outside purchas accounting

[PartsPlant81]

It doesn't make sense to post a lost sale for a part that you also sold. The DMS's and RIM track "Demand Hits". A demand hit for a part # would be a lost sale or an actual sale. If you are posting lost sales for parts you actually sell; your DMS and RIM are showing 2 demand hits instead of 1 every time that you do that.
We do use a matrix but that will be obsolete in the coming years thanks to the internet and all of the GM Direct websites. Unless we can figure out a way to not show the customer the part number on the repair order or invoice...All they have to do is Google the part number and they will have all of the info about that part including price.

[Zep33]

We had a problem like that a few years ago. Customer had a brake module and some other module replaced here. Authorized all work. He went home, punched the part #s into Google and found GMpartsdirect selling those parts at 2% above cost. Customer wrote a letter to us, AMEX and GM saying we were a bunch of thieves and ripped him off. GM contacted us, actually believing we ripped off the customer. Had us refund the customer and do a warranty claim on the job to get paid for it. Douchebags

[lochstein]

I guess my point was that I figured a lost sale is posted when the tech comes to the counter and the part is not in stock. What happens when the part is actually sold? Do you back out the lost sale?

[cville1987]

We do use a matrix but only over the back counter and sparingly at best. It just is too hard to pull off anymore. I tend to be more apt to use it on long lists of parts, big jobs. I don't think you can back out a lost sale in Reynolds. I would like to know if anyone has a functioning way of posting lost sales for service rather than just retail or wholesale? I never know if the job didn't sell because of cost or availability.

[PartsPlant81]

Lost Sales Process
The lost sales process is one of the processes in the parts department that is the most over looked. Many parts managers become overwhelmed with their day to day activities and this process is usually the first one to be put off to another day. From a viewpoint of daily business activities this process appears to have little value. This process is an investment in the future of the parts department.
The inventory control system requires that all activity in the parts department is properly recorded. The inventory control system is not just a point of sale machine. All requirements of the department need to be recorded for the system to be able to forecast our needs accurately. This includes lost sales. The first request for a part number that has never been sold is either a customer special order or it is a LOST SALE. If you are not recording lost sales, the system is only receiving data from one area, the customer special order requests. All inventory control systems treat a lost sale posting as an actual sale when calculating if a part needs to be phased in.
The major reason why many parts managers do not have a lost sales process in place is because they do not know the definition of a lost sale. There are some service consultants and other professionals out there that are advocates of lost sales posting, but have an incorrect definition of a lost sale. I have seen parts departments that post a lost sale every time they do not have a part in stock immediately available for a technician. These same dealerships then procure the item from another dealer or outside vendor and complete the sale. This process is flawed; the part number in question then has two hits recorded against it for one sale. If you have aggressive phase in specifications built into your system (i.e. two hits in a three month period) this part will appear on your next phase in report, when in fact you have only one hit.
The definition of a lost sale is:
“When you receive a request for a part and you DO NOT order or procure the item.”
The definition of a demand sale is:
“When you receive a request for a part and you order or procure the item.”
If a technician comes to the counter for an item that you do not have and you special order the part, it is NOT a lost sale, it is a demand sale!
If a technician comes to the counter for an item that you do not have and you locate the part from another dealer or parts supply, it is NOT a lost sale, it is a demand sale!

[PartsPlant81]

Lost Sales Process – cont.

The lost sales that normally get posted are when a customer calls on the phone with a request and you don’t stock the item. Most counter people will then post a lost sale. Frequently in the same situation if the part is normally stocked but is in a sold out condition, they will not post a lost sale, when they should. Lost sale posting is not just for part numbers that you don’t stock, refer to the lost sale definition above!
There are two situations in every dealership that involve lost sales that normally do not get any attention. These same situations are the source of the majority of lost sales posting.
Situation One:
Technician comes to the counter and needs price and availability of a part. You can’t post a lost sale because he may come back and have you procure or order the item. In many stores the price and availability is recorded on the back of the technician’s hard copy and the parts department has no other record of the request.
Print a price quote from your system, two copies, one for the tech and one to file in a basket under the counter. If the technician returns and needs the part ordered or procured retrieve your copy of the price quote from the basket and process his request.
At the end of every day there will be price quotes left in the basket under the counter. Review these quotes with the service advisor to ensure that none of these items should have been ordered. We sometimes have good intentions of communicating the needs between departments and that doesn’t happen. This will also eliminate the phone call from a customer two weeks later about parts that were ordered, that you have no record of.
The parts manager then posts lost sales to the parts on the balance of the price quotes. What have we accomplished? We have separated our demand sales from our lost sales and recorded every potential sale of a part with out duplicating the posting.
Situation Two:
Technician comes to the counter for an item that you do not have and/or do not stock. He needs this item immediately and you call the local parts store and procure the part. Typically you then charge the part out on the repair order as an in-out sale under the vendor’s part number.
What has happened here? We had a request for an item, procured the part, and because we need to charge the part out under the vendor’s part number we recorded the sale as an “I-O”. An “I-O” sale does NOT create a record of the transaction, that is the purpose of the “I-O” transaction code, if it did our system would be littered with all kinds of vendor’s part numbers with only one sale posted to them.

