June 08 FOM - Fixed Ops

Parts Department
Selling Parts for a
Loss Can Help You
Make More Money!
By Jeff Painter
urn! Turn! Turn! (To
TEverything, There is a Season)
is a folk song written by Pete
Seeger and first recorded in
1962. Turn! Turn! Turn!
should be the theme song of each and
every parts manager.
Industry experts estimate that there is
perhaps two billion dollars of idle parts
inventory sitting on shelves in dealerships
across the country. That’s
Billion, with a capital B. Two billion
dollars in inventory that isn’t turning.
If you are like thousands of
other dealers, you have
some idle inventory that
is not turning and thus is failing to
produce profitable sales for you and is
actually costing you money the longer
it gathers dust on your shelves.
Insurance, taxes, physical inventory
costs—even the cost of the money
invested in those parts—all add up to
hard costs that the dealer incurs for
this non-productive inventory. Just
about everyone understands these
costs but we sometimes lose sight of
less visible costs: decreased technician
productivity from lower off-the-shelf
fill rate, lost sales, higher parts acquisitions
costs and lost manufacturer stock
order incentives. And the biggest cost
of all: unrealized sales / gross profit
opportunities.
OK - so you have some idle parts and
you know it is costing you money; what
can you do to address the problem
Continued on p. 52
June 2008
Fixed Ops Magazine p. 51