparts.com and move to the Trade Motion website. For example, the page that lists 2005 Honda Accord Brake Pads is:

http://www.trademotion.com/partlocator/ … atalogid=1

If you look at this long and convoluted URL it obviously is not associated with the sponsoring domain. It also does not comply with Google recommendations about simplifying dynamic URL strings or to utilize a clear set of sub-directory structures. You can read Google’s recommendations in this PDF document:

http://www.paschconsulting.com/PDF/sear … -guide.pdf

The reality is that all the page views associated with paying for a consumer via SEM to shop the parts database will never be associated with the car dealer’s parts website domain. Only http://www.trademotion.com gets credit for the page views and time on site.

Better But Not Effective

Another example is http://www.infinitipartsonline.com which uses another version of Trade Motion’s database platform, which is better but not ideal. The Infiniti 2007 FX35 brake pads come up as:

http://www.infinitipartsonline.com/part … atalogid=0

In this example, the database pages are tied to the main URL but the length and composition of the URL is not designed to compete for organic search listings. In addition, the META description and HTML title for this page has nothing to do with 2007 FX35 brake parts. This is in violation of Google’s SEO guidelines.

Here are the HTML tags that are on the page for 2007 Infiniti FX35 front brake pads, which are obviously just a generic tagging system:

<META name=”description” content=”A complete line of Infiniti parts & Infiniti Accessories. OEM Infiniti Parts and Aftermarket Performance Infiniti Parts”>

<META name=”KEYWORDS” content=”NISMO, infiniti parts, infinity parts, Infiniti accessories, Infinity accessories, G35 coupe, G35 Sedan, G20 accessories, G20 performance, G35 performance, G35 parts, G20 parts, infiniti parts, infinity parts, nissan parts, nismo parts, G35 accessories ,performance parts, brake pros, stillen, stillen brakes, metal matrix, performance brakes, g35 brakes, g20 brakes, oem nissan parts, oem infiniti parts, oem infinity parts, wholesale nissan, wholesale infiniti, wholesale infinity, nissan, infiniti, infinity, g20, g35, fx35, fx45, g35, q45, i30, j30, qx4, 350z, 300zx, datsun, infiniti factory parts, infinity factory parts, m45, m35, m30, i35, infinity g35, infiniti g35, infiniti fx35, infiniti fx45, infinity fx35, infinity fx45″>

Learning How to Compete

Dealers who want to compete nationally for parts sales need to create an SEO strategy that will build pages rankings and traffic that will not ONLY require SEM. Right now it seems like sites like http://www.parts.com have an inside track on what web architecture really drives organic sales results. The goods news for car dealers is that they will be having some competition very soon…the cat is out of the bag.

I’ve been studying parts websites for a while and have solutions to supplement the poor SEO design of many current automotive parts website platforms. If dealers are interested in building a better parts business on the Internet, they are encouraged to share best practices here. Dealers are also invited to give me a call to discuss how we can help better optimize their current efforts in selling parts online. I can be reached at 732-842-4720.
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Written by Brian Pasch

It’s Time to take the OEM Blinders Off!

Most of us that have been in the dealership service and parts business have had a mantra of “factory parts” pounded into us since day one. We were told that only factory-supplied parts met the engineering, quality, and durability standards that our customers required and that our liability protection called for. Recently, in an effort to help our franchised clients recover some of the service and parts customers they have lost to the aftermarket, Net Profit created a workshop called “The Garage.” The whole concept behind this was to teach dealers how to behave like independent shops. Boy, did we hear it when we put this one together!

Choices…choices…choices
The first thing we learned about aftermarket parts is that many of them are manufactured by the same suppliers the OEMs use: in the same factories, on the same lines, by the same people, and usually to the same standards. The major differences lie in the distribution networks, pricing, and warranties. Assuming for now that we are dealing with equivalent parts from a quality perspective, let’s look at these differences.

Distribution – Many different retailers will carry the same products from a supplier. Most of these are national chains or franchises, but the common thread here is that they all have the same products from the same supplier, and usually made to the same standards. In some cases, the “house brand” will also come from these suppliers packaged with the retailer’s logo. This means that you, the customer, have choices you can pass on to your customers.

Pricing – Just as we saw in distribution, the duplication of products between franchised retailers and vendors lends itself to competitive market pricing, up to and including house brands and volume buys. There are also programs that subsidize you for stocking these parts as opposed to calling for them every time you need them. That’s better for your shop, and it’s better for your profitability.