[PartsPlant81]

Lost Sales Process – cont.

In this situation we could continually, once a month receive a request for this same item, procure the item and our system would never try to phase in the part. The system does not know that we are selling this item because we charge it out as an in-out transaction.
The counter person must record the original equipment part number on either the vendor’s invoice or the attached purchase order. When he charges out the vendor part number on the repair order he must also post a lost sale to the original equipment part number on the system.
Was this transaction actually a lost sale? No, it was a demand sale, but this is the only effective process to capture our sales of outside vendor items that have an O.E. equivalent. Now after we procure the same item two or three times the system will try to phase in the part number.
This lost sale situation is very easily monitored because the part number was recorded on the vendor’s invoice and/or the purchase order. Every time that you review the outside payables you check the ones with an O.E. part number against your lost sales report to ensure that the counter people are recording the lost sale.
We can write a daily lost sales report in report generator, in ascending date sequence, to facilitate this process. With this format of a lost sale report we don’t have to look through the entire body of the report because yesterday’s transactions are the last items to print. This report can be put into the job scheduler to run daily to ensure that we have a copy when reviewing the outside payables.
With the above process we can capture lost sales and monitor the two major areas that generate lost sales. If a counter person is forgetting to record the lost sale you can identify it immediately because you have a copy of the outside payable that was involved. In addition, it is clear who the counter person was that forgot to post the lost sale. If a counter person does not print a price quote, in effect defeating that part of the process, it becomes obvious because that is now part of your price and availability process with the technicians.
Another problem area with lost sale posting is qualifying what is a lost sale! I see situations where counter people will not post a lost sale because they feel the part is too old or is a trim item. You can not have anyone qualifying lost sales, this is not a think process, if it is requested and not procured, post it! I don’t care what it fits or how old the vehicle is!
The worst case scenario is that the part will appear on a phase in report and you will delete it. This is not a situation where the part will automatically appear on your shelves.

[PartsPlant81]

Lost Sales Process – cont.

If you are a Reynolds & Reynolds customer you have the ability to change and/or delete lost sales that were posted incorrectly. Follow the process that I have outlined below to correct lost sale posting errors.
1. Go into your 2101 executable screen and enter the part number that you want to change the lost sale posting on.

2. Enter line number 38 (this is your history prompt), and then put in a question mark and hit return. The sales, lost sales, and receipts sub-screen will appear.

3. At the bottom of the screen enter line number 3, this will bring you to the current year lost sale column, return down through the column until you get to the month that you need to change. At this point either enter the correct quantity or “X” to clear out the entry.

4. Return through the remainder of the month prompts until you are back to the bottom of the screen and enter “E” and hit return. Enter “E” back at the main screen and hit return.

If you are an ADP customer you have the ability to change and/or delete lost sales that were posted incorrectly. Follow the process that I have outlined below to correct lost sale posting errors.
1. Go into your posting screen and post the same amount that was posted incorrectly as a negative quantity, this will give you a net lost sale posting of zero.

2. This will only affect the current month, that being the case make sure you are reviewing your lost sales daily.

Above all, Inspect what you expect

[lochstein]

so can anyone confirm that in R&R when a lost sale and a sale are posted in the same month it is only counted as 1 hit for demand?

[PartsPlant81]

Omg. Everytime you sell a part OR post a lost sale it is a demand hit. So if you sold a part # once in a month then had a lost sale for the same part # in that same month you would have 2 demand hits for that part # that month.