What the F*#^ is my manager doing here, I don't understand!

[Impala67]

Hello,

Okay so here goes, GM DEALER, we are in Canada, we are not on the powertrain program, we are not tier 1 or tier 2. We have a deal set up with a local tier 1 dealer where we buy our powertrains at tier 2 plus a little. We run R&R, he wants me to post in the powertrain at the cost from the invoice from the tier 1 dealer, but he doesn't want me to change the cost of the part on the 2525 screen in the RO. He wants me to leave it at the regular GM cost. Now, I am just a wee lowly back counter parts guy that likes to read these forums, but he won't say the reasoning behind this, so could someone please enlighten me as too the reasoning behind this confusing dilemma.

[Zep33]

The discount can be taken either up front or on the back end. Most managers don't want the cost changed in the computer and the invoice is then coded so the actual cost goes to 242 and the discount applied to 687 (your discount account)

What happens after that varies. The GL (accounting general ledger) and the parts pad (inventory) remain consistent and 687 can either go straight into the DPs pocket, used at a later date to scrap obsolete parts, cover for stuff that ends up missing during inventory, or even used to fund the company Christmas party 687 can have many uses

[TimK]

687 better be going in the parts department employees pocket on payday.

[Impala67]

687 better be going in the parts department employees pocket on payday.

The discount can be taken either up front or on the back end. Most managers don't want the cost changed in the computer and the invoice is then coded so the actual cost goes to 242 and the discount applied to 687 (your discount account)

What happens after that varies. The GL (accounting general ledger) and the parts pad (inventory) remain consistent and 687 can either go straight into the DPs pocket, used at a later date to scrap obsolete parts, cover for stuff that ends up missing during inventory, or even used to fund the company Christmas party 687 can have many uses

Zep, Tim,

Thank you both for the great answers so quickly. It is much appreciated that you guys help teach me the in's and out's early on in my career.
Judging on how well I know my manager, I would say that Zep's response, is the answer, the Manager and the DP go way back, they have been working together for 20 plus years. And he would do anything for him.
I do not think it is helping us in the end Tim. I will show my fellow parts advisors this post and response and have a group meeting so we can discuss further action or an explanation from our manager so we know we are not getting jibbed.

[lochstein]

OK, I'm a little confused here (not having GM or Tier pricing knowledge.) Can you provide a dummy example of the three levels of pricing and what you input as a receipt vs. what you sell? Despite the fact that there might be a discount involved somewhere that goes to 687 or wherever, I read it as you're posting a different cost than you're relieving. This is a surefire to cause an accounting discrepancy on your GL side.

[lochstein]

Also: Don't discredit yourself! Asking questions is what this industry needs. That's how you move up to be a Parts Manager (if you desire.) An honest manager shouldn't hide things like that from his people, he should encourage questions! He should surround himself by talent and not feel threatened by it. Keep up the curiosity! We need to weed out the complacency and carelessness that plagues our business.

[Impala67]

OK, I'm a little confused here (not having GM or Tier pricing knowledge.) Can you provide a dummy example of the three levels of pricing and what you input as a receipt vs. what you sell? Despite the fact that there might be a discount involved somewhere that goes to 687 or wherever, I read it as you're posting a different cost than you're relieving. This is a surefire to cause an accounting discrepancy on your GL side.

No problem, okay so 4L60E transmission that is pretty common is cost $1931.28. Tier 2 Program price is $1738.15, Tier 1 Program Price is $1545.02.
When I post the part into the inventory in 2063, I input what we are invoice so the Tier 2 + the little mark up deal we have. We typicall sell it for $500 over that cost.
We put it in on the RO as the Cost of $1931.28. I can see where accounting will ask questions later, but I would like to know his reasoning behind it but he is being quiet on the matter.

[Impala67]

Also: Don't discredit yourself! Asking questions is what this industry needs. That's how you move up to be a Parts Manager (if you desire.) An honest manager shouldn't hide things like that from his people, he should encourage questions! He should surround himself by talent and not feel threatened by it. Keep up the curiosity! We need to weed out the complacency and carelessness that plagues our business.

I try not to most of the time. I try to ask questions, but to be honest this manager is more on the side this is my way and it is the only right way, then a previous manager that I had that would go into great detail to explain it to my level. I do desire that in the future, to further myself, my career, and my quality of life for my future family. I feel as though this manager feels threatened because of his turn around in this department, he has burned bridges with some of the more senior people in the building and department and that reflects poorly. And I couldn't agree more with that statement, transparency is what will make retention happen in the next generation and even tomorrow.

[TimK]

OK, I'm a little confused here (not having GM or Tier pricing knowledge.) Can you provide a dummy example of the three levels of pricing and what you input as a receipt vs. what you sell? Despite the fact that there might be a discount involved somewhere that goes to 687 or wherever, I read it as you're posting a different cost than you're relieving. This is a surefire to cause an accounting discrepancy on your GL side.

No problem, okay so 4L60E transmission that is pretty common is cost $1931.28. Tier 2 Program price is $1738.15, Tier 1 Program Price is $1545.02.
When I post the part into the inventory in 2063, I input what we are invoice so the Tier 2 + the little mark up deal we have. We typicall sell it for $500 over that cost.
We put it in on the RO as the Cost of $1931.28. I can see where accounting will ask questions later, but I would like to know his reasoning behind it but he is being quiet on the matter.

You should input at GM cost of $1931.28 and then $386.26 goes into 687.
Base your sales price off of GM cost not your "actual cost".
If you split profit with service they get half of that $386.26 YOU saved.

687 SHOULD go into the parts profit, it is an INCENTIVE to save money.
If you can buy a part for LESS than GM cost you should be rewarded for saving money.

[lochstein]

Sounds like your manager needs to go. If he feels threatened, maybe he should be and his relationship with the owner isn't as close as he makes it out to be or seems to think it is. Either way, keep asking and learning. Maybe tomorrow, maybe in 3 years, maybe in 5 the job will be yours! Sometimes, owners would rather promote from within because they know what they are dealing with and there's a level of trust there. Good luck!

As far as the accounting issue; Tim K is right. Should be posted as GM cost and sold on the RO at GM cost. Any purchase discounts should be itemized as exactly that in accounting. Then, the parts dept. pay plans come into question. Are you and your colleagues paid off of 687 (or part of it?) If not, that's another conversation for your manager and GM/owner... I'm positive your manager is paid off of 687.

BUT! If you are posting the part at the discounted cost, and then selling it at the higher cost on the RO, there will be a reconciliation issue in accounting. These transactions would cause a discrepancy between accounting and the parts inventory. It also matters how the accounting dept is posting the invoice from the vendor. If they are posting the actual cost to the inventory GL, then your sale throws the inventory off by that difference. If they post the GM cost to the inventory GL, then the discount is put somewhere. "Somewhere..." I'd say either someone is trying to cover something up or isn't that knowledgeable in accounting practices. Could be theft or just a way that management wants to avoid certain transactions from happening (perhaps with the blessing of the owner.)