OEC Blog

Top 5 Things Successful Parts Managers Do To Manage Parts Inventory

Top 5 Things Successful Parts Managers Do To Manage Parts Inventory

As I’m sure you are aware, the parts department contributes to a large amount of a dealership’s profitability.  The parts business alone is $50+ billion industry, according to NADA! What do the successful parts managers do to maintain that trajectory?   With consumers keeping their vehicles longer, it is more important than ever to install OE parts and manage parts inventory with accuracy to keep your customers happy with quick turnaround!

The question is, how do you manage?

There is not enough time in the day to add another priority to your already long list of to-do’s.  To try to help, we have compiled the top 5 things successful parts managers do to keep inventory at a manageable level.

1. Understand your OEM programs

With all of the OEM programs available to parts managers surrounding inventory management, it’s more important than ever to grasp these specific rules.

  • How much do you need to purchase from your OEM?
  • At what age can you return a part at full cost?
  • What are your loyalty qualifications?

All of this information can be accessed through your OEM portal or through OEM Representatives.  Download the rules, make sure you understand and check it for updates.  You never want to leave an opportunity on the table.

2. Manage your obsolescence

Successful parts managers know exactly what inventory they stock, how old it is, and how it sells.  This is where knowing your OEM program can help.  Most have a certain time line you need to follow in order to qualify a part’s return eligibility.  If OEM programs are not available, a manager has the understanding of discounting and part life cycle.  Whether you have an OEM program that manages inventory or you use a brokering agency/discounting tools, the secret to success is to know at which point the part MUST GO.

3. Invest in your parts department

I know this sounds old fashioned, but you need to spend money to make money. You need to invest in parts that turn.  Each part that sits on its shelf for 12 months or longer has a 5% chance of ever selling in your market.  Not great odds! Great parts managers invest in management/service tools to help maintain consistent inventory turns.  Define your fast-moving parts, and utilize every option you can to make sure those are the parts that are on your shelves.  Most of the time, this will require an investment into a tool.  Or it requires you to understand a parts life cycle and have awareness that there will come a time that you may have to take a loss in order to open up options for a future win.

4. Have a purchasing plan

Again know your OEM program.  Make sure you know what, and how much you have to  purchase from your OEM to stay compliant.  Most calculate this at the beginning of the month and reaffirm mid-month.  Once they are compliant they begin to look for other avenues when it comes to purchasing fast-moving parts.  There is nothing smarter than increasing your profit margin by purchasing at a discount. The successful parts manager knows that all dealers do not share the same list of fast-moving parts and that there are dealers out there selling your fast movers at a discount.  Find them, have a program that finds them, or use a broker to make the match.  The key is to have a plan when it comes to purchasing and profit margins.

5. Embrace change

This is perhaps the hardest one of all.  Change is not easy, and sometimes it’s downright ugly!  Every successful parts manager adapts to industry change.  Utilize what you know, learn what you don’t and take advantage of everything that’s now available.  The world continues to evolve when it comes to networking/marketing.  Embrace new technology and service solutions while continuing to develop your team and your department.

Never too late

It is never too late to step up your game and take charge of your department. This is not a business for the timid, and you have proven that just by doing what you do, day in and day out. So take the next step and manage the biggest asset of the dealership with speed and profit in mind.