Case Study, Feedback appreciated

[PartsPro16]

Long time reader, finally decided to join the discussion. I'm trying to show my DP and FO Director the need for additional parts personnel in my location so I thought I'd post some KPIs and my thought process and see what everyone here thinks.

Here's a short overview before I get into the numbers: 3 stores, all owned by same dealer group, all within 25 miles of each other. Dealer A has 3 model lines; Dealer B has 2 of the 3, and Dealer C has only 1 of the 3. Dealer A parts department is heavy wholesale and retail, and has a total of 18 people; Dealer B has moderate wholesale and retail and has 7 employees; Dealer C has moderate wholesale and low retail and has 8 employees. Included in employee counts are all employees, including managers, drivers, and warehouse, not just parts advisors.

Here are some of the key numbers (all are monthly averages)

Dealer A: Total sales per emp: $46223; Gross profit per emp: $15267; Cost of sales per emp: $30956
Dealer B: Total sales per emp: $81094; Gross profit per emp: $29281; Cost of sales per emp: $51812
Dealer C: Total sales per emp: $52199; Gross profit per emp: $18610; Cost of sales per emp: $33590

Now the twist: employees in all 3 departments can sell and work in all 3 stores (phones, techs, etc.) and participate if/when there are vacations, illnesses, training, etc.

So the combined data is this: Total sales per emp: $55069; Gross profit per emp: $19050; Cost of sales per emp: $36019

In case you haven't realized it, I work at Dealer B and feel that we are understaffed. I've tried in the past to convince my DP and FO Director that I need at least 1 more support staff employee so that we aren't all running around like mad scientists trying to make everything work. I have an incredible team whom I trust to make good business decisions and who are very motivated, but I can tell that they are burning out quickly. Compounding this is that upper management is never very clear on what numbers they are always looking at. They seem to be fixated on Gross Profit (of course, because that's what pays the bills) and GP %. It's more than a little stress-inducing, so before I make one final stand I'd like your thoughts. I'm not interested in pointing out the inequities when compared to the other 2 stores (although I know that's what I'm doing in order to make a point), but rather in showing that maybe we need to re-allocate our assets a little bit. Dealer A's parts manager, and to a lesser extent Dealer C's manager as well, likes to deal in anecdotal evidence rather than numbers, so seems to get whatever they want. I tend to feel that a combination of the two is necessary to make the best informed decision.

This board has always been very forward-thinking, so please tell me what I need to hear and what my best approach should be.

Thanks in advance!

[lochstein]

Question; what area of the country is your dealer group located? How busy are your dealer's own mechanical shops?

[689is4me]

my .02. get rid of wholesale, nothing but a waste of time and effort for the % made. I am at a smaller dealership and run 80-100k with just me with 3-5k in wholesale gross profit about 41%. I like it by myself, I know exacly what is going on with every part, until vacation time comes in.

Just trying to say that wholesale does take a lot of man power, if you were running those number through the shop I would let it be. But if you continue to run wholesale I think 1 more person would help.

[PartsPro16]

We're on the west coast.

Own Shops: Dealer A does about 3500 hours per month; Dealer B does about 3000, Dealer C does about 2500

[Mike Nicholes]

Dollars/man/month is not the best determination of work load; pieces/man/month are better. The averages in our database (3K plus dealerships) shows an average of 1400-1800 pieces/man/month in sales to be a good job. There are those that do a bit higher, but when it gets around 2500-3000, you are short of man power, or need to reallocate the work where the sales and movement of parts are found. This seems to apply to all but the 2-3 man parts department who often are operating at minimal staffing regardless of dollar sales or piece movement

Mike

[PartsPro16]

Mike,

Thanks for the insight. I'm looking at a recent MGR report and for pieces/man/month, would I be adding the total number of pieces listed in the Gross Sales section and Return Sales section and then dividing by number of employees? Basically, what numbers should I be looking at for the calculation?

I feel like I'm about to go down the rabbit hole...

Thanks!

[lochstein]

i'm with 689. Get rid of wholesale in your store. Then, 7 parts people total will be too many. If you're around 3000 hours in your shop, you can get away with no drivers, no shipper/receiver and 4 counterpeople and that will be plenty. Then you can concentrate on growing that end of the business which is MUCH more worth the investment of time. I'd rather sell less parts @ 40% than 4 times as many @ 15% (without the overhead which likely makes wholesale unprofitable.) And no hassles of chasing money, returns, bounced checks, etc... Techs will be more productive too, which will turn more hours which will sell more parts. If the bigger dealer in your group has the same lines, is 25 miles away, and has all that staff...? Let them absorb the wholesale business. Wholesale in 2017 is not what it was in the 90's.

[LivinDaDream]

I'm with the consensus of the group on this as well. Tough for me to say, but I started in the business as a "wholesale guy" back in the 80's and IT WAS a different business back then!! These days it's just a bunch of thrashing and not making any $$$$. Concentrate your people's efforts on the service department of your very own dealership and you will make bank! Your staffing should be fine at that level, and it's not as though your dealer "A" won't continue to service those wholesale customers. We consistantly run over a 40% parts department gross and a 30 - 35% dept NET.

My two cents.

[Mike Nicholes]

to get the pieces use in the formula you take the month end statement and add the total pieces sold, plus all lost sales and all returns. this represents what was handled by the staff in the parts department. This figure, as opposed to using dollars, recognizes that it takes about as much time to sell an engine assembly as a cotter pin, but a whole lot of difference in the money involved. For dealerships that have heavy wholesale in sheet metal the dollar figure is huge, but it does not accurately reflect on what "work" was done to do the job required.

[Fixed Ops Mgr]

Are you saying that the financial statement should show pieces sold? I have looked for this number on the GM financial statement and mine does not show these numbers. I cannot find this number in any DMS report either. Where am I looking wrong?