I continue to see parts departments ordering parts in package quantities without first checking their dealer management system (DMS) to see if another company location might have that part.
While checking the DMS may be more time consuming, if you’re going to use your inventories to the fullest it’s necessary to enforce the practice of looking for a part company-wide before ordering.
I would like to challenge parts managers to walk your bins and look for open packages. When you find an open package, write down that part number and do this for 25 parts. Then go to your DMS, enter the part numbers and see how long it has been since the last sale of that part number. Then next to each part number note how many months have passed since the last sales date.
Now comes the fun part. Look at your company-wide DMS and for each part find out if another company location has the part. If so, note which locations have it. Also note which locations have a partial package. Some systems will allow you to look at the history of that part in the other locations. If you can’t view this, call them and ask them these questions:
- How long have you had that part?
- Would you have sold it at cost to get rid of it?
- Would you have paid the freight charge or split it with me?
I tell dealers that if they get a call from a sister location looking for a part and you have a a partial package always say “yes” to last two questions. Most manufacturers won’t take back open packages so you’re going to be stuck with it regardless, especially if it is a slow moving or idle inventory part number.
If you really want to torture yourself look at your notes again and add up all the locations that had a partial package. In the example below, on the first part number listed, there were four locations plus mine that had a partial package, for a total of five. Here is what my sheet looked like:
As you can see low inventory dollar amounts it can really add up. I would challenge you to look at each of your locations and see how much your less-than-full package quantity parts add up to and then set a process to begin thinning this inventory out. Review whether you’re stocking a slow moving or idle part that a sister store is selling on a continuous basis and transfer it to their location so they can help liquidate the inventory.
Make sure you recognize that these less-than-full packages are adding up to a large amount of idle capital. I hope this idea sparks some conversation inside your department or dealership.
I have seen partial packages add up to more than 7 percent of a parts department’s total idle capital. Make it a habit to search the inventories of your company-owned stores first before ordering from your manufacturer.