6 Killer Parts Inventory Reports for Dealers, General Managers and Controllers

Transcription

1 6 Killer Parts Inventory Reports for Dealers, General Managers and Controllers With Chuck Hartlé, President of PartsEdge Moderated by Mike Bowers, Executive Editor at 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 also the editor of the nationally recognized newsletter DealersEdge Parts Manager. Previously, Chuck spent more than 30 years as a parts manager then parts and service director for a multi-franchise dealership group. He was also one of the founders of the Mopar Master Parts Guild. He 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 factory-sponsored training seminars. Since forming PartsEdge, Inc, Chuck has participated and spoke in front of many workshops, seminars, 20 Groups, and Dealer Associations. We are 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 A Dealersedge Webinar Presentation October 22 nd, 2009

4 Six Pulse Reports to Measure Your Parts Inventory Health Special Order Parts (parts that have not qualified for stocking yet) are the number one cause of obsolescence in the parts inventory. Returns from Wholesale customers, over ordering, and just plain lack of control spells disaster for the typical parts inventory. Forced Stock inventory is based on the unfulfilled demand from special order parts that never qualified for your stocking criteria. Excess Inventory is the hidden culprit in lack of inventory productivity. These are parts where the on hand quantities exceed the system generated best stocking levels. True Obsolescence needs to meet two criteria, not just one! We call it the 13 / 13 rule! Measuring your complete inventory movement of non returnable parts is so critical for today s parts operation with dwindling return reserves and discounts. Commonly referred to as the Month s No Sale to Month s No Receipt report, this helps to identify over purchasing issues and depth in the inventory.

5 Pulse Report # 1 Special Order Parts (ERA) Substitute Your default bin location found in Program 2322 or the group of bins used for special order parts in the VALUE (SP-ORD) fields above and below. Remember, no matter what, the PROD.MASTER file is what wins when it comes to physical reconciliation time. Special Order Files for the ERA system are independent of the actual Part Number file SPEC.ORDR and PROD.MASTER Ideal Pulse Special Order Value is 3-5% of overall inventory with nothing over 60 days old. Ideal reporting option would be to reconcile the 2253 Special order report with this 6910 report monthly.

6 Pulse Report # 1 Special Order Parts (ADP) FROM FUNCTION CODE: ENG? LIST PART-NO. MNR PART-ID DESC8 BIN O.H. COST MFG-2 YRSL MNS MNR SS SO? TOTAL OH.VALUE WITH BIN EQ SP-ORD AND WITH O.H. GE 1 AND WITH P-U? BY-DSND MNR BY PART-ID ID-SUPP (P) (P) Sends report to the Lineprinter (N) Sends report to the Screen Substitute Your default bin location for the value SP-ORD for your special order parts in the English Statement above. Remember, no matter what, the PART-NO. file is what wins when it comes to physical reconciliation time. Special Order Files for ADP system are also independent of the actual Part Number file. The File Name is SOR-LINES. Ideal Pulse Special Order Value is 3-5% of overall inventory with nothing over 60 days olds. Ideal reporting option would be to reconcile the Standard RAS Special order report with the Above English Statement.

7 Pulse Report # 2 Forced Stock Inventory (ERA) You won t find any canned DMS reports on this area of your inventory The Average Dealership has 24% of the inventory tied up in Forced Stock inventory. What is your %? Implement these reports to track forced stock on a weekly basis. Ideal Pulse Forced Stock Value is less than 15% of the overall inventory.

8 Pulse Report # 2 Forced Stock Inventory (ADP) You won t find any canned DMS reports on this area of your inventory FROM FUNCTION CODE: ENG? LIST PART-NO. BREAK-ON SO PART-ID DESC8 BIN O.H. COST MFG-2 YRSL MNS MNR SS? TOTAL OH.VALUE WITH YRSL LE 2 AND WITH MNS LE 12 AND WITH O.H. GE 1? AND WITH P-U BY SO BY PTNO ID-SUPP (P) Ideal Pulse Forced Stock Value is less than 15% of the overall inventory. FROM FUNCTION CODE: ENG? LIST PART-NO. BY MNS BREAK-ON MNS SPACE TOTAL OH.VALUE SPACE?TOTAL CORE.VALUE SPACE TOTAL O.H. SPACE TOTAL #ITEMS? WITH YRSL LE 2 AND WITH MNS LE 12 AND WITH O.H. GE 1?AND WITH P-U ID-SUPP DET-SUPP (P) Forced Stock inventory leads to 85% of the obsolete inventory issues in today s parts operations. Controlling Special Orders & returns daily is the key to keeping forced stock low!

