Obsolescence

[renrok]

My dealership has been challenged to run <3% 15 month obsolescence. Its currently at 10%. I'm curious how all of you would handle this situation. What have you tried in the past? Any advise at all?

[Mike Nicholes]

First is to accept that obsolescence is a 'process', and it's usually when we look at a final number that the pressures boils over. Step one is to slow, or stop the things that increase and spread obsolescence. Special Orders that are not picked up, not paid for and burn the parts department is one of the largest. A tight special order process, paid in full, no returns or 20% penalty to return, under ALL circumstances and for any customer; Next set your phase out to <6 months no sale to go to AP and STOP ordering the part.

The last is not so simple. The factory ASR programs are one of the larger contributors to obsolescence since most (but truthfully not all) are nothing more than factory marketing programs based on the need of the PDC to make their parts sales goals at the expense of the dealerships that often do not need and cannot justify based on their OWN area demand, the requirement to stock the part. This, of course, gets us into a political arena where many factories have set the compliance figure beyond a reasonable number, and require the parts department to hold the part for 9-15 months before they can return the unneeded and unwanted part.

Watch the factory ASR orders carefully against your own buying guides. If your guides are set for YOUR store and YOUR market, they will be more accurate than the factory "guides". Make sure you post all the sales AND all the lost sales to every parts demand at your counters and phones to get the most accurate picture of the demand that YOU need.

Irrefutable data has show, over the past 30+ years, that the parts manager, with a will tuned system,with the proper demand input can to a better stocking and obsolescence controlling job than ANY factory ASR system.

Good luck, Mike Nicholes

[LivinDaDream]

HRUMPF !!! Well articulated and sage advice from the master !! Thanks Mike.

It is RARELY that a parts manager sits back and says, "oh ... I think we should stock some of these!" The ills that we must all overcome are the special orders, particularly from wholesale and body accounts; additionally, mis-diagnoses and speculative ordering from our own service departments lead to higher idle inventory.

[MSInventory]

Irrefutable data has show, over the past 30+ years, that the parts manager, with a will tuned system,with the proper demand input can to a better stocking and obsolescence controlling job than ANY factory ASR system.

Absolutely!!

It's a process, but fine tuning is the key. Mike is right, STOP the bleeding now. Accept whats there and deal with it however allowed by the owner/owners.

[OilleakEarl]

The problem is not the returns. We've always had to deal with returned parts. The problem is the percentage of return reserve from the factory. I have been working for GM dealers for going on forty years and we've always had around the same amount of returned parts. We used to never have an issue with obsolescence, in fact we used to get a check back from GM for reserve that was not used. But now it's a f$#@%ing joke. 1% return reserve for "eligible" purchases doesn't cut it.

[PartsPlant81]

Amen Earl. And it keeps getting less and less YOY!

[bluepart]

And the difference between 1% Reserve and a 35% charge is worse than what banks do to us on intrest. Just pure simple robbery.

[possum]

PASE has no RIM DRO discount built in. The RIM compliance, sales and purchase loyalty are just qualifiers, and also earn no funds. Everything is based on Service conformance, Parts purchase growth, and Service effectiveness.

[camaroman]

I didn't think the 35% return option was still available. Let me know if I am wrong. Thanks

[PartScott]

I didn't think the 35% return option was still available. Let me know if I am wrong. Thanks

*** CSO orders purchased in the last 365 days may be returned on an MR11 with a 35% restocking fee.

From the bottom of page 35 of the latest P&P manual.