Definitions...

[fixops]

Is there a general or universally accepted definition for a lost sale, as well as a universal calculation for parts/service absorption.

With 6 different brands in our group, each manufacturer tends to define these differently. A generally accepted one for composite and review purposes would be great.

[asekevin]

Q"Is there a general or universally accepted definition for a lost sale" in my humble view a lost sale is any opportunity found, presented to the client and then declined.
*This does not cover lost sales due to poor/no inspections, lack of proper process to catch the opportunities that come in the door every day, order takers, and myriad of other sins we commit every day. You can hardley track what you don't even know about!!!

Another school of thought is to use the term "batting average" this takes into account the fact that you came up to the plate and swung........some of the better shops I know run in excess of .500 when it comes to presenting opportunities(upsells)and making a home run(not sure if I like the term home run....to many negative attachment, but you get my point


Keep in mind if you never ask for the sale you will have 1000 batting average, can't miss if you don't swing!!!

[scotstrong]

In order to answer your question about the definition of a lost sale, one needs to ask what is going to be done with the information:

A) Are we referring to "what is a lost sale" as far as my inhouse inventory control computer system is concerned?

or

B) Are we trying to identify "lost opportunities" and somehow quantify them?

If (A): We need to keep in mind that any lost sale posted is viewed the same as an actual sale when it comes to determining if their has been adequate demand to begin stocking a particular part. There are some so-called industry professionals out there who say things like "if you couldn't sell it for any reason (such as price too high; customer cannot afford right now; failed attempt at upsell, etc.) that these should be posted as lost sales in the inventory control system. This amounts to posting false demand and has the potential to inflate inventory levels and increase obsolescence. These should actually be viewed as "lost opportunities" that have nothing to do with determining inventory levels and when a part should begin to be stocked. If the part is on the shelf and you were not able to make a sale, that does not equate to "unfulfilled demand". For parts not in stock, you would only want to post a lost sale to the inventory control system if not having it was the difference between making a sale and not making a sale. That would qualify as "unfulfilled demand". If you couldn't have made the sale even if you did have the part on the shelf you would hardly want to tell the computer system to possibly increase the stocking level.


B)Too many in this industry get hung up on "lost opportunities" and when they look at the parts departments they want to take the lost sales info and treat it as "lost opportunities" with little or no regard to what the computer system is doing with the information. Make sure that "lost sales" only get posted if an "unfulfilled demand" situation exists. It isn't "demand" until the customer would have purchased it if you had it and they could not or would not wait for it to be ordered or procured locally.

If we are trying to quantify "lost opportunities", make sure that we include the lost labor sales that would have gone along with the lost parts sales. Bottom line is this: A "lost sale" as far as the inventory control system is concerned should be viewed as "unfulfilled demand" -- anything else falls under the heading of "lost opportunites".

Just one school of thought; many others exist.

Scot Strong

[asekevin]

Great reply Scot, did not consider the parts angle. learned something.
Kevin