Warranties – These are all over the map. They vary from over the curb to nationwide. Typically the aftermarket warranty does not include labor leaving you to absorb that expense. Even when the warranty includes labor it may not be at full rate, and may be limited as to where the work can be done. There can be serious customer relations’ issues here so choose your vendors carefully.

Good…better…best
Here’s where it starts to get interesting. Up until now your parts offerings have been largely limited to what you get from your franchised vendor, and that usually results in only one option for your customer. In order to get some jobs bought you resort to discounting the parts, labor, or both to get to the point where the customer says, “yes.” Since the cost of labor is a constant, the only area with some pricing options is parts, and here’s how you do it.

Good – These are the lowest cost parts that you can install with a reasonable degree of confidence that they will perform properly at installation and for some time beyond. They may be new, and they may be recycled. Yes, I did say recycled. Depending on the age and condition of the vehicle being worked on, a used part from a quality recycler can be a very acceptable alternative. I know this goes against everything the OEM industry has taught, but remember what type of customer we’re dealing with when you’re working on an eight- to 10-year-old vehicle (industry median age). Besides, the collision industry has been doing this for years, as have successful independent repair shops and even national chains. If you are going to retain the oldest vehicles in the fleet then you need to accommodate their needs.

Better – These are those OE spec parts, which are distributed by the aftermarket under the supplier’s brand name, or even their own house brand. These parts work well with vehicles that are out of warranty, but are still very serviceable for many years to come. They are typically in second owner hands and call for a second owner budget; less expensive than OE, but better quality and more expensive than recycled or off-brand. These parts can be priced at, or even better than, the margins you get from OE parts since your cost of acquisition is usually much lower than OE. These are the parts that you want to develop a small stock of when the demand on them warrants. It’s always better to sell one and replace it rather than tie up a bay waiting for that “30-minute” delivery that turns into an hour. Remember, every work stall has a cost factor, and every minute lost is gone forever, not to mention the technician’s time as well.

Best – This is where your OEM parts fit in. They are the best quality, offer the best warranty, and therefore are the best value to your customer. Not everyone can afford these parts, which is one of the reasons why your customer base erodes after the warranty expires. All things being equal, most people would love to install the best parts on their vehicles, but the reality is that it’s not an option for some folks and they take their business elsewhere as a result.

It’s in your best interest to offer customers options that are priced to fit the age and condition of their vehicles. The better you are able to do this the longer they will remain active in your service shop, and the more likely they will be to replace that vehicle with another one from your dealership. If you’d like more information on “The Garage” contact me at jrichter@dfo-magazine.com.
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Jim Richter is a fixed operations consultant and trainer with Net Profit Inc., an international company working with dealers, distributors, and manufacturers. He has spent over 40 years in the automotive and marine industries analyzing and assisting parts and service operations throughout North America. His work experience includes dealerships, field and management positions with major manufacturers, and his own consulting company.

Growing Your Profits in 2010

Growing Your Profits in 2010—Aftermarket Parts and Accessories

The auto dealership industry is showing signs of life as we head into 2010, but that doesn’t mean it’s time to relax and stop looking for new ways to profit at your dealership. Dealerships across the country have been integrating their online and offline advertising, trimming waste from their budgets, and combing through their databases, all in an effort to bring more money into their dealerships. All of these efforts are important and necessary, but one profit center that is often overlooked is aftermarket parts and accessories. We have assembled a panel of experts to offer some advice on how dealerships can increase their revenue from this often overlooked profit center.

Show your customers their options

Customers need to able to visualize the parts you want to sell them. This goes a long way towards smoothing the path to the sale. You have to “show them! Tell your customers you personalize by what they see on the dealer’s website, showroom, or service lounge. Tell them in advertisements. Dress up vehicles. Hang accessories on the walls and then create a process to present those accessories to every customer,” advises David Copp Stringer, president of the Insignia Group LC.

One way to do this, that all of our experts recommend, is to have at least one vehicle on your lot with every accessory you can fit on it. This may not make for the most attractive vehicle but, “even though when you slap it all on one car it doesn’t look that great, if a customer is considering a step-up [or another accessory], you can say, ‘You want to see what a step up looks like? Let me show you this one car, it’s got everything,” explains Famous Rhodes, director of parts and accessories for eBay Motors. “It will give customers an idea of what these things will look like when you put them on a vehicle.”

This works, because as Greg Basich, executive editor of Mobile Electronics Magazine, says, “When customers are shopping for cars, if they can see the actual accessories on the vehicle, and use them in a test drive, they are more likely to be interested in that vehicle and its accessory options.” He adds one word of warning though, “Don’t add accessories to too many of the same model vehicle. You want the cars with accessories on the lot to stand out.”

Online parts sales

Totally accessorizing one or two of the vehicles on your lot is probably the best way to convince customers at the dealership to purchase accessories for their new vehicle, but the vast majority of consumers start their accessories searches online, the same way they do for vehicles. “The overall percentage of online aftermarket is anywhere from six to seven percent of sales and it’s expected to grow to anywhere from 12-14 percent over the next five years,” Rhodes explains. And your dealership needs to capture its share of that market.

“Like all industries, the internet has provided access to information. Whether that’s products or pricing, customers are better informed and know what is possible,” David Copp Stringer reminds us. This is to the dealers benefit, because, “It has also provided a differentiation between OE accessories and aftermarket accessories. Information on aftermarket accessories is everywhere as is the availability. OE accessories are available, usually at the dealership only. So it provides dealers with a great opportunity to offer the OE accessories as a lead product and then the aftermarket to fill in the gaps or provide a good-better-best model.”

In addition to informing consumers of the superiority of OEM parts, online parts sales have one great advantage over local sales: they have a national (possibly international) marketplace. A larger marketplace allows you to sell the parts that are just sitting on your shelves taking up space. This is also a low-risk way to begin selling parts online, because you don’t have to buy any new inventory to start.

“Take a look at the parts that have been on your shelves for more than 365 days,” recommends Famous Rhodes. “Those are the parts you want to start with and try to sell online. They’re low risk, they’ve been in inventory, some of that inventory may have even been written off. It gives you a quick way to get some of the old products off your shelves that you need to sell to a national audience.”

It still comes down to the salespeople

Accessorizing vehicles so your customers can see what their new vehicle will look like and selling parts online are essential to growing your aftermarket parts and accessories sales, but in the end it still comes down to your salespeople. “If they [salespeople] are not involved in selling and explaining available accessory options, no amount of POP materials or cars sitting on the lot with a couple of installed accessories is going to help,” Greg Basich emphasizes. “Everybody involved in the vehicle sales process should be knowledgeable, to some degree, about the accessories sales process and what’s happening with it.”
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Written by Michael Bowen

Improving Technician/Parts Interface at No Cost

Technician lost time
As best as I can remember, sometime in the mid ‘70s, NADA conducted a study on how much time was lost at the parts counter waiting on parts and while the service advisors awaited instructions. The results were astounding. That study found that on average a technician lost between 54 and 56 minutes with each interface, almost two hours a day! This amounts to 25 percent of each technician’s available clock time, which was wasted and not billable. If you look closely at your operations you will probably see this is still the case today.

Technicians’ time is a very fragile commodity and can not be warehoused or carried into the future. It is like inventorying ice cubes in the summer in the South without the benefit of refrigeration or ice chests. If it is not utilized today, both the dealership and the technician are the losers.

One of my clients put a time clock on the parts counter and billed the parts department for the lost time at full customer pay labor rate. This got everyone’s attention in the fixed operations department and the delays were significantly reduced as a result. The benchmark for parts’ gross profit is currently 40 percent and the benchmark for technician labor gross profit is 75 percent. It is important that we realize that improving the labor productivity (efficiency) greatly increases total net profitability in all of the fixed departments.

Pre-pull parts
Wilson Sisk, the president of Sisk Auto Mall in Kentucky, is using a time honored system that they updated to pre-pull needed parts utilizing their computer system, reducing the delays at the parts counter. When the service advisor prints the repair order, a plain copy of that order is automatically printed in the parts department. Experienced parts counter people know most of the parts needed for routine factory recall, repair, and maintenance jobs are approximately 80 percent of service work. They can pre-pull parts that are known to be needed especially for maintenance work.

Jamie Spence, the parts manager, has the countermen pull the needed parts, charges them to the respective repair orders, and place them on the counter along with the parts copy of the repair order underneath the pulled parts. The technician then comes to the parts counter and picks up the parts. If additional parts are needed the technician then tells the counter person. Yes, sometimes there are unnecessary parts pulled; no system is perfect. You can not design any system to cover all exceptions; you must design systems for the rules and handle the exceptions as exceptions.

The parts manager states that this process speeds up the technician interface at the counter and gives them a “heads up” on parts they do not have in stock.

Other techniques
Establish an intercom, portable radio, or in-house computer e-mail parts ordering system. This concept allows for communication between the technicians and parts personnel with minimal travel time. It allows for fine tuning the parts ordering with increased efficiency.

I have heard of dealerships where this process is utilized along with runners delivering the parts to the technicians in their stalls, further increasing efficiencies. The technician lets the parts department know when they are going to get their next job and its repair order number.

