Issue Date: Parts Manager Apr 15, 2009, Posted On: 4/15/2009
What's the right level of NS parts as a percentage of total inventory? Benchmarks always seem to draw the interest of dealership managers. For instance, what's the parts department benchmark for NS parts as a percentage of total inventory? Is 20% too high? Is 5% even possible? Mors importantly, once the benchmark has been defined, how do you reach it if your inventory is currently way off the mark?
Our resident parts department expert, Mike Nicholes, says the question of NS (non-stock) parts with an on-hand value is problematic at best. Mike suggests first going to the DMS report generator and creating two lists of NS parts.
The first list should display all parts with NS status and an on hand value. Sort this list by entry date and by the last purchase date. Also, look for groups of parts with the same entry and/or last purchase date to see if there are a lot of parts entering the inventory or being purchased at the same time. These might be kits or packs for a new model year.
These parts might also be special orders that have not been picked up yet. Review your special order procedure. Are you getting a deposit or is there a failure to call the customer to come and get the part installed.
As Mike notes, "some of the well intentioned' automatic stock replenishment systems (RIM, ARO, Smart Stock and the like) will list new part numbers that the program adds to the system as NS parts. The error is in the program. That's why parts managers that go on these automatic replenishment systems often see their NS percentage shoot up. The program is forcing parts into inventory for which there is no local sales history."
Phase-in/phase-out The phase-in/phase-out parameters are key here.
Mike Nicholes is of the opinion that 3 in 12 to activate an NS part and <1 in 6 to put it on AP and begin the phase-out procedure is the most stable approach. Some DMS "jury rig" phase-in and phase-out because of a flaw in the computer logic for AP and NS parts.
Having an on hand value for NS status parts is a yellow warning flag waving that must be addressed and fixed. For parts managers on automatic stock replenishment systems there might not be an answer for the question posed at the beginning of this article until the OEMs fix their own logic problems.