Goals

As I have stated before, I wish to consult for automotive dealers who need help in their parts departments.  I have 30 years of experience as a parts manager in dealerships.  This will be the first of several articles that I plan to post over the next few months.  My contact information is:  pratt.ken@gmail.com or 253-561-3698.

Have short and long-range objectives been established?  Is there a prioritized plan to achieve them?  Does everyone know they’re part in contributing to the end product? 

Goal setting is a powerful process to helps members of your team realize what and how they contribute to the overall success and profitability of your organization.  Properly thought out they act as the road map to the future of your operations.  The parts department depends on other departments as well as themselves to attain objectives and goals.  Likewise, the service department depends on the parts department to manage many facets their operations.

For example, a service manager sets a goal of reducing the amount of time that technicians spend at the back counter obtaining parts in order to increase his shop efficiency and thus increase his gross income as well as profit.  But he doesn’t tell the parts department.  This will be a classic failure.

Everyone involved in the back counter transaction must be aware of the goal.

Each goal needs a specific, measureable, attainable, relevant, time-bound, (SMART).  Study the process as it is and then decide how much you want to change it and set a timeline.  For example:

If we reduce the wait time for technicians by 30% by the end of April 2015, parts and service personnel will receive _______________.

We will reduce the wait times for technicians by 30% by the end of April.

First of all, they are specific and definitely measurable if you did your proper research before setting the goal.  I don’t think anyone will disagree that they are attainable.  They have a deadline and one of them offers something relevant to the personnel involved.

Now, by telling everyone involved what the goal is and helping to train them in ways to meet the goal we actually can obtain a 30% reduction by April 2015.  Once processes are in place employees will become accustom to it and with guidance it will be come second nature and employees will look for ways to bring about change.

There are many ways to change processes for the better and goals is just one of them.

I’ll discuss setting financial goals next time

Ever Move A Parts Department

Until this past year, I had never moved a parts department.  While we didn't move across the city, moving from an upstairs location to a temporary location downstairs and then back up to a newly remodeled area six months later, isn't easy.
As a dealer, be sure to include your parts manager and his staff in the process.  Listen and understand their needs with relation to the new facilities.  If you can meet their needs, do it.  If not, let them know.
As a parts manager, make sure you have a plan of attack and a big enough crew to get the work done.  Hire some extra help to move and assemble bins and use the parts personnel to stock and locate the parts.  Make sure your voice is heard.
Otherwise be prepared for more tension than you can imagine.

Financials

The parts manager of the dealership today is managing an average parts inventory that approaches $300, 000.  Some manage more while others manage less.  In order for a manager to manage his department he must have available to him, all the tools necessary to ensure a good return on your investment.

Dealers closely monitor the purchase of used and new cars while scrutinizing the expenses of the dealership.  But how often does a dealer look at the parts manager or the purchases made by this department.  A dealer that hands a parts manager a blank check (Purchase Orders) at the beginning of the year, should keep a very close eye on what that manager is doing with that blank check.

Additionally, a dealer asking a parts manager to manage and give a good return on investment has got to give that manager the tools to succeed.  One such tool is access to the financials as it pertains to the managers department.  All of the tools.

You wouldn't want to fly with a pilot that had no instruction manual.  Why would you point a parts manager fly and not give him the tools to succeed?

The Beginning Continued

Another post today for a couple of reasons, one being the need to create more posts so the blog gets hits when folks do searches looking for the information that this blog is here to address.

And the other to continue with the discussion of Obsolescence.  If you read the first blog I suspect, yes even hope, that you got the end of month report and took a look at the numbers for your dealership.  I said anything over 12 months is obsolete and that is true, but increasingly there is another school of thought that states:

              Anything in inventory over 9 months with no sale is obsolete.

So if a part doesn't have a sale between 7 - 12 months it is considered obsolete with a 75% chance of never selling.  Mike Nichols and some of the other inventory gurus now believe that there should be 0% of inventory value in the over 12 month category and less than 2% within the 7 - 12 month category.

I think this may be a little tight but it is totally doable within the manufacturers terms of trade.

How does your inventory compare to these numbers?

The Beginning

My name is Kenneth Pratt and I am a soon to retire Automotive Parts Manager with extensive inventory experience and with this first blog post I am hoping to start my traveling consulting business.  My wife and I plan to travel throughout the U.S.A. over the next few years and I would like to offer my experience to any Auto Dealers that have issues with their fixed ops departments, especially as it relates to the Parts Department.

In the past few years I have worked for one dealership in the Pacific Northwest.  I have been very blessed to have an owner who has afforded me the opportunity to step outside my Parts Manager job description and be involve in asset purchasing (additional dealerships), complete financial statement disclosure, access to all relative prompts in Reynolds and Reynolds for accounting, safety and hazmat policies and training and orientation just to name a few.  I have learn a great deal and can decipher a financial statement involving most manufacturers.  I have been with my current employer since 1998 with a three year absence.

I have been a Parts Manager for several manufacturers:  Volkswagen, Subaru, Chevrolet, Nissan, and Toyota.

It has been my experience that a lot of Dealer Principals may not always understand the parts business and how much it can effect the bottom line of the total dealership. Obsolescence can be a big hit to the bottom line of a dealership.

What is Obsolescence?  In a nutshell, it is any part in your inventory over 12 months with no sale.  You have had this part on the shelf for more than a year and no one has purchased any of them.  Less than 10% of your total inventory value should be represented by these items.   Thus, a $200,000 inventory should have no more that $20,000 in this group of aged items.  Ideally you would have less that 5% of your total inventory value in the group and there should be a plan for disposal of these items.

Do you know the value of your obsolete items verses your total inventory dollar value?  It maybe time to look at your Parts Managers end of the month report.

If you want to know more I have references available and I will gladly look at one end of the month report and tell you what I see for FREE.  I will be working on a flat rate fee when I start to travel.  Please feel free to leave a comment on the blog.  My phone number is 253-561-3698.  My email address is HaveTrailerWillTravel9@gmail.com