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How to Manage using the month end summary
The month end summary report contains some
valuable information that needs to be reviewed and
understood by management. This report is printed at
the end of every month and generally given to the
parts manager. The report provides a lot of
information however today we will look at some key
data that should be used as a tool to monitor the
health of the parts department. First check the aged
inventory section. Aged inventory in my view is
anything in stock over seven months without a sale.
Add the dollars up as well as the percentages. A
good guide is to be under 18% of inventory
investment that is aged. Twelve months and older
should be under 10 percent of inventory value. Use
this as a tool to understand where your investment is
and manage this number down using some other tools
in this newsletter.
Find out more....
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Greetings!
If your new or used car inventory was over 50% aged
7 months without a sale it would be a major concern
yet most dealerships have this condition in their parts
department and are not even aware of it. This month
let's look at ways to control and manage our parts
inventory investment.
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| Lost sales tracking |
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The month end summary will also report lost sale
tracking. Without good lost sales tracking and
aggressive phase in settings your inventory
investment will be on a steady slide down the aged
pipeline. A good definition of a lost sale is any time
the company loses technician time, gross profit by
picking up a part, or return reserve. The more we pull
from our inventory the better return reserves we will
have. This practice will also improve gross profit as a
percentage of sales. Emergency purchases are a
bottomless pit sucking the gross and time from our
parts department. Lost sales should be in the
hundreds every month.
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Read on... |
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| Phase in and out settings |
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Aggressive phase in and out settings will keep your
inventory fresh and have other dealerships feeding
their gross profit and return reserves to your
company. I recommend phase in set at three
movements and phase out after six months without a
sale. These settings combined with proper lost sales
tracking will improve every area of the parts
department. Set the computer correctly and let it
work for the team to keep your inventory fresh and
improve fill rate to your technicians. The goal should
be to have a 90% fill rate to service. Body shops fill
rate should not be tracked as lost sales items.
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Read on... |
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