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The Skinny: A leading developer of electronic parts catalogs for car dealerships, ProQuest sought features in trade media publications to help build a presence within its target market. This piece, appearing in Dealer Fixed Operations magazine, was not only informative but also served as a discreet, third-party testimonial from a legend among Texas car dealers, J. Harold Mathews.

Style: Informative, factual

Excerpt:

A GMs Take on the Importance of a Profitable Parts Department
by: J Harold Mathews

Parts departments are like standalone businesses for dealerships. Many general managers leave them alone unless something's going wrong. However, what some fail to realize is that a strong, profitable service department-a dealership's lifeblood-depends on a well-organized, efficiently run parts department. General managers who give attention to parts departments reap the benefits.

When I started my career in parts management in 1951 for a Texas-based Chevrolet dealership, Chevrolet's parts catalog contained roughly 18,000 items with a shelf life of 10 to 14 years. Today, GM warehousing carries over 400,000 items with up to a four-year shelf life. Cars cost more, but they last longer and require less frequent parts replacement. Smart parts department managers know what to stock, how much to stock and when to clear out stock.

The ins and outs (literally) of inventory control
If there's one thing that's critical to controlling parts inventory, it's this: Be selective with stock choice. Simply put, stock parts that sell and get rid of ones that don't. And if you phase a part into your regular stock, have a plan in place for phasing other parts out.

At the dealership I manage, Henna Chevrolet in Austin, Texas, our parts manager, Hal Mathews, sets stocking parameters - and sticks to them. That means items in our inventory are monitored daily. Some of things we watch include the following:

Parts sales - We track sales and take a hard look at stocking items that have been requested twice in six months.

Newer vs. older models - New models get special treatment in our inventory. An older model would require frequent requests to warrant stocking parts.

What the team is saying - We act proactively by listening to our service manager, David Byrne, by reading technical service bulletins and by talking to field engineers. This helps us determine which models are having more issues and the parts we should stock accordingly.

Outside purchases - We monitor our emergency purchases from other dealers to determine whether to change our stock plan.

Eligible returns - We exercise our return options whenever possible. Parts that have not sold in 12 months are generally returned and deleted from the inventory.
We review the parameters routinely and make changes when necessary. If we find that we're placing a lot of special orders because our inventory is inadequate, we make adjustments to our stocking guidelines.

The result of our efforts is a lower-than-average obsolescence rate. While it's not unusual for a dealership to carry 25 percent of their inventory for 12 months or more, our rate is a remarkably low 3 percent. Since a parts department's main capital is inventory, our low obsolescence rate means we primarily carry only the parts that make us money. And that makes a significant difference to our dealership's bottom line.

Critical partner: Your Electronic Parts Catalog (EPC)
An important part of inventory control is ordering the right part for the job so it stays out of the "obsolete inventory" category. Now that parts catalogs have moved from paper to computer screen, department personnel have the opportunity to greatly decrease their order error rates.

Using our EPC from ProQuest Business Solutions, we have access to daily updates on parts information. This offers a tremendous value, as it helps us avoid ordering the wrong part, delaying a repair and annoying our customer.

The system's additional parts feature tells us what parts apply to others, such as the gasket and adhesive that accompanies a particular water pump. This simplifies the ordering process and saves the customer an extra trip. In addition, the EPC's filtering device makes it easier and faster to order the right part by limiting choices and allowing us to focus on a particular area.

We depend on our EPC for current, accurate information. By having full confidence that we're ordering the correct part, we control our inventory, reduce error rates, lower our obsolescence rate and decrease the number of part returns. That in turn improves efficiency and profitability.

With the continued pressure on dealerships to control costs, it's more important than ever for general managers to take a serious look at the efficiency of their parts departments. Improving inventory control could very well make a significant difference in overall performance.

J. Harold Mathews is president and general manager of Henna Chevrolet, Austin, Texas, and understands the importance of a well-run parts department. A 55-year veteran of the business, he spent more than 45 years in parts management, building a reputation for efficiency and profitability. A "parts man at heart," he still has many part numbers committed to memory, including #3680776 (fan belt for 1941-53 GM cars and pickups).

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