DealersEdge Professional Forums

I have to believe that a lot of confusion with inventory begins with Days Supply and Phase In/Out criteria. It would seem to me that there would have to be some benchmark criteria here that would hold for most dealerships, regardless of location and market. These would be controlled by your sales and mix. The lack of this benchmark, coupled with the fact that the setups are Greek to a lot of people and they fear changing something they don't understand, causes people to live with the dragon, as long as he stays asleep.

I have heard many experts and consultants give "numbers that will work" over the years, but the numbers are never the same. Combine this with DPs not understanding, and the definition of obsolescence constantly changing--it's no wonder there are a lot of stale inventories, dazed looks and managers with drinking problems.

Scotstrong-- what are your suggestions for improving the order forumulas? Yes, the DMS providers are listening, what do you want them to hear? What changes would make the stock order calculation better for your inventory management?

Chuck- regarding your suggestion that the order formulas be changed to look at weeks rather than months, are you also saying that this change would mean you would examine a smaller period of sales history? If you currently look at 12 months of history, you would no longer look at 52 weeks of history but something less than that?

Pete, I have heard dealers for the last ten plus years ask for a sampling of 52 weeks per year, rather than 12 months. Example: If your criteria is three cycles per year phase in then your new model parts phase in in three weeks worth of sales rahter than 90+ days. Ask how that equates in customer satisfaction numbers? Consider yourself a new car customer haveing your car down for parts ordered.
Consider the manufacturers point of view. Trying to predict the demand of parts four to six months down the line. Each of our high line manufacturers are starting to monitor vehicles as we diagnose them through T1 lines attached to our test equipment. That works great for finding faults with new vehicles and addressing them quickly. The parts depots have to judge by VOR or Emergency orders for vehicles already down for repair. Imagine if they could see the trends through the dealers stock orders 60 to 90 sooner, due to the DMS having a more precise stocking criteria. The potential is that they could have fewer vehicles down for repair in the dealership. Wouldn't J.D. Powers love that! I don't know of any manufacturer that still has a Monthly parts stock order, so why haven't the DMSs kept up?

John Belen

If Chuck's clients only edit 10%,which is also MNI's guidlines,maybe the problem is us.If we do not have our criteria as in BSL ROP phase-in etc set where we need it,of course our stock orders are going to be a process.Like Eric said most of us are afraid to wake up the dragon.If you are cancelling the same line every time you run your SO,should that part be there? Or should you move it to another source and not look at it or test it more. If you are always adding to line items,are your days supply set right? I can only imagine if the DMS suppliers or manufacturers started telling us how to set up our systems and order "their way". Ask any GM guy how much he likes RSG. Anyway thats my two cents.....John

If you have a 2.5 engine and put in all your expertise and lots of money and time in to it you will likely never have a motor of 600-horse power. The engine driving the current vendor parts systems is like this. It seems that the current software engines and methodology generally only manage a stockorder that is 70 or 80 % correct (approximately). Therefore, no matter how much time a parts manager spends on tweaking guides and changing things only a certain amount of improvement will be available. That is because the base engine that runs things is not the right base to build on.

Attaining 90 percent or better accuracy seems to be only available when many years of experience is combined with outside programming techniques and methods. In other words one must pay others to support the product that the dealership also happens to be paying support on to someone else. It would be like GM or Ford saying we better get Wal-Mart to service our cars because we cannot seem to do it ourselves.

Current DMs vendors have produced some wonderful tools for our industry. Unfortunately some of those tools are becoming redundant and dull in their ability to be effective.

Chuck,

Honda up here in the great white north introduced DDS and took away stock order discount. It has its advantages but I would prefer that extra discount earned at the end of the month.

I believe the main issue here is the yabuts.
We set the system to phase in with x sales in y months and it orders three transmissions, because we sold a zillion.

And we say ya but I dont it to do that. So we limit the dollar value and it stops ordering subframes that bodyshops want yesterday, because they cost $1000.

And we say ya but I dont want it to do that.

How many guys print a stockorder that includes source 100, and then bitch that they have to delete half of it? Just because a part phases in, doesnt mean it has to be on your stockorder every day.

It is a concept thing. What do I want to stock? If you sell something every single month it is a no brainer you want it on the stockorder. So give it its own source [101 or whatever] and set it up to report on STK. If you just ran 101 for your stockorder you would have a zero edit rate.

But what about the other stuff? If you sold more than 4 a year you would probably want to stock that right? So create source 102 and put parts with years sale 4-11 in it, and set it up to report in STK. Your edit rate will now be 1 or 2 items per order to adjust. The two sources can have different days supply criteria.

But what about that tranny that snuck in again? Go into PM and change the source back to 100. What about the 4000 oil filters it wants to order? Go into PM and change the full bin to 1000 or whatever you want.

What about the phase in parts? Phase in parts will normally be in source 100. Set up STK so that 100 is not normally included. When you want to review, add source 100 and give the stockorder the name TEST. When you have the printout in your hand, immediately go into RA and cancel the order. Review source 100 and for parts you decide to stock, go into PM and change them to source 102. They will now be on your everyday stockorder.

What about that new model that has come out that you know you want filters and bumper covers for? It will take at least 3 months according to phase in criteria. Go into PM, change the source to 102 and special status to blank. It will now be on the walmart order.

What about that other new stuff that has to keep being emergency ordered? Run SGR report NS parts with years sales greater than 2. Review it and change anything you want to source 102, special status blank.

By now edit rate should still be 1 or 2 items per order, can be run in five minutes and give you more of that precious resource,
time.

WOW - what a thread.

Here's my ramblings on the above items.

In my travels as an installer, the days supply calculation was a custom set of numbers for each and every store. Sure I started with the standard 30BRP/45BSL and 3/12 phase-in/out. Then I played with the numbers until the parts manager (PM) smiled with acceptance. But typically, the acceptance was the fact that I mirrored the calculation of his/her old system. That doesn't necessarily mean it was right or better - just simply the same.

There were cases where the PM would look at the new stockorder and the order value was thousands of dollars more than his old calculations. He felt it was correct that it wanted to replenish so many zero on-hand parts, but he also felt that this type of investment increase would be inappropiate due to the budget constraints he was tied to.

Conversely, if the new order was less than previous orders, there was suspicion that he risked stock-outs. But there was also suspicion that the new calculation was telling him to reduce the depth of stock.

Many (not all) PM's wanted a turn-key system that just worked from the get-go. These are the people that have no idea (or desire) to adjust and tweak over time and are the same stores that run 60% accuracy with 40% adjustments.
The few that discipline themselves to understanding the setups and continually make adjustments are the ones that have a 90+% accuracy.
Time is the key. History cannot create itself faster than it already does
And yes, there are dealers that simply run the order and submit without review. The order had proven itself to be exactly what the PM wanted.

The advent of daily orders threw many non-tweakers a curve-ball. For many, it was a case of "it still kinda works, better to make daily adjustments than to play in the setups and really screw it up." aka-your dragon theory.

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Do the vendors look at this page?

Absolutely. This is another form of feedback that is used to determine where future enhancements need to be made.
What isn't understood is the time it takes to develop enhancements.
Factors (not excuses) such as:
1. