Issue Date: Parts Manager Mar 1, 2010, Posted On: 3/2/2010
Mike Nicholes on “off-the shelf-fill-rates” While conducting a review of the service and parts departments in a big Ford dealership a few years ago, one thing came across loud and clear: the technicians thought the parts manager did a poor job of keeping fast moving parts available. Now there is nothing new in that. Techs always think the parts manager does a poor job.
But there was more to it this time. Not only did warranty parts have to be special ordered, but routine items like oil filters were frequently out of stock.
The only parts that were available in quantity were crash parts. Sort of tells your where the parts manager's mind was.
In discussing the situation with the general manager, who had formerly been the store's controller, we asked a simple question: What is your off-the-shelf-fill-rate in parts? His answer surprised us. "That's hard to say," he said.
What the GM meant was that it was one thing to calculate the fill rate by the book, but the reality of life on the ground dictated a "more flexible" approach. So what was the "more flexible" fill rate? The general manager didn't know that either. That's a problem.
Do you calculate the fill rate for only the OEM parts that you sell, or should you factor in the non-make and aftermarket parts too? And how deep do you need to go?
One parts manager we spoke with says he runs all his General Motors groups, excluding cores and sundries. Last year his calculated off-the-shelf fill was 89%, pretty good. These were parts items that countermen took "off-the-shelf" and were used to complete the job. They also had roughly 4% for "completed the same day," where the dealership had to get a part from AC Delco or another dealer. So that's a 93% same day fill rate. Right?
In addition, the parts department had just under 7% of parts that had to be special ordered (trim, sheet metal, national backordered parts, etc). That left us with 0.5% lost sales. We didn't have it, couldn't get it, and or the customer couldn't wait for it.
Here's the hitch. The dealership owners want the fill rate calculated using all parts and all stocking groups.
On that basis, our parts manager falls to a 48% off-the-shelf-fill-rate, and about 89% same day (counting all aftermarket parts plus other manufacturer's parts).
What's the right number? What parts should be included in the off-the-shelf-fill calculation?
Fixed operations expert and regular Parts Manager contributor, Mike Nicholes responds: "OK, maybe there is a little misunderstanding."
The calculation for fill-off-the-shelf, in pieces, is only for those parts that are controlled by the DMS. If your theoretical 1912 Maxwell part is not in the system as a stocking part or test item it should not be calculated in the formula.
Recognize also that a single monthly figure does not say squat about your performance. You need a trend (at least four months) to establish a pattern of the running number.