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Five Sure-Fire Ways to Manage Special Order Parts … Before They Age

Five Sure-Fire Ways to Manage Special Order Parts … Before They Age

Special order parts (SOP) can be one of the biggest contributors to bog down a parts inventory.  Often considered a problem borne of service advisors placating customer requests, special order parts 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, managing 8 product lines and a $6.2 million inventory, lays it on the line when discussing the danger of SOP with his dealership management:  “An uninstalled special order part is only worth 40 cents on the dollar after discounting, carrying costs and commissions.”

Five methods

Below are five proven methods for managing special order parts before they start to drain your profits.

  1. 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.
  2. For non-warranty SOP, follow the same above procedures, where applicable, plus require a customer deposit.  The deposit helps offset carrying costs should the customer fail to pick up the part.
  3. Should the SOP become a part of your inventory, evaluate its active parts life cycle for marketability.  If 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.
  4. Bundle SOP with larger parts orders, requiring the buyer to purchase everything.  This method works well when bundled with a large variety of parts.
  5. 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.  So make sure you have the right policies and tools in place to keep these parts moving at a profitable pace.