How To Earn More Money In Your Parts Department
Photo © by swanksalot
Every owner knows that managing parts can be an incredible headache. You can have literally thousands of parts stocked, but if they’re the wrong ones then they’re not going to move. And then you’re left with a ton of cash tied up in something that’s just sitting on the shelf.
The good news here is that there are several strategies you can use to make sure that your parts department earns you money consistently.
Strategy #1: Identify Your Biggest Customer
Many dealers make the mistake of thinking that when it comes to parts, their biggest customers are the commercial accounts or individuals that walk through the door. But, this is almost always wrong.
Why?
Because the customer buying the most parts from you is your own service department.
Successful dealerships recognize this, and they earn more simply by structuring their parts department to fit the needs of their service department. Service departments, when run well, can really add to the profitability of a dealership. Your goal should be to make sure the service department has the parts they need on-hand so shop efficiency is improved.
Strategy #2: Don’t Try To Stock Everything
Many dealers try to keep everything they can in stock for when customers walk through the door. Some even strive to have parts on-hand for equipment that’s 30 or 40 years old!
What’s wrong with this?
Well, doing this means you’re trying up money and shelf space on parts that very few, if any, customers will ever come looking for. Even manufacturers don’t have a fill rate of 100%. So why should you?
Focus on the parts your shop needs first, and then on the parts that your customers come looking for most. You can track this information with quality OPE office management software, and this can really take the headache out of looking for this data.
Strategy #3: Create A Reliable Stocking Point
So how do you know which parts you should be stocking? Successful dealerships make it a rule not to keep a part on-hand unless three customers come looking for it within a 70-day period.
This information can be almost impossible to track without good OPE office management software. Your software can record this as a “lost sale” every time a customer comes asking for it, which will allow you to see what people are looking for and which opportunities you’re missing to add revenue to your dealership.
It’s important to stick to the formula of three customers within 70-days. When someone needs a part, many dealers will place an order and then add an extra part on to keep on-hand. But this is how a parts department gets bloated, tying up more revenue and shelf space than it needs to.
Sticking to the guideline of three customers within 70-days will ensure that your department doesn’t get out of control with parts people just aren’t looking for.
Although managing parts can be challenging, using smart strategies and having good OPE office management software can make all the difference.
outdoor power equipment software, Shop Management | 
May 3, 2010 9:32 am
