Special order parts (SOP) can be one of the biggest factors contributing to a bogged down parts inventory. Often considered an issue, originating from the service advisor’s acceptance of customer requests, SOP can become everyone’s profitability problem the moment a service call or parts request is terminated.
Worth 40 cents on the dollar
One highly successful parts manager, who manages eight product lines and a $6.2 million inventory, lays it on the line when discussing the danger of SOP with his dealership management, saying: “An uninstalled special order part is only worth 40 cents on the dollar after discounting, carrying costs and commissions.”
The five methods for handling SOPs
Below are five proven methods for managing special order parts before they start to drain your profits:
- For warranty SOP, require both a service manager’s authorization and a scheduled appointment for installation prior to ordering the part. The likelihood of customer pick-up increases exponentially with this procedure.
- For non-warranty SOP, follow the same procedures as above, when applicable, plus require a customer deposit. The deposit helps offset carrying costs should the customer fail to pick up the part.
- If an SOP becomes part of your inventory, evaluate its active parts lifecycle for marketability. If it’s still within the current model year, retain it in inventory for up to 10 months. If not, treat it immediately as aged inventory by discounting it 40 – 50% as part of an integrated parts locator system. Or, turn it over to a broker like with PartsBrokerDirect.
- Bundle SOP with larger parts orders, requiring the buyer to purchase everything. This method works well when bundled with a large variety of parts.
- Eliminate special order crash parts returns with parts ordering technology. Many e-commerce tools offer VIN-scrubbing features that validate part numbers to help ensure a higher level of accuracy and reduced returns.
Special order parts can muddle your clean inventory faster than a leaky oil filter. Therefore, it’s important to make sure you have the right policies and processes in place to keep these parts moving at a profitable pace.