|This is Part 2 in a two-part article. Continued from last week (Part 1).
This is a tool to log demand for a part that you do not have on hand when a customer needs it. It serves the same value as Traffic Control in Sales, helping the store to develop an inventory that matches customer needs. This is one of the most underutilized tools I see in almost every dealership I visit for the first time. Every person who sells parts has at least two opportunities or more daily to post a Lost Sale, especially if they are selling to Wholesale customers.
This is the monthly exercise of matching the value of the Physical Inventory (PAD) to the General Ledger (GL.) This is no different than Floorplan Checks and I’m constantly amazed at how many stores do not perform this basic check and balance. Adjustments are made to the PAD to account for Work In Process, which is equivalent to Contracts In Transit, Returns and Credits Pending; Cores which are not in the PAD but are in the GL; and Appreciation and Depreciation, since the manufacturers change some prices every month, and as soon as the update is run the PAD value changes, but not the GL, unless you report it and make the appropriate adjustments.
Daily Perpetual Inventory (DPI)
This is the procedure that counts all of the Investment 3 or 4 times annually, but on a daily basis just like your Lot Counts. It is designed to achieve 2 objectives:
Just like in Variable Operations you have to have enough people in place at any time to process the current business demands, as well as develop growth for the dealership. All too often we simply count heads without taking into account the portion of their time that they are available to perform their duties.
This term refers to days that a staff member is on hand during a work year. Elements that figure into it are:
Hours in a Day
What constitutes a day in your store? Most dealerships are open 10 to 12 hours in Fixed Operations, some even longer. Things to take into consideration for coverage are:
There are a lot of details involved in managing a profitable Parts Operations beyond just selling parts and controlling Gross profits, and I hope this has raised some questions in the minds of Dealer Executives as to what else they need to be aware of. There are many solutions and one size never fits all.