Fixed Ops Journal - August 2017 - 36

FIXED OPS JOURNAL

PARTS PRECISION

 Growing parts numbers, return rules demand careful order planning

J

ALEX KWANTEN
foj@autonews.com

ust five years ago, Stephen Snow recalls, Ford's F-series pickups offered
three choices of batteries. Today, says
the parts director at Northstar FordLincoln in Fort McMurray, Alberta, "you're
looking at six, based on what the option packages are."
The F series, bristling with technology, has a
wide array of options. But it isn't an exception:
Since 2012, estimates Michael Czach, the
global strategy and planning manager of Ford
Motor Co.'s customer service division, the
automaker's parts numbers have increased by
15 to 20 percent.
Ford isn't alone. Even as automakers generally seek to limit their parts numbers, many
have grown anyway. As factories also toughen
their rules for returning parts, dealerships
must plan their orders ever more carefully to
prevent expensive bloat in their inventories,
especially for special-order parts.
Several factors account for the increase in
parts numbers, car company officials and
dealers agree. These include the need for new
powertrains and lighter parts to help automakers meet federal fuel economy rules,
which President Donald Trump has vowed to
roll back. Consumer technology also is a major driver of growing parts numbers.
Most automakers have stocking programs
for the parts that dealerships need most frequently. They keep track of the most demanded parts from logged orders and even lost
sales among dealerships.
In-house stocking programs include Fiat
Chrysler Automobiles' Automatic Replenishment Ordering system, Ford's Top 300 and
PartsEye - a third-party vendor that manages
parts stocking for Nissan, Kia and Subaru.
Most of these systems allow free returns of
unused parts that automakers have recommended. Others tie parts returns and stocking
levels to bonus cash and traditional - if decreasing - return allowances.

Special consideration
Special-order parts that generally are not
needed in large volumes fall outside recommended stock. Some automakers permit returns of these parts only through prescribed
PAGE 36

AUGUST 2017

The Driver's Village dealership
group in Syracuse, N.Y., takes
steps to limit its purchases
of special-order parts.

Tracking the parts
Rick Heronime of Dealership CSI,
a parts and service consulting firm,
offers these guidelines to limit
special-order parts risk.
 Hold staff accountable for special
orders.
 Don't order special parts on spec;
seek to ensure in advance they'll be
used.
 Record lost sales to gauge actual
demand.
 Make customers accountable for
parts ordered on their behalf.
allowances or reimbursements for scrappage.
Many specialized and costly collision, interior and electronic parts fall into this category.
Special-order parts can account for 20 percent
or more of a dealership's monthly parts sales,
says Jim Richter, a fixed operations consultant
with M5 Management Services Inc. in Pelham, Ala.
But they also create financial risks for parts
managers, Richter notes, because dealerships
must pay for such parts upfront.
This year, Nissan North America reduced
from 7 percent to 2 percent its return allowance
for special-order parts, as a share of the monthly dollar value of parts a dealership orders.
That policy change "means we need to be

very astute businessmen," says Don Schick,
parts director for Driver's Village dealership
group in Syracuse, N.Y., which sells 21 brands.
Northstar Ford's Snow says he instructs his
employees to log every lost sale in the dealership management system when they look up a
part, even if a sale is unlikely because of cost
or customer distance.
Just one or two calls for a part may indicate
demand, informing the parts department's
stocking forecasts and determining whether a
part is needed. Such information helps Snow
decide what to order and stock, he says.
"Those lost sales are building hits," Snow
says. "They're calculating data for us."
Rick Heronime, COO of Dealership CSI, a
parts and service consulting firm in Rancho
Santa Margarita, Calif., notes that dealership
management systems "have a great special-order management function built into
them, if we use it properly." But many parts
departments don't train counter workers in
these features, he says.

Customer commitment
Driver's Village operates a large collision
center that buys parts wholesale. A replacement quarter panel is an expensive part that
could consume a big chunk of a dealership's
return allowance.
After several quarter panels were returned
see PARTS, Page 37



Table of Contents for the Digital Edition of Fixed Ops Journal - August 2017

Fixed Ops Journal - August 2017
Contents
Need a lift
Tire track
Mobility devices
Times to recall
Slick trick
Fatal fire
Players club
Online parts
Lean inventory
Loyalty test
Patent pending
Open minded
Editor’s Letter
Service Counter
Legal Lane
Richard Truett
Feedback
Five Minutes With
Letters
Fixed in Time
Fixed Ops Journal - August 2017 - Intro
Fixed Ops Journal - August 2017 - Fixed Ops Journal - August 2017
Fixed Ops Journal - August 2017 - Cover2
Fixed Ops Journal - August 2017 - Contents
Fixed Ops Journal - August 2017 - Editor’s Letter
Fixed Ops Journal - August 2017 - 5
Fixed Ops Journal - August 2017 - Service Counter
Fixed Ops Journal - August 2017 - 7
Fixed Ops Journal - August 2017 - Legal Lane
Fixed Ops Journal - August 2017 - 9
Fixed Ops Journal - August 2017 - 10
Fixed Ops Journal - August 2017 - Need a lift
Fixed Ops Journal - August 2017 - Tire track
Fixed Ops Journal - August 2017 - 13
Fixed Ops Journal - August 2017 - 14
Fixed Ops Journal - August 2017 - 15
Fixed Ops Journal - August 2017 - 16
Fixed Ops Journal - August 2017 - 17
Fixed Ops Journal - August 2017 - Mobility devices
Fixed Ops Journal - August 2017 - 19
Fixed Ops Journal - August 2017 - 20
Fixed Ops Journal - August 2017 - 21
Fixed Ops Journal - August 2017 - 22
Fixed Ops Journal - August 2017 - 23
Fixed Ops Journal - August 2017 - Times to recall
Fixed Ops Journal - August 2017 - 25
Fixed Ops Journal - August 2017 - 26
Fixed Ops Journal - August 2017 - 27
Fixed Ops Journal - August 2017 - Slick trick
Fixed Ops Journal - August 2017 - 29
Fixed Ops Journal - August 2017 - Fatal fire
Fixed Ops Journal - August 2017 - Richard Truett
Fixed Ops Journal - August 2017 - Players club
Fixed Ops Journal - August 2017 - 33
Fixed Ops Journal - August 2017 - Online parts
Fixed Ops Journal - August 2017 - 35
Fixed Ops Journal - August 2017 - Lean inventory
Fixed Ops Journal - August 2017 - 37
Fixed Ops Journal - August 2017 - Loyalty test
Fixed Ops Journal - August 2017 - 39
Fixed Ops Journal - August 2017 - Patent pending
Fixed Ops Journal - August 2017 - 41
Fixed Ops Journal - August 2017 - Feedback
Fixed Ops Journal - August 2017 - Open minded
Fixed Ops Journal - August 2017 - Five Minutes With
Fixed Ops Journal - August 2017 - Letters
Fixed Ops Journal - August 2017 - Fixed in Time
Fixed Ops Journal - August 2017 - Cover3
Fixed Ops Journal - August 2017 - Cover4
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