ADP Lost Sales

ADP Lost Sales

Postby petepuma01 » Thu Jun 29, 2006 10:58 am

CTVOLVO

I would recommend that you don't post a lost sale when you purchase a part elsewhere-- you're recording double demand and it can affect your stocking levels since the extra demand could cause the part to phase in pre-maturely (though this will depend on your phase-in specs). It will also affect the ROP/BSL calculation.
petepuma01
 

ADP Lost Sales

Postby Gerry Laughlin » Thu Jun 29, 2006 11:05 am

CTVOLVO,
"It is not going to affect your stocking levels if the LS and sale are in the same month. If it does, you need to check your stocking parameters."
I think I would double check the accuracy of this statement. If I lost sale one today and then pick one up this afternoon and sell it on a ticket my system believes I have had 2 seperate demands, and will stock accordingly.
Gerry

Gerry Laughlin
 

ADP Lost Sales

Postby Mike Nicholes » Thu Jun 29, 2006 11:33 am

Just to clear up an ongoing misconception regarding lost sales. If you have a demand and you pick up the part from another dealer or source you didn't lose the sale. If you post a lost sales, then get the part elsewhere and sell it you will have posted 2 pieces of activity which will be factored into any DMS system guides. What you have here is an emergency reciept with a subsequent sale. you didn't lose the sale, you just slowed down the process that the technician is involved with.
Mike Nicholes
Mike Nicholes
 

ADP Lost Sales

Postby cantfind12 » Thu Jun 29, 2006 10:27 pm

I am getting mixed concepts here so forgive me. If someone asks for a part (intending to buy it) and you don't have it you have lost that sale (albeit temporarily). If you go elsewhere to get it you are artificially un-losing that sale since perhaps you should have stocked that part not to mention profit since you probobaly had to go above cost to purchase the part elsewhere. Also considering the hypothetical you have possibly recorded one lost sale and receipted and sold a non stocking part which will show activity for that part number (hence effecting phase in criteria) but it will not be recorded as two lost sales. I sort of agree with PetePuma in an offhand way. If your stocking criteria says two hits in 3 months (for example) you have now phased in that part even though it may be a fluke. I realize these are exceptions for the most part but it is interesting. Thanks to everyone for their input.
cantfind12
 

ADP Lost Sales

Postby petepuma01 » Fri Jun 30, 2006 8:36 am

CANTFIND12

If you don't have the part in stock and you purchase it elsewhere to make the sale to your customer, I look at that as delaying the sale, not losing the sale. You still got the sale-- just not as quickly as you would have had you stocked the part. (The same goes for special orders.) By recording a lost sale and a sale, you are recording two demands for the part when there really was only one demand for the part.

You also mentioned the profit factor due to the purchase elsewhere, likely at a higher price. In all of the DMS's I know of, lost sales are purely for demand purposes-- they affect the phase in of the part as well as the ROP/BSL. By recording two demands for a single demand, you may be doing more damage to your profitability since the artificially increased demand may cause a part to phase in sooner or raise your BSL, thereby unnecessarily increasing your inventory value.

petepuma01
 

ADP Lost Sales

Postby scotstrong » Fri Jun 30, 2006 9:46 am

All too often in this business, people confuse "lost sales" from the perspective of how your computer system uses this info to determine stocking levels with "lost opportunities"; or loss of "maximum" profit on a sale. Parts managers usually learn very quickly that they can only post a lost sale from the perspective of determining to stock a part or increasing the stocking level of a part. As others stated above, posting a "lost sale" when a sale is merely delayed is telling your system that there were 2 demands for that sale, when in reality there was only one demand.

If you wish to quantify by some method those sales that were not lost, but were made at a reduced profit because the part was not in stock -- many parts managers post these as an "emergency purchase"; which you then can view exclusively in a report.

Scot Strong
scotstrong
 

ADP Lost Sales

Postby ctvolvo » Fri Jun 30, 2006 2:17 pm

petepuma01, Gerry Laughlin

I disagree. Having two hits in the same day is not going to affect your inventory unless you are using R&R's phase in criteria based on pieces. I have overridden those settings and only stock based on months of demand.

Besides, how do you know when exactly the part that is not in stock will be purchased elsewhere. Not all decisions are made in the split second you find out you do not have the part. What if the tech leaves and comes back a half an hour later. You have to post at the time of inquiry or you will never post it.

When we had Dodge in our store and I became manager I tracked our outside purchases for three years in excel after I implimented my thoughts on what a LS was. In those 3 years, our business picked up and out outside purchases dropped by over 50%.

If it is a retail customer do you ask, "If I had the part would you have bought it?" No, I bet you don't, no one does.

As Mike Nicholes says,

"The real answer is "post all lost sales" and dont' worry about the numbers. The posting must become part of the culture."

And as chartle says,

"I can have 20 parts managers and get 30 different opinions."

And as I say,

"I would rather have an extra demand posted than none at all."

Enough said. :-)

[This message has been edited by ctvolvo (edited 06-30-2006).]

[This message has been edited by ctvolvo (edited 06-30-2006).]

ctvolvo
 

ADP Lost Sales

Postby petepuma01 » Fri Jun 30, 2006 4:13 pm

CTVOLVO

Having two hits on the same day can affect your phase in, even if you have "overridden" the 'pieces' phase in spec.

Phase in question 1 in 2323 Sources reads as follows:

HAVE DEMAND IN X MONTHS OUT OF THE LAST X MONTHS WITH TOTAL DEMAND OF X PIECES

If you set your spec like this:

HAVE DEMAND IN 2 MONTHS OUT OF THE LAST 6 MONTHS WITH TOTAL DEMAND OF 3 PIECES

where the number of pieces is greater than the number of months demand must occur in, the extra lost sale could phase the part in.

I do agree that you can set your phase in specs so that it could not occur (demand months and demand pieces are equal) but since other readers of this forum may not have their specs set that way, I wanted them to understand that the extra lost sale could cause a part to phase in early.

Also keep in mind that lost sales are treated equally with actual sales for calcuating your ROP/BSL. These figures are rounded up/down to the nearest whole number based on the '.5' break point. For example, for a given demand of a part without extra lost sales, the BSL could be calculated as 7.45, which would become 7. However, an extra demand could calculate the BSL to be 7.51, pushing the BSL up to 8. Probably not a huge thing but it could impact obsolesnce.

I also agree with your scenarios though I would qualify them. If you do know you will go elsewhere to get the part at the time the demand occurs, it really isn't a lost sale. But yes, if the customer/tech walks away without indicating they want you to get the part, I also would post a lost sale.
petepuma01
 

ADP Lost Sales

Postby davem » Fri Jun 30, 2006 7:08 pm

This is great stuff..
davem
 

ADP Lost Sales

Postby Gerry Laughlin » Sat Jul 01, 2006 10:25 am

I know that I am going to get slammed for this, but I am the one sitting in an inventory that is half junk. The store that I am at now was doing doing exactly what you are talking about, a lost sale was posted immediately anytime a part was not in stock, even if they knew a driver was being sent to pick it up. The counter people here were under orders to post a lost sale anytime a customer asked about a part that was not in stock, even if the customer never would have bought it due to pricing or difficulty of installation. I am certain this philosphy contributed greatly to the obsolecence problem here. I am a firm believer in posting lost sales, but I strongly believe that if it is a choice between lost sales being done wrong and lost sales not being posted at all I will take not at all.
Gerry Laughlin
Gerry Laughlin
 

PreviousNext

Return to Parts Managers

Who is online

Users browsing this forum: Google [Bot] and 17 guests