60 % Fill Rate

[Partsmadesimple]

Is a 60% fill rate an acceptable level?

What level is acceptable?

What steps are necessary to improve the fill?

Thanks - Tim Deel

[dangreer]

Mr. PartsMadeSimple,

I'm trying to get a feel for what you are saying in the DealersEdge forum about shelf mix.
I feel that measuring the fill rate is a very important process. With out a measurement of what is or isn't going out, you will never really know what you are missing. Not only that, but doing a fill rate survey can show if you are purchasing too much from outside vendors at a cost to your bottom line. I'm sure that in some way you must be watching your fill rate!
A properly done fill rate will show:
-- if your inventory width or depth is short, long or right on the mark.
-- if your outside purchases are costing you money.
-- if your special ordering items that you might want/need to stock.

I agree with the stocking of parts based on sales history, but if you don't know what you are missing, and you don't take the time to look ...... that's costing you sales/profit and customer satisfaction.

Recently a client of mine told me they were afraid they were becoming too customer driven! Meaning that their customers were forcing them to stock things they really don't want to (their not in the automotive business). I said "What? Isn't that what you're in business for!"

With out measuring what your customers needs are (internal and external) you can not be providing them with quality service. A fill rate study and report is just a way to measure your customers need and if you are not meeting those needs, you have a the information you need to make the changes. With out the information .......... Darkness!

No 60% fill rate is not acceptable! You are not providing your customers with the level of service you should be. You are also not giving your dealer/owner the level of service they deserve either. In the long run, a fill rate below 85% in my mind is an injustice to your customers, owner, dealership, you and your department's employees if you and/or they are paid on any type percentage/commission. With a little time and effort a department's level of service can be greatly increased, resulting in greater profits and customer satisfaction. Even your part counter persons and service technicians will reap the benefits of better-planned inventory. The technicians will receive more of the items they request and the counter persons will spend less time locating or special ordering the needed items resulting in greater employee efficiency.

It's an all around win to measure your customers needs. That's what we're here for!

90% is realistic. And ever higher!

Enjoy thanks for giving me a rant again!

Dan Greer
dangreer@pmicp.com www.pmicp.com

[This message has been edited by dangreer (edited 06-15-2001).]

[This message has been edited by dangreer (edited 06-15-2001).]

[Chuck Hartle]

The problem with fill rate is that it can be manipulated based on the way your receipt parts into your inventory system. A 60% fill rate is too low. Depending on the degree of business that you do in different areas of sales will drive your fill rate too.

A real measurement is off-the-shelf level of performance or job fill. For example, if you are a large wholesale operation and you do a lot in warranty, I can just about guarantee you that you will have a lower fill rate than say a small dealership that does very little wholesale, very little warranty, and a lot of maintainence work.

Reality in our business is that it is "reactive retail" inventory with a large proliferation of part numbers. How we set our phase in criteria and phase out criteria will make a huge difference in inventory performance. True demand, no matter what area of sales it comes from, should drive your determination for inventory performance. If you set your phase in criteria too tough, your fill rate will suffer. If you set it too liberal, it will cause excess inventory.

Dan has some good points and in our dealership parts environment, I would think that 90 to 95 percent fill would be a long term goal to reach for off-the-shelf level of performance.

You asked how to improve your fill rate...

Look at your phase in / phase out guides
Look at your days supply settings
Look at your excess inventory report
Review how your department tracks true demand

Chuck Hartle'

[Partsmadesimple]

Thanks Dan - Thanks Chuck!

In your experienced opinion, can a dealership with a parts inventory less than $500,000 achieve fill rates greater than 90%?

Tim Deel

[Chuck Hartle]

Absolutely! It all begins with getting rid of idle captial and getting your system settings to work properly. And, remember, if you have a 20% obsolescence problem and you begin to change your settings and implement a new format for your inventory control methods, it will take time. Patience is the most important part of this process. What you kick off today will typically not show any results for the next 6-12 months on management reports. All too often dealers and parts managers get too impatient and don't understand that it takes time to clean up and change the inventory. It then becomes very easy to abandon new methods and revert back to old habits because patience wasn't applied to the process.

Chuck Hartle'

[LexBill]

I would appreciate a description of a fill rate survey and how to conduct it. Thanks in advance.