OPTIMIZE YOUR INVENTORY. A guide to organizing your parts inventory sources.

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1 OPTIMIZE YOUR INVENTORY A guide to organizing your parts inventory sources.

2 What is included in a Source - Pricing - Master Pricing - Escalator - Matrix - Phase In Criteria - Sale Accounts - Economic Order Settings - Phase Out Criteria - Source Accounting - Days Supply - Price Code Adjustments 2

3 Think of each Source like a File Cabinet with Folders What you have for sale Captive Parts Competitive Parts Accessory Parts What you need to stock Special Order Parts Non-Stock Test Parts What you need to get rid of Forced Stock Parts Obsolete Parts

4 Exercise: Important Folders Checklist Captive Parts Value Competitive Parts Value Accessory Parts Value Special Order Parts Value Forced Stock Parts Value Obsolete Parts Value Total Inventory Value

5 Captive - Manufacturer Specific. Other Dealerships are your competition OE Specific Parts - Escalated Pricing - Reviewed daily for Stock Order Replenishment Source by Movement - Reduce Excess Depth - Different Days Supply Settings to control depth

6 Competitive Competitive/ Fast Moving Maintenance Parts - NOT Manufacturer specific. Every Parts Supplier is your competition - Sold at Suggested Retail - Sold at a Fixed or Family Menu Price - Typically sell the most of all parts groups Create Multiple Sources - Different Part Groups (oil filters, air filters, brake pads) - Source by Movement to control depth - Pricing Strategies

7 Accessories - NOT Typically Manufacturer Captive Accessory Parts - True Impulse Retail Product - Usually Sold at Suggested Retail - Model specific, date specific Getting Creative - Create Multiple Sources for Movement - A Source for Special Pricing - A Source for Idle Accessories

8 Special Orders - In stock for a Specific Customer Special Order Parts - Not usually stocked yet - Waiting for more demand to phase in - Isolating Special Orders for Customer Contact - Easy to create Aging reports

9 Non Stock Non Stock Test Parts - Parts that have had some sort of demand - Waiting for more demand to meet phase in criteria What do you do if a part meets your phase in criteria and you don t want to stock it? - Using multiple Phase In Sources is critical to allowing actual customer demand to dictate stockable parts! - What is your Standard Phase In Criteria?

10 Non Stock Phase in Process How to build Width into your Inventory! #1 Default Source Phase in 3 in 9 #3 Phase in Source 5 in 9 #5 Never Stock Source #2 Phase in Source 4 in 9 #4 Phase in Source 6 in 9

11 Forced Stock Forced Parts - Parts on-hand that did not meet your phase in criteria 5 Major Reasons for Forced Stock Inventory 1. Over-ordering by technicians to solve customer issues in the shop, mainly under warranty conditions 2. Returns from wholesale customers, especially body shops 3. Customers failing to return for repairs, especially new vehicles under warranty with non critical issues 4. Order error by the parts adviser, failing to get the proper vehicle information or not properly trained 5. Speculation; stocking a part based on gut instinct or technician suggestion without testing any phase in process at all

12 Obsolete Obsolete Parts Parts that are over months no sale & 12 months no receipt 95% of Obsolete Parts Value comes from unfulfilled demand Unfulfilled Special Orders Forced Stock Obsolete Inventory

13 The Source Guide Source = Captive Parts Selling Source = Competitive Parts Source = Accessory Parts Source = Non Stock Parts Source 135 = Special Order Parts Source 140 = Forced Stock Parts Source 150 = Obsolete Parts Source 199 = Never Stock Parts This sample of 20 Sources is really 8 Sources that you would have to control. The other 12 Sources are grouped into Source by movement and done automatically for you.

14 Conclusion - The Benefits of Sourcing - Helps to eliminate Excess Value - Promotes Inventory Breadth - Helps Identify Forced Stock quickly - Identifies Special Orders easily - Saves time calculating the Right Stock Order mix - Allows for accurate pricing - Allows for proper Source Accounting - Helps increase accuracy and consistency - Can help maintain profitability - Give you a better Return on your Investment

15 If you need help setting up your system for success, send us a message.