DealersEdge Professional Forums

The rumors of Ford PIPP going away more than just rumors. Here is the information I received from a reliable source on what Ford is "running up the flag pole"......

This proposal has apparently made it's way to the Dealer Council and is as noted:

Elements

1) Reduce Dealers need for PIPP
* Parts Upgrade Program will be "Mandatory"
* 30 Day Return Program Enchancements
* extend it to 45 days
* Minimum parts value for return to $10
* Eliminate some non-sheet metal restrictions

THAT IS THE GOOD NEWS!!!!!!!!!!!!!!!!!!!!!

2)PIPP Generation Levels
* Reduce to 3% in 2000
* Reduce to 2% in 2001
* Reduce to 1% in 2002 and ongoing

3)One time return on any PIPP eligilbe inventory up to 12% of prior year purchase
* Parts must be idle over 6 months
* Ford takes parts back at .75 on the dollar
* Dealers MUST submit an off-setting order for50% of the gross return credit
* The order will be restricted to certain parts

4)Credit will be issued for $12,0000
It can be used for :
* For a revisit from ADMI
* For continued reporting from ADMI
* Facility re-arrangement as a result of
parts upgrade (part of the money only)

5)MAT will periodically review with dealer
critical measurement to insure sustainment

6.Three (3) levels of Parts Upgrade
* Inventory level of $150,000+ -current pgm
* Inventory level between $75,000 and
$150,000 - half price
* Inventory levels below $75,000 -
Parts Upgrade in a box

I find one very critical element missing from this whole proposal; "Where's the beef?"
This may seem selfish, but what's in it for the dealer? There is no mention whatsoever that the PIPP allowance will be transferred into purchase discount dollars for the dealer to 'bank' to purge his own obsolescence.
Even with "BIC" (Best in Class) parts management ideas, you are still going to have idle inventory. Reactive retail inventory will never be perfect.
I would be concerned as a Parts Manager and/or Dealer that I will be expected to manage my inventory without the benefit of PIPP allowance?
Bascially, this proposal expects the dealer to to manage his inventory perfectly. And we all know that 'reactive' retail inventory is far from perfect.
Where is this going? Any comments or suggestions?

Chuck Hartle'

Chuck

If you were a Ford parts manager, what steps would start taking now to prepare for the elimination of PIPP?

There are several things I would begin to do.

First, I would inform my dealer of the pending proposal and what implications this could have on our inventory. What is scary about this, Mike, is that traditionally with all the dealerships we have done an analysis on; Ford dealers already tend to have the highest percentage of obsolescence overall.

Second, from a physical inventory issue, I would make sure that I had daily reports that reported the aging 'by days' instead of months on new or special order parts that were put into my inventory.

I would certainly end any practice of 'speculative' inventory practices unless it was absolutely certain that a part (such as a new oil filter) was going to move.

Finally, I would increase my phase-in criteria to make it tougher to get into the inventory.

There just has to be some sort of 'compensation' or option here for the dealer. To just 'do away' with PIPP without any explaination except that the dealer has to pay $29,700 for the dealer upgrade and that is going to make it all better is fantasy thinking. When Chrysler re-wrote their return program we proposed that they take the return allowance and give it to us as a credit. Chrysler, and rightly so, balked at such a proposal as they feared a 'secondary' parts market would spring up and the larger dealers would control the market, period! You know, they had a good point and offered an extra incentive in the way of return allowance to help small dealers clean up their inventory.

Ford, unfortunately, is going in the wrong direction here. In a word, it looks as though it is a cost-shifting issue. If I were a Ford dealer, I would be questioning the Ford heiracy and this possible decision.

Chuck Hartle'

[This message has been edited by Chuck Hartle (edited 02-03-2000).]