So, what are some other ways to manage your inventory and generate profit (without adding to your to-do list)? The following offers a few strategies, tips, and tools successful parts managers have taken advantage of to help manage their parts inventory. Check out, and even try, these different approaches to enhancing your inventory strategies, growing your parts business, and creating a stronger customer experience.
Invest in your parts department
Savvy parts managers invest in management or service tools to help parts personnel perform their daily tasks. This next phrase is going to sound a bit tired, but it’s also true: you need to spend money to make money. However, you need to be strategic and invest in parts that move. Parts that sit are less likely to sell and their odds of selling drop the longer they collect dust. The last thing you want in your department is a bunch of idle parts that function as really expensive paperweights or doorstops. That’s just no good. So, identify your historically fast-moving parts and make sure those parts are on your shelves. Of course, you can always tap into your team’s collective parts knowledge to accomplish this goal, but most of the time, this requires investing in a tool to help understand part lifecycles and sales trends. The right tool can help you learn, adjust, and excel – all to help you secure some future sales wins.
Adopt an inventory management tool
Consider this an extension of the previous piece of advice. Many Manufacturer dealerships go this route and add an additional “tool” to their toolbox. Inventory management
systems allow the parts department to optimize their inventory, while also capturing more sales, improving order fill rates, and even lowering inventory costs. It’s possible to invest in a tool that actually helps reduce your overall inventory expenses. The best inventory management tools allow your team to track which parts are moving, so you can make sure to have them on hand, and monitor which ones are, well, not moving, so you can avoid cluttering the inventory with parts that are going to decrease in value and take up space. This is an efficient, data-driven way to make sure you have fast-moving parts available while keeping those that are less likely to sell off the shelves.
Understand your Manufacturer parts programs
With all the Manufacturer programs available for inventory management, it’s more important than ever to grasp these three rules: How much do you need to purchase from your Manufacturer? At what age can you return a part at full cost? What are your loyalty qualifications? You can access all this information through your Manufacturer portal or your Manufacturer rep. Make sure you review – and fully understand – the rules and check for updates. It’s important to avoid leaving any opportunities on the table and one way to help ensure you’re on the right track is to simply understand the parts program rules. This alone can save your department from avoidable losses. While this certainly happens, it’s a pretty silly mistake to make and one that can cost your dealership money. Please consider this tip to be a friendly reminder.
Have a purchasing plan
This tip starts with a “refer to previous tip” and know your Manufacturer parts program. Again, that part seems obvious, but it’s worth noting. So, make sure you understand what you need to purchase from your Manufacturer to stay compliant and calculate this at the beginning of the month and reaffirm mid-month. Once you’re sure you’re in compliance with the Manufacturer program, then you can look for other avenues to purchase fast-moving parts and even increase your profit margin by purchasing parts at a discount. Remember: other dealers do not have the same list of fast-moving parts as you do and there are dealers selling your fast movers at a discounted rate. Find them, have a program that finds them, or use a broker to make the match for you.
Connect with a larger dealer network
Enrolling in a program that provides access to a virtual network of Manufacturer dealers is a popular choice. Some existing programs and solutions are designed to help dealerships buy and sell parts from each other. This will expand your sales territory to help you move parts while also allowing you to find the parts you need from a larger network of dealers. The leading virtual networks provide frequent updates to help ensure accurate inventory numbers while also having millions of parts and thousands of buyers and sellers logging on each day. Overall, it’s a pretty simple equation: When your dealership is part of a larger network, you get access to a larger group of buyers and, when you need a part, you also get to cast a bigger net – all with the assistance of an online tool.
Work with a parts broker
It’s probably unrealistic to think you’ll never have any idle parts hanging around, collecting dust, and taking up space in your parts inventory. It happens. The problem with idle parts is that the challenges with them tend to snowball. They’re already not selling and the longer they don’t sell, the less likely they are to sell, all while they depreciate in value. You’re probably aware, as well, that trying to sell idle parts is a time-consuming process, which is especially costly when you could be selling fast-moving parts. This is why a broker can be helpful. A parts broker can remove the burden of selling those resource-draining idle parts by working to match them with buyers who are looking to purchase those specific parts. You know you want to avoid having too many parts that are just collecting dust and working with a broker to help you move them is a good option, especially since you certainly want to spend your time focusing on fast-moving parts (i.e., making money).
Be smart, savvy, and successful
If you’re looking to make your job a little easier and make the parts department run smoother, there’s good news: you don’t have to reinvent the wheel or spend your nights and weekends selling parts on eBay (unless you want to, of course). First, there are the good practices, like understanding how your parts program works and what you need to do – or not do – to remain compliant and avoid preventable mistakes. Then, the next step is investing in tools that are proven to be successful and can help you and your team optimize your inventory and generate sales. In a lot of ways, it’s about making the right decisions and following the best practices to put your parts department in the best position to be successful. At the end of the day, you want to make sure that your parts team is held up as a shining example of success at the dealership, one that actively and consistently contributes to the overall growth of the business.