Understanding "Forced Stock" Inventory
Defining "Forced Stock"
"Forced stock" refers to parts that did not qualify for any phase-in criteria. These parts accumulate for various reasons.
Causes of "Forced Stock" Inventory
Firstly, Chuck identified overordering by technicians. Often, technicians order multiple parts to fix a problem. When only one part is used, the rest become instant idle inventory. This scenario not only clutters the parts department but also creates inefficiencies.
Secondly, returns from body shops significantly contribute to "forced stock" inventory. Body shops often demand massive discounts and unlimited returns. Consequently, this leads to a significant volume of parts returning to the dealer.
Thirdly, unclaimed special orders contribute to this issue. Parts initially ordered for repairs that customers never return to collect sit idle. This common scenario can be mitigated by improving communication and follow-up processes.
Lastly, some parts are approved by manufacturers Auto Stock Replenishment programs but end up not being used. According to Chuck, around 40% of ASR-approved parts become idle, taking up valuable shelf space.
What is Technical Obsolescence?
Technical obsolescence occurs when a part hasn't sold within a set timeframe. Mike Nichols introduced the concept of "technical obsolescence" parts aging between seven to twelve months.
Understanding the Timeline
A part reaching its seventh month unsold has an 85% chance of becoming obsolete by the thirteenth month. This likelihood increases as time progresses. Thus, managing parts within the seven-to-twelve-month window is crucial.
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SPONSOR
This show is powered by PartsEdge: Your go-to solution for transforming dealership parts inventory into a powerhouse of profitability. Their strategies are proven to amp up parts sales by a whopping 20%, all while cutting down on idle inventory. If you’re looking to optimize your parts management, visit 🔗 www.partsedge.com.
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Key Takeaways
- Track idle parts to prevent waste.
- Sort inventory by key aging categories for better control.
- Know guaranteed parts from non-returnable stock.
Quote
“If you only got one way to look at your inventory, look at it by receipts because that's what matters to the dealer.” -Chuck Hartle
Chuck Hartle
LinkedIn: www.linkedin.com/in/chuck-hartle-1923ab14
Website: www.partsedge.com
Kaylee Felio
LinkedIn: www.linkedin.com/in/gotopartsgirl
Website: www.partsedge.com
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