Getting All Auto Group Parts Manager of All OEMs on a Common Reporting System... It's Not Rocket Science
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1 Getting All Auto Group Parts Manager of All OEMs on a Common Reporting System... It's Not Rocket Science With Chuck Hartlé of PartsEdge Moderated by Mike Bowers of DealersEdge
2 Chuck Hartlé is president of PartsEdge, a dealership parts department consulting firm in Poway, CA. PartsEdge offers innovative inventory management services to help dealers maximize parts department profits. Chuck is the editor of the nationally recognized newsletter DealersEdge Parts Manager. Chuck spent more than 30 years as a parts manager then parts and service director for a multi-franchise dealership group. Chuck was one of the founders of the Mopar Master Parts Guild. Chuck has been a featured speaker at NADA's Annual Convention and Dealer Academy as well as at dealer Twenty Groups, regional parts manager meetings, and factorysponsored training seminars. Since forming PartsEdge, Inc, Chuck has participated and spoke in front of many workshops, seminars, 20 Groups, and Dealer Associations. PartsEdge is located in Poway, California, a town located in San Diego County. You can contact us by phone by calling our toll free number at (800) Our office address is Pomerado Road, Suite E, Poway, CA You can contact us by at operations@partsedge.com.
3 You Can t Compare Me To. Three Steps to finding common ground among mul franchise opera ons. Table of Contents Presented by: Chuck Hartle of Partsedge, Inc. Page Content 2 Strike One manufacturer programs and acromyn defini ons 3 Strike Two; ASR versus MSR 4 Step One; Phase in and Phase out criteria 5 Inventory by aging, ge ng it defined equally 6 Sample inventory report of a General Motors RIM vs. Non RIM Inventory 7 Step Two; Common Sources 8 The fear of crea ng new sources or messing around with old se ngs 8 CDK Func on Code table for se ng up sources 9 Reynolds Program table for se ng up sources 9 A Sample source table 10 Source Accoun ng 10 CDK Report Labor Types table #1 11 CDK Report Labor Types table #2 11 CDK snapshot of Update Source Accoun ng (USA) se ngs 12 Reynolds screen shots for se ng up source accoun ng and programs 13 Step Three; Common Repor ng 13 CDK Sort Sources 14 Inventory report by source, speaking the same language sample 15 What is your plan 15 The Conclusion
4 The Focus for this Webinar Today! The focus of today s seminar, regardless of the manufacturer program, is to discover the steps necessary in ge ng dealerships with mul ple franchises able to measure inventory performance across all makes. At Partsedge we work with over 100 dealerships and 17 franchises day in and day out. We have been able to accomplish the task of comparing inventory performance regardless of the manufacturer. We have done this through common source se ngs and measurement guides that make prac cal sense for repor ng purposes. Strike One Manufacturer programs available defining the acronyms. Manufacturer Defini on BMW SRD Chrysler ARO Ford DPA General Motors RIM Mazda MPA Toyota TIP Volkswagen SSA Volvo VMI Stock Replenishment Distribu on Automa c Replenishment Ordering Dealer Parts Advantage Retail Inventory Management Mazda Parts Advantage Toyota Inventory Performance Suggested Stock Approval Volvo Managed Inventory If the above acronyms aren t confusing enough, imagine if you were a mul franchised dealership with all of these manufacturers to deal with. It can be, truly, informa on overload and it can take a tremendous amount of me to manage these programs to maximize your discounts and stay compliant with each one.
5 Are you an ASR franchise? Are you an MSR franchise? There are s ll some major franchises out there that don t have a specific parts program. Even though Toyota offers their TIPS program, it is neither an ASR or MSR program. American Honda and Acura do not have any program specifics either. Do you fit neither ASR or MSR?
