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For many years our Parts & Service Mgrs bonus plan has been the same, however, due to service not holding their end up, got plan changed to pay by dept. Now we have a new Service Mgr, and he wants a piece of the parts action, which I can agree with if the proper plan is in place. Issue, how to do it seeing old way did not work. What I would kind of like to know, what plans are used, off gross profit, off net profit, and if anyone is willing, what sort of a percentage. We are a small to medium sized dealership.

I have been a service manager, parts&service manager, and a p&s director all 3 during my 24 years in the ford business. The thing that upsets me the most are comments like yours, that service does not hold up their end of the bargain. Sure service accounts for a large part of your obsolescence through sop parts that are not picked up. However, these are primarily warranty parts, that you cannot get prepaid, and customers generally complain about the problem when they have it in for something else, but it's not bad enough to bring it back. HOWEVER, from the other side, I challenge you to take your departmental, add up all the service dept related sales, (shop, warranty, internal (most of this is done through the shop), esp), subtract this from your total sales and see where you would be without the shop. We have to work together, because without each other we are not much on our own. Also your selling gross is higher on shop sales than others i'm sure. From the service side, you need to investigate how much not having parts costs the shop, in lost production, tied up stall space, CSI, etc, this is not counting what happens when the parts are ordered wrong the first time. Parts shows a higher net departmental than the shop does on the statement, due to the higher personnel costs of the shop and equipment, however the proper way to account for this is by transferring 50% of the selling gross from all shop parts to the service department statement,(remember the parts dept would not have sold them without the shop). This drastically changes the complexion of the statements. ***As Ron Stoner with Atcon said one day, **The Parts Manager should each morning go out and Kiss the Service Manager for all the money he made parts dept the previous day**** By the way reply back with your total sales figure and the figure minus shop sales just for comparison purposes. Any questions feel free to email me at fordman@tisd.net

Fordman,

You bring up the counterpoint for the 'service' end of the equation. Any parts manager out there that doesn't realize that the service department is his most profitable and best customer needs to find a new job! This goes without saying, really.

This is why I believe that service and parts managers (and body shop managers if you have one) should be paid off the same line, preferably the net of the fixed operations. I did this and saw tremendous results in team work and unity that were incredible.

John is echoing frustration just as you did over a problem that he can't control.

While you point out that **Parts Managers should kiss their Service Manager every day for the business they bring the parts operation** it is also the same Service Manager who complains that the parts department never carries the right parts in stock, while order fill and level of service stink.

The parts manager comes in and kisses the service manager each day and later in the day he gets beat up by the service manager for not having the proper parts.

The problem here is that service, while being the parts department's main reason for existence, is the main cause of obsolescence for the parts opertation with very little responsiblity for creating it. The service writer, technician, or manager can order parts 'at will' without any consequences for the ultimate result in many dealerships.

Thus, the service manager and writers complain that their parts department can't carry the right parts in stock while service is the cause of it's own problem. The parts department is only reacting and trying to order what is requested and the service department continues to order a percentage of parts that 'choke' the parts department's ability to stock the proper parts because they are too busy putting away parts that went unfulfilled by improper demand from service.

The smaller the store, the stronger this problem is. Stores that are solely dependent on their service department don't stand a chance and the service department dominates the fixed operation.

How can you effectively begin to work the problem? Pay the managers off the same bottom line. Also, begin to hold your service advisors accountable for parts ordered that go unfulfilled. There have been many threads on this forum covering these problems.

General Motors listened to service managers and came up with parts gross profit transfer as service wanted their piece of the parts pie as they were tired of parts showing a higher profit from sales generated by the service department. This was a major mistake on their part. They effectively sent a message to dealers and managers that service and parts were two separate profit centers, thus creating nothing but conflict between departments.

The smart way to deal with this is to 'fuse' fixed operations into a single purpose and mission statement. As you stated, one cannot exist without the other in the dealership environment, so if this is true is it not a single operation that should be treated that way?

Chuck Hartle'

[This message has been edited by Chuck Hartle (edited 05-06-2000).]