Parts Department Self Assessment

Jim NewsletterDealer Executive,

Observe your Parts Operations in the following areas and honestly rate your dealership on each key performance item based on the criteria listed below. All of these criteria are key operating characteristics of the highest performing dealerships in our client base.

Do you track the Productivity of your parts staff on a daily basis?

YES

NO

Productivity for parts people is measured just like it is for ASM’s, i.e. Sales and GP$$ for the time worked (Daily/Weekly/Monthly.) If you don’t track it then how do you know who’s contributing and who’s not?

 

   

Do you track Retail Shop and Counter GP% on a daily basis?

YES

NO

Shop and Counter GP% are the most controllable of all the parts sales types and the most subject to discounting. It should be tracked daily compared to the objective and those transactions that are low should be investigated ASAP!

 

   

Were the Retail Shop and Counter GP% greater than 40% last month?

YES

NO

If NO, what were they last month?

Retail Shop _____%

Counter _____%

Years ago 40% was the industry standard that all OEM’s priced MSRP at. Today that is no longer true and the dealer needs to control pricing to achieve, or exceed, their Objectives. If you don’t know, then you need to start. You find this on the Gross Profit Analysis of the Financial Statement, or in the DOC, or DMS reports.

 

   

Do your Parts Advisors handle telephone inquiries promptly?

YES

NO

Who takes these calls? If it’s the Shop Counter in a smaller store, are the techs paying the price of waiting for the call to end? Or is the caller waiting for the tech to be done? Neither is a good situation.

 

   

Do your Parts Advisors collect an e-mail address from every customer?

YES

NO

This goes hand-in-hand with Quote Management. If you don’t have a good way to get back to the customer you lose the opportunity, and e-mail is the latest and greatest right now.

 

   

Do you have a Written Pricing Policy that outlines authority to discount?

YES

NO

If you have low GP% in Shop or Retail Sales it is usually due to discounting. Coupons are OK, but when someone challenges a price, and the parts people offer a discount, there needs to be guidelines and defaults they cannot exceed without management approval.

 

   

Do you utilize current, sales weighted, price averaged parts pricing for Service Menus and Market Competitive parts?

YES

NO

One of the easiest ways to control GP% is to Price Average like groups of parts. This takes out the variable of quoting from the counter people, and in some cases makes formerly expensive parts more affordable at the expense of those that were cheap. In the end everyone wins.

 

   

Is your Inventory Obsolescence less than 15% of the investment?

YES

NO

Obsolescence for this question is parts that are 12 or more Months No Sale, 3 or more Months No Receipt, with Quantity on Hand and not protected by the OEM. 15% is actually too high for most dealers to handle since the return options from most OEM’s today will not cover this, leading to Brokering and Distressed Sales.

 

   

Does your Parts Manager and Controller perform a Monthly Inventory Reconciliation?

YES

NO

This is the Month End exercise of comparing the Adjusted Physical Parts Inventory to the General Ledger value of that same inventory.

If YES, what was the Variance last month?

 

________%

Since both the Physical Inventory and the GL are constantly in motion with transactions happening constantly, it is very difficult to get them to absolutely match outside of a Physical Inventory Count. Therefore the industry standard is +/- 5%, at which point it is assumed that they are close enough not to warrant a full Physical Inventory. If they aren’t then it may be necessary.

 

   

What was the Parts GP$$ per parts employee last month?

 

$________

One of the questions that always come up is “How many people” should be in the parts department? One good indicator is GP$$ per employee, but it will vary depending on how big the store is, are they active in Wholesale, do they have a Collision Center, and what the product line is. In the end you still need to look at the work being done and is it being done correctly and on a timely basis (see the above.)

This exercise is designed to have the Dealer Executive looking into the basics of good management in their Parts Operations. It is by no means a complete analysis, but it is meant to stimulate questions and draw attention to areas that are not usually on their radar.

 

 

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