6 Step One Find common Measurements that make sense Descrip on Phase in Criteria Phase Out Criteria Notes Phase in criteria is nothing more than a mathema cal calcula on of months sales into number of months generally. Phase out criteria is the calcula on of months without sales into number of months. The Phase in criteria is one of those hot topics that can vary depending on the dealership franchise, size of inventory, and parts manager preference. The generally accepted phase in criteria for years has been 3 months of demand in a 12 month period, or 3 in 12. If you are neither an ASR franchise store or a MSR franchise store where phase in criteria is dictated, I would recommend that you start with a 3 in 9 criteria. The Phase out criteria has tradi onally been set up to match the phase in criteria in months. For example, if your phase in criteria is 3 in 12, your phase out criteria would typically be 1 in 12, or with less than 1 sale in the last 12 months. I would recommend that your phase out criteria generally be the following: I would recommend that your phase out criteria should generally be the following: If you have less than 1 sale in the last six months on a part in inventory that qualified under the phase in criteria, have the system set it to phase out. If a part was forced into inventory and never met your phase in criteria, set it to phase out immediately. Make it easy to have a part number not selling get out of your inventory!
7 Inventory Aging Inventory aging has several issues that can make it hard to compare apples to apples. Consider finding common ground at a certain age that would be generally accepted. For instance, measuring your inventory based on months no sale and months no receipt to truly judge aged inventory. Finding a common method for looking at idle inventory. There are three (3) areas of idle inventory within every parts department: Excess Inventory = Where the on hand quan ty is greater than the best stocking level quan ty. Forced Stock Inventory = Parts on the shelf with a value that never qualified for stocking. Obsolete Inventory = Those parts that have a months no sale and a months no receipt of a certain age, generally 13 months no sale and 13 months no receipt. ASR (automa c stock replenishment) Aging In our experience, working with the automa c stock replenishment programs, we find that excess stock is generally much lower than that of programs where the DMS (Dealer Management System) have a days supply se ng. Don t be fooled! This is typically because the manufacturer is controlling the best stocking levels and they never order more than is generally needed. Thus, the excess inventory value, set by the manufacturer, is almost always what you have on hand! This is why we recommend separa ng out your inventory into two groups; Guaranteed and controlled inventory value. Non guaranteed inventory value.
8 A sample report of ASR versus non ASR inventory USA Chevrolet Guaranteed RIM Inventory Month Total Inv Pct Produc ve Pct% Watch Pct% Excess Pct% Forced Pct% 13/13 OBS Pct% JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER USA Chevrolet Non RIM Inventory Month Total Inv Produc ve Pct% Watch Pct% Excess Pct% Forced Pct% 13/13 OBS Pct% JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER USA Chevrolet Combined Inventory Month Total Inv Produc ve Pct% Watch Pct% Excess Pct% Forced Pct% 13/13 OBS Pct% JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER TOTALS AVERAGE The above report separates out what is guaranteed versus what is not guaranteed. This helps to determine exactly what you are responsible for, and what will be taken back by the manufacturer. And, for General Motors franchises, the guaranteed inventory value in the 13/13 Obsolete category goes to show how much you have 13 months and older that you have to carry un l 16 months aging has been achieved.
9 Step Two Set up sources so that everyone can communicate at the same level. This is a cri cal step in the whole process. When you consider se ng up a common source table, here are some groupings or part number characteris cs that all parts inventories have in common: * Ac ve Hard Parts * Accessory Inventory * Tire Inventory * Sheet Metal Inventory * Gas, Oil, and Grease Inventory * Special Order Inventory * Idle or Obsolete Inventory *Special Pricing Inventory * Motorcra Inventory * A ermarket Inventory * Non Stock Tes ng Inventory * Never Stock Inventory All of the above characteris cs should be set up in separate sources, and in groupings that make these easily iden fiable regardless of the manufacturer. When having mul ple manufacturers under the same inventory account, for example a Ford, Chrysler, Hyundai franchise, consider the following; 100 Sources = Ford 200 Sources = Chrysler 300 Sources = Hyundai Also, consider limi ng your source table per franchise to no more than 20 or 30 sources total. Without some sort of automated movement process, it becomes impossible to manage effec vely.
