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By Lorraine Barnes
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It's
no secret that the costs and delays associated with buying parts and maintaining
parts inventory can cost dealerships a bundle of money each year-not to
mention a lot of frustration. Slow and expensive processes keep many parts
departments from earning the profits they're capable of achieving.
Yet
with the tools that are available today, not only can most of these obstacles
be eliminated, but parts departments can take advantage of exciting new
ways to market their inventory and increase sales volumes. By replacing
outdated systems, many dealerships are finding that it isn't so hard to
manage inventory efficiently, expand inventory exposure, and make way
for higher profits.
Getting
connected to the parts marketplace.
The PartsVoiceŽ parts locator is the hub technology for buying and selling
parts efficiently. Using either the Internet or the telephone, parts staff
simply type in a part number to immediately find out which dealerships
are currently stocking the part anywhere in the country. Nearly 30,000
buyers search the PartsVoice parts locator each month, and many of those
users rely on it repeatedly throughout their work day.
"I
couldn't tell you how often we use it. Hundreds of times a day," says
Rick Monteiro, parts manager at Jack Powell Chrysler Dodge in Escondido,
CA, and current president of the Mopar Master Guild. "Everything we're
out of that we have a chance to sell, the first thing we do is look at
the locator to see if we can get it from somebody else to make that sale
the same day."
Finding
an out-of-stock part to make a timely sale has a whole host of benefits
for the parts department's bottom line. From earning satisfied customers
who get back on the road more quickly to avoiding rental car bills, it
can stop the snowballing expenses of waiting for a part to arrive. "Being
able to hook up to other dealerships makes a really big difference," says
Connie King, parts manager at Peterson Autoplex in Boise, ID. "It's just
more convenient and it's more profitable."
Making
obsolescence obsolete.
Parts managers are also finding that parts locator tools can help them
sell off obsolete parts, with a dramatic effect on sales volumes and profits.
Joe Hatcher, parts manager at Fowler Toyota in Dallas, TX, uses the PartsVoiceŽ
Discount Parts Center to set an automatic discount for any parts in his
inventory over 12 months. Buyers get a good deal on the parts, and Hatcher
frees up capital that can be put to better use.
"If
you can get rid of the sludge that's dirtying up your inventory, you can
concentrate on parts that actually sell, and that's what you want to tie
your money up in," Hatcher says, "not something that's going to sit on
the shelf for a year." The 40 percent obsolescence he inherited when he
joined the dealership is now at zero percent.
Several
years ago, King faced a similar figure of 35 to 40 percent obsolescence
in her inventory. "Now I'm sitting on about one percent of my total inventory
of $1.3 million," she reports, "and it all has to do with the technology."
Moving more inventory has paved the way for much higher sales volumes.
"Five years ago, we were doing about $3 million [annually]. Now we've
hit over $6 million."
Stocking
on sale.
On the flipside of this coin are the parts managers who are making big
profits buying discounted parts. At Bill Pierre Ford in Seattle, WA, Parts
Manager Bud Guyette brought in $400,000 in additional parts profits for
the dealership last year using the PartsVoiceŽ Idle Stock Relocator.
By
carefully cross-checking the parts he knows will sell with the buying
criteria he sets on the Idle Stock Relocator, he's able to acquire many
of the parts he needs at half price. "It's like its own little profit
center," Guyette says.
Better
data, better inventory.
As more and more dealerships start using these tools, there are a lot
of benefits that come with the better data that is available. Rick Monteiro
uses the locator to qualify phase-in stocking parts by checking his sales
versus the competitors in his geographical area.
At
the manufacturer level, more accurate data means better forecasting. "We
can see what the dealerships are actually moving out there," says Willi
Muehlbacher, parts logistics/training specialist at Volkswagen of America.
"That way we can better forecast our inventories on a big scale and get
the right parts to the right people at the right time."
Open
for business anywhere.
Rick Monteiro in California points out that being listed on the parts
locator opens up a new world of sales opportunities. In one example, he
recalls selling an exhaust manifold at retail to a woman who was traveling
in Vermont. It was a discontinued item and "we had the last one in captivity,"
Monteiro says. After finding it on the locator and having it shipped and
installed, the customer called to thank Monteiro.
"It
made us feel good that we were able to help her and still make a nice
profit," he says. "And we got rid of something that could be interpreted
one of two ways. Some people might treat a discontinued item like that
as obsolescence, but we knew it was the last one. We treated it as treasure."
Bud
Guyette even sells parts to a company in Guam serving Andersen Air Force
Base. "There's a lot of distance between Guam and us," Guyette remarks,
"but we've got everything on the Internet so they can find us through
our website." To add broader appeal and drive more business with his website,
Guyette recently installed Parts Counter Express which lets online customers
search his inventory by simply entering their vehicle information.
Online
and in the money.
In fact, the Internet is providing enterprising parts managers with a
whole new channel for boosting revenue. Joe Hatcher is bringing in approximately
$50,000 a year in mostly retail sales on his toyotapartswholesale.com
site, and he believes "there's still a lot more we can do to enhance that."
He's taken a creative approach with the site, where online customers can
use a parts locator to search his inventory directly, check out detailed
specials, and submit email questions to a technician.
At
Peterson Autoplex, Connie King is using online photos to draw more customers
into her retail store. King has found that putting merchandise photos
and prices online drives foot traffic like no other medium. "If people
can see what you have, they'll turn around and come into the store," she
explains. Starting with "maybe a thousand or two" in monthly sales, the
retail store is now making around $30,000 a month.
Peterson
has also branched out in other creative ways to promote their parts and
service departments online. The dealership is sponsoring a sports contest
on a popular local TV station website and offering a $1000 certificate
for parts or service at the dealership. "We're getting around 200,000
views, or about 7.9 cents per hit," according to Marketing Manager Sharon
Payne. The site links to the dealership's website specials and, says Payne,
helps gain more exposure for the parts and service departments at a minimum
cost by aligning them with a well-established Internet presence.
Whether
it's getting a part to a waiting customer or connecting with customers
in new ways, parts technology is giving dealerships the tools they need
to give customers the service they expect. As Joe Hatcher explains, "It
all ties into customer satisfaction. Anything that helps you maintain
customer satisfaction and increase your sales nowadays is a good benefit."
Lorraine
Barnes is a writer for The Cobalt Group.
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