9 Pulse Report # 3 Excess Stock Inventory (ERA) Are you ordering too much, over-riding your actual quantities? Are your days supply settings to high? Has demand slowed and best stocking levels retreated while sales stalled? Ideal Pulse Excess Inventory Value should be 20% or less of total inventory value. Consider Isolating Excess Parts into a separate source or group and fix the MAX/FB (Full Bin)setting to not exceed the BSL, keeping days supply the same. Don t forget to remove Full Bin settings when target on hand is reached!

10 Pulse Report # 3 Excess Stock Inventory (ADP) Suggestions: By changing the Days Supply Settings to a lower or higher number in a source, you automatically change the Reorder Points and Best Stocking Levels of those parts, creating more or less excess inventory prematurely! Ideal Pulse Excess Inventory Value should be 20% or less of total inventory value. When a lot of parts are in the same source or group, you only have one days supply setting for many parts that have completely different movement and sales history. Break them out!

11 Pulse Report # 4 True Obsolete Inventory Following the 13 / 13 Rule Suggestions: Aging Reports, such as in the Month End Management Reports, by Just Months No Sale, can be misleading; not taking into account excess inventory value and forced stock issues. Ideal Pulse True Obsolete Inventory in the 13/13 should be Zero! FROM FUNCTION CODE: ENG? LIST PART-NO. BREAK-ON MNS MNR PART-ID DESC8 BIN O.H. COST MFG-2 YRSL SS SO? TOTAL OH.VALUE WITH O.H. GE 1 AND WITH MNS GE 13 AND WITH MNR GE 13? AND WITH P-U BY-DSND MNS BY-DSND MNR BY PTNO ID-SUPP (P) The 13 / 13 Rule: Parts must be both 13 months since the last sale and 13 months since the last purchase (receipt). This report should be run monthly!

12 Pulse Report # 5 Non Returnable Inventory Do You know where your Manufacturer Return Codes are listed and what they mean? X = Research Your Return Code based on the Manufacturer Suggestions: There are 12 positions in the MFG-2 (A.B.C.D.) field. These fields have manufacturer defined information that is very valuable and critical to identifying specific groups of parts, such as non returnable flags. Ideal Pulse Anything over the 13/13 rule should be zero. FROM FUNCTION CODE: ENG? LIST PART-NO. BREAK-ON MNS MNR PART-ID DESC8 BIN O.H. COST MFG-2 YRSL SS? SO TOTAL OH.VALUE WITH O.H. GE 1 AND WITH MFG-2 NE ^^^^^^^^^^^^?AND WITH P-U BY-DSND MNS BY-DSND MNR BY PTNO ID-SUPP (P) ^ (Carat - Shift 6) = Research Your Return Code based on embedded code(s) in the MFG-2 field Be very Pro-Active in Measuring the non-returnable parts in your inventory. Do you accrue dollars from purchase discounts or gross profit to offset and purge these parts?

13 Pulse Report # 6 Purchase to Sale Ratio Last Time You Sold a Part Total Inventory Value = $112,921 This inventory shows that they have sold $25,989 more than they have purchased in the last 3 months. A 23% difference in purchase to sale ratio. Parts could be selling down the critical parts that make the money and leaving nothing but the parts that don t sell. In the Obsolete categories, comparing 13 MNS and 13 MNR, there is more than double the amount of obsolete inventory in the receipts category compared to the sales category ($11,400 difference). This is a 10% difference or going from a 9% obsolete problem to a 19% obsolete problem. Which is the most critical of these two reports? Aging by Sales, or aging by Receipts? Last Time You wrote a Check for a part Ideal Pulse Staying under 10% in comparing active month categories 0-6 and within 3% comparing inactive month categories 7 and up Run two reports: Aging based on Months No Sale over 13 months, then Aging by Months No Receipt over 13 months, to find the difference. ADP MGR The Monthly Summary Report has them both together. ERA 2213 Run 2213 by Default for Sales By MNS; then go into Program 2321, Option 35 and flip the flag to Y and rerun the 2213 report for sales by MNR.

14 A Cornucopia of Report Processing

15 Introducing PlayBook Using the PlayBook software application to simplify the process

16 The PlayBook Process x x o A Software Application designed by Automotive Professionals for Automotive Parts with years of dealership experience. A program that levels out parts information, regardless of the DMS platform. A easy to use application that doesn t take hours of time to compile and extract inventory information. A tool to help Coach every aspect of your inventory on a daily, weekly, or monthly basis. PlayBook recognizes most Manufacturer information from return codes, to movement codes, and promotional information. PlayBook eliminates the need to be a DMS Specific query expert, as reports can be accomplished with just several mouse clicks.

17 Full Screen Shot of PlayBook Filter Icons Inventory Specific Dashboard Purchase to Sale Ratio Dashboard Green Bar Detail Area

18 The Dashboard Fields = The Total Value of the current inventory on hand quantity. = Active inventory where sales are current and the on hand is less than or equal to the best stocking level of a part. = Inventory that has slowed down and/or has excess value. The parts value is based on on-hand and BSL being equal. = Inventory where the on hand quantity is greater than the best stocking level, regardless of special status code. = Simply defined as parts that have not qualified for stocking using a 3 sales in X months phase in guide. (X = 6 to 12 mo) = True obsolete inventory, where sales (months no sale) and purchases (months no receipt) are over 12 months combined.

19 The Months No Sale / Months No Receipt Dashboard The first dashboard report of it s kind to put the information of sales and purchases side by side where you can capture sales and receipt data from your DMS system! This report can point out inventory strengths and weaknesses simply by comparing similar month groupings, as shown above. (From the actual demo file).

20 Pulse Report # 1 Special Order Parts Step #1 / Select Quantity Step #2 / Select Bin Step #3 / Sort, Review, and Print Did we forget to mention PlayBook is NOT DMS specific?

21 Pulse Report # 2 Forced Stock Inventory Step #1 / Click in Forced Dashboard Column Step #2 / Click the ON HAND Filter Step #3 / Click and Sort by any of the Column Headers below / drag the Columns around too Talk about being easy to isolate sources that might have special source accounting, pricing, or days supply settings?

22 Pulse Report # 3 Excess Stock Inventory Step #1 / Click in Excess Dashboard Column Step #2 / Click the ON HAND Filter Step #3 / Review the Dashboard Step #4 / Sort / Review / Print the Detail Both the Watch and Excess Fields are populated. The Watch parts are the excess parts value where the on hand value meets the best stocking level. Sort Multiple Columns by simply holding down Ctrl Key and clicking the mouse on the columns.

23 Pulse Report # 4 True Obsolete Inventory Following the 13 / 13 Rule Step #1 / Click in 13/13 Dashboard Column Step #2 / Compare it to the Values in 13+ MNS-MNR Categories Step #3 / Sort-Review-Print (Notice how the columns were moved around and sorted by descending MNR) Notice: The MNS 13+ and MNR 13+ have $10,595 in common with each other.

24 Pulse Report # 5 Non Returnable Inventory Take the guess work out of the non-returnable thinking. Our process has practically every Manufacturer return code equation built in! Step #1 / Click in On Hand Dashboard Column, then the ON HAND Icon Step #2 / Holding the Ctrl Key Down ; click on Filters ; then Non-Returnable; then APPLY Step #3 / Sort-Review-Print This is done by MNS in sample 1 Anytime you want to start over with all of your inventory data, you simply click on the CLEAR button to reset the data file.

25 Pulse Report # 6 Purchase to Sale Ratio No Longer Do you have to Switch Settings to compare on paper! The purchase to sale ratio is built right into the Dashboard for easy review and mouse click comparison. The Months No Sale Report Alone can be misleading and a poor indicator of inventory performance if that is your only measurement The Months No Receipt Report Alone is a better management tool to measure inventory performance, but not the only way to view it Comparing both Sales and Receipts (Purchase to Sale Ratio) is the only way to effectively track the pulse of the inventory!

26 PlayBook is not DMS Specific!!!!! The fields your DMS Provider has can allow processing in PlayBook FIELD NAME FIELD NAME Part Number Description Bin Location Quantity On Hand Manufacturer Source or Group Cost Months No Sale Months No Receipt Entry Date Sales in Last 12 Months Best Stocking Level Return Code Field Manufacturer defined field such as (ABCD or DETAIL field) Last Receipt Date Special Status Codes (AP / DP / NS) If your DMS Provider has the fields listed above (or even most) ; and you can capture a text file or CSV file to your hard drive, then Partsedge can process your file into the PlayBook Application. Talk to your DMS provider to learn how!!!

27 Playbook Introductory Price!!! Download and Work with the Playbook Application for 30 Days with No Obligation or Cost to you. Work with the Demo File briefly to get the feel of this simple application Call our number to schedule a training session, if needed. Download your own inventory and open it with the Playbook program. Begin processing, reviewing, and managing your inventory without having to be a query expert to identify critical areas of your inventory!

28 Click Here Downloading Playbook Go to

29 Starting Demo Inventory File Click on File ; then the Load Demo File

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