10 The fear of crea ng sources It can be cumbersome to reinvent your source control and sourcing structure as there are so many things that have to be remembered. This is why I would recommend reviewing all the current setups and formula ng a plan so that you can implement the new process with confidence that it can be done and not cause undo hardship in the migra on process. CDK (ADP) Func on Descrip on of Func on Code Code Acronyms MSSO IRO OSPC Set up Source controls such as Descrip on, Order Pad, Sort Source For ADP Drive Users, this sets up days supply, phase in and phase out critera, economic ordering, and weighted stock order averages. Set up Price Codes and overrides for a given source. SPB OSPL OSSA USA PMU SCS Set up price break escalators (or matrix table se ngs) Set up print list for specific sources and/or price codes Set up counter cket source accoun ng for specific sources Set up repair orders source accoun ng for specific sources and labor types. Parts Master Update. This is where you map given fields to update at the source level on a monthly basis from the manufacturer pricing tape. Source Change Sales. This is where you can set up source by movement criteria based on year s sale movement in a group of sources.
11 Reynolds program table for source set ups Reynolds Program Descrip on of Program Numbers Numbers 2323 Se ng up source informa on 2323 Op ons 2 & 3 Se ng up low day supply and high days supply 2323 Op ons 5 & 6 Phase in and Phase out criteria se ngs 2565 Set up price codes for each source 2571 Set up counter cket source accoun ng 3636 Set up repair order source accoun ng 2335 Set up mapping for master tape updates monthly 2322 Overrides allows you to set up source by movement 2324 Set up individual stocking range criteria for months to review at source level.
12 Source Accoun ng It is Important!!! When sales don t seem to jive and general ledger balances start to go sideways, it is typically because the source accoun ng se ngs are not set up properly. Usually, this falls onto the parts manager or fixed opera ons director to delve into the problem and become accoun ng wizards. Adding new sale types and new labor types typically change the en re complexion of source accoun ng problems. Strong controls on who can add new sale types and labor types should be enforced at the accoun ng level. A Report labor type (RLT) report for CDK In the above table, when the parts sale account is fixed with a sale account number other than SRC, all the source accoun ng setups in Update Source Accoun ng are not going to ma er. When the sale account is fixed, it will go to that sale account period. The typical CDK labor table tends to be set up where you put the faith and trust into the service adviser or booker to use the proper labor type to control sales and general ledgers. This is not the best prac ce and best way to bullet proof your sales!
13 The right se ngs for source accoun ng in service with CDK report The table above is totally reliable on source accoun ng se ngs. It is a cri cal se ng for even a dual store with two franchises. This takes the control out of the service adviser s hands. CDK se ngs in program USA (update source accoun ng). The most important thing to remember is that with CDK, your STD source is your default without any overrides at the individual source level.
14 Reynolds Source Accoun ng Setup This is a screen shot of Program 3636, under the service branch for se ng up source accoun ng on the Reynolds ERA system. Program 2571 is under the parts branch and is similarly based on sale types. Doing a Source Override in each Labor Type will open up a second window that then show if there are any source accoun ng overrides on separate sources that take precedence over the defaults in the first screen.
15 Step Three Set up common repor ng to measure inventory performance & characteris cs. CDK Source Sort Table Source Number Description Sort Source Group 100 Default Source Active Hard Parts Special Pricing Hard Parts Accessories Accessories Special Tires Gas, Oil, & Grease 103 Sort Source Groups are a great way to measure the inventory with the CDK parts so ware setups. It allows you to have a group of sources for certain source characteris cs and report them as a single group. For example, you could have 5 source by movement sources for ac ve hard parts, and report them on the monthly management report by sort source as a group total. I sure wish all DMS vendors would get on board with this type of grouping process!
16 Speaking the same source language The two reports above, while hard to read, show a Honda store and and Toyota store parts inventory by source. You will no ce that all of their source groups are common. For instance, all the sources are ac ve hard parts, all the sources are non stock sources, all the 120 sources are specialty sources, all the 130 sources are accessory sources, and the 140 sources are all sheet metal sources. You can accomplish commonality between different franchises!! Common Repor ng
17 What is your plan of ac on? Take Note: Repor ng and/or capturing your exis ng se ngs (Number 4) above is cri cal. This really helps in the process of se ng up new sources and reviewing new setups if issues occur. Conclusion
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