Understanding the key factors in optimizing the investment in parts inventory – being able to balance Parts Availability with Stock Turn , understanding how to effectively measure and monitor them, and how to drive performance improvement will  deliver profitability for the Parts Department. There is also a big impact of the Parts department on the effective operation of the Service business, and on Customer Satisfaction and loyalty
  •  the profit build up from the Parts department and how it fits alongside the profit build for the Service department
  •  Parts sales opportunities in relation to the age profile of vehicles in the vehicle parc
  •  the factors affecting the profitability, inventory and sales performance of the Parts department
  •  which KPIs should be measured

An effective Parts department makes money on:
Buying parts at the right price (balancing stock orders and VOR’s), having parts at the right time , holding stock in the right quantity, selling parts to a wide range of customers and having a pricing policy.
  •  Parts Sales Revenue and the factors that influence Sales Revenue and Gross Profit
  •  the impact of a change in labour sales mix (CPR, Warranty, Internal) on Parts Sales Revenue
  •  the differing dynamics of internal and external parts sales
  •  the core elements of parts cost of sales
  •  Landed Cost Factor (LCF) and why it is important for it to be managed
  •  what the fixed expenses of the parts department are and how to control them
  •  what direct profit is and how it is generated

It is important to recognize what happens to a parts inventory value when availability is being pushed  too high. The right part, made available at the right time, in the right quantity and bought at the right price.
  • key objectives of holding inventory, the importance of identifying performance levels to assist in monitoring and managing the parts stock
  •  Parts availability KPIs
  •  the business health indicator: Stock Turn Ratio
  •  the influencing factors for Stock Turn and identify the actions that a parts manager can take to improve Stock Turn performance
  •  one of the “acid test” KPI’s for the parts department – Annualised Return on Stock (ARoS)
  •  the actions that a parts manager can take that influence the drivers of ARoS

In the early days, for parts not stocked, the initial demand will usually result in a special order being raised – usually a VOR. It is important that these early demands are monitored and a stocking decision made at the right time. If the decision is left too long, some of these unfulfilled demands will result in lost sales-thus giving a competitive advantage to other companies such as grey importers.
  • product lifecycle and its impact on management decision making 
  • inventory terminology
  • the importance and financial implication of effective VOR minimization and control
  • the principle of stock ageing and how age parameters should be defined
  • the actions and disposal techniques that can be taken by a parts manager to assist in the reduction of aged and obsolete stocks
  • obsolescence management and how it affects parts management accounts