DealersEdge Professional Forums

I was told that we have an inventory aging issue. We have an outside consultant pushing this idea. I do not agree, but the powers that be want to use a broker to sell off the problem inventory.
I was given this list to contact and find out what we could expect. I'd like some opinions, and if you have one that you found that works better than the listed ones, by all means, let me know.

O.E. Connect (cost of software is reimbursable thru GM advertising) Parts manager controls discounts of parts in setup.
CDK (ADP System)
EInventorynow com (888) 225-3144
Dealer Mine (888) 289-7278
Young Automotive Distributors (888) 763-2021

When I took over the parts department here, we had an obsolescence issue. We used Cash Discovery Program to help with peddling the crap inventory. It was an utter waste of time. After the payout to the middle man, buyer discrepancies (which always happened), and shipping we maybe received .15-.20 on the dollar. Some owners find it better to take the loss of writing it off for tax reasons.

One thing we did do...we had numerous a/c delco transmissions that were non-returnable. we donated them to a local tech center and were able to write off the value of those trannies...

None of them even buy parts. E inventory is for vehicles only, and Young Automotive wants you to sell them ANYTHING in your inventory at cost or below, not just your aged parts.
The rest are brokers, and the parts you sell the very best you can do after fees ect, is about 40%....
I think we would better off tossing them in the dumpster and taking the write-off.

I make sure we have enough overage each year to offset a scrap write-off; it helps keep everything clean. Just keep records of the scrapping and have a witness sign the list.

Add the man hours in and the numbers end up looking even worse. After trying it once, and finding everything finding a box to ship in all the work involved. I will not be doing this again.

Dave

What are your 12 MNS and on-hand NS figures that are prompting this? As a percentage please.

We used ADP's cash discovery and it's a waste of time.

Try using D2D with a staggered below cost discount on old parts.

The older it is the higher the discount.

***BE SURE AND USE BOTH MNS AND MNR***

or you will discount parts you just received but haven't sold in a while.

This is my setup on the locator (MLR=MNR):
30MNS 30MLR 30 % Discount on D2DLink Locator x
28MNS 28MLR 25 % Discount on D2DLink Locator x
25MNS 25MLR 20 % Discount on D2DLink Locator x
22MNS 22MLR 15 % Discount on D2DLink Locator x
18MNS 18MLR 10 % Discount on D2DLink Locator

So, if you don't do something like this, what's your alternative? Write-Off? Does that come out of your pay? When you inherit a poorly run inventory, your faced with many bad alternatives but receiving something is always better than nothing. Holding costs typically equal the cost of the part after 12 months, so if you hold on to that part and by some stroke of luck sell it for cost, you've lost money. Find and fix the inventory issues and use whatever means available to limit the impact to the bottom line and move on as quickly as possible.

I would take the non returnable (for whatever reason) and would write off $500.00 every month. Had these parts in a source that my advisors were given the okay to sell at cost if needed to get rid of it. I also put in a strict prepay policy on special orders which cuts down on the left over stuff. It took a couple of years but my obsolete got down to under 7% of a $500,000 inventory. When we lost the franchise.