By pre-pulling parts your parts service counter can determine which parts are not in stock and verify that they are needed. Are the parts you need out of stock or for non-franchised vehicles?

Do not forget that emergency purchases and lost sales must be logged into the computer tracking system as emergency purchases or lost sales if you expect your computer to track them.
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E. Eugene White, BSIT/SAE/IIE, is president of Gene White Management, Inc., Slidell, LA. For the past 30 years, White has performed in-dealership evaluations and training (automotive and heavy duty trucks), and conducted workshops in all areas of the service and body shops for NADA, ATD, FADA, NACE, state associations and 20 groups. His areas of expertise include CSI, employee empowerment, SA salesmanship, multiple level pricing, facility planning, and all management processes and concepts in fixed operations.

After Months of Dire Reports, the Recession is Finally Here

After Months of Dire Reports, the Recession is Finally Here, Part I

We’ve all been talking about what to do when the recession finally hits, and I’m sure some of you paid attention to us and made your plans accordingly. The operative word here is some. Human nature being what it is, there are far too many who did nothing in preparation, and are now approaching panic as the flow of customer demand has slowed to a trickle in some cases. Dealers that I spoke to in January and February, who didn’t want to invest in fixed operations because it looked like it was going to be a slow sales year, are now calling wanting to know how to get the fixed revenue up since vehicle sales are so weak. Well, I’d like to tell them that we could come out and run a weekend event, just like sales does, and that would solve the problem, but the reality is that years of neglect require some time to repair.

Where did the customers go?
In all actuality customers are sitting at home, paralyzed by the media like the rest of us, waiting for the next disaster to befall their 401k. If you want them to come in for service and parts, you’re going to have to talk to them and convince them that they still need to service their vehicles, and that you are the best place to have that done. Before you can do that you first need to identify who they are and when they were last in the store. Your DMS can provide this data and I recommend that you begin with any customer that has not been back for six months.

The following common needs should be focused on:

[list:2zmesq2s]• Uninstalled service special orders – if you’ve still got them, get rid of them!
• Repair work that was turned down – hopefully your customers haven’t gone somewhere else yet.
• Scheduled maintenance that is due – it’s cheaper to maintain than repair!
• Recalls that have not been completed – this is free work to the customer and gives you a look at their vehicle.[/list:u:2zmesq2s]
OK, so you’ve tracked down your delinquent customers, now how about new ones? Where can you find new blood? Try the following:

Service clubs in town. There’s no better bonding locally than within these organizations. Offer them preferential service and you’ll attract some new customers. Treat them well, they’ll tell the rest of their members and you’ll get even more of them. Treat them wrong and…let’s not go there.

Used car lots. Yes, I know they’re competitors, but most don’t offer service and leave their buyers to find their own aftersales support. Why shouldn’t it be you?

[list:2zmesq2s]• Offer to do their mechanical recon work for a fair price.

• Check their inventory for recalls on your products.

• Ask to put your service stickers in their vehicles.[/list:u:2zmesq2s]
Check out any large educational institutions in your market. If you’re fortunate enough to have a big university nearby, cultivate the students. I’ll bet if you cruise the parking lots you’ll see plenty of your products with out-of-state tags on them. Ask for their business. So what if the parents pay it. Do you care? Set up bird dogs on campus.

Investigate getting onto major government and industrial sites.

[list:2zmesq2s]• Military posts and bases are excellent sources of business and the vehicles are required to be properly maintained or they cannot be brought onto the premises.

• Major industrial locations can be great sources of new business as they transfer people in and out. Offer pick-up and delivery. You can write up many cars on paper sheets, utilize some part-time drivers to shuttle the cars back to the shop, and then deliver them back at the end of the day. Most stores have electronic cashiering so closing out the tickets is not an issue.[/list:u:2zmesq2s]
Get into the wholesale repair parts business. Even if some customers aren’t coming back to you, they’re going to someone who can purchase and re-sell your parts. Isn’t it better to have the parts business than no business at all?

Before you start pulling the trigger on loyal and productive employees, who rely on you to support themselves and their families, exhaust all efforts to build business back up. If you lose these people they’ll be difficult to replace when business picks up again, and you will have to go through the expense of training their replacements, which is always expensive.
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Jim Richter is a fixed operations consultant and trainer with Net Profit Inc., an international company working with dealers, distributors, and manufacturers. He has spent over 35 years in the automotive and marine industries analyzing and assisting parts and service operations throughout North America. His work experience includes dealerships, field and management positions with major manufacturers, and his own consulting company.