According to the National Automobile Dealers Association, the service and parts department can account for nearly half of a dealership’s gross profit. But parts obsolescence can take a toll on those profits, said Kaylee Felio, PartsEdge sales and marketing manager.
She said every dealer will have some obsolescence, but it becomes a problem when more than 15 percent of the inventory has been on the shelves for 13 months or longer.
“They take up space on the shelf where you could be using that space for something that you’re selling a lot of,” Robins said.
The most common causes of obsolete parts is when a dealer overorders, doesn’t return parts on time or orders the wrong parts and can’t return them, Felio said. It can also become an issue if warranty parts are ordered for a customer who never gets the repair done. Dealers can’t have the customer prepay for warranty repairs and customers may feel less compelled to get the repair completed, she said.
Robins said he’d sell the unsold parts online for 50 cents on the dollar. Or he would write parts off that wouldn’t sell even at a large discount, he said.
PartsEdge, which has just over 200 new-car dealership clients, helps ensure parts departments have less invested, more of the right parts to sell and very minimal obsolete parts, Felio said.
“The goal is to have just enough parts to service the repairs you need,” while keeping a lean inventory, Felio said.
PartsEdge provides a better way to more precisely track inventory by breaking it into five categories:
1. Productive stock (stock that’s selling)
2. Excess stock (stock that exceeds the system’s best stocking level)
3. Forced stock (a part that is special ordered because of demand and wasn’t in stock)
4. Technical obsolescence (parts haven’t had a sale or been receipted into the system in seven to 12 months)
5. Obsolescence (the part hasn’t sold or been receipted into the system in 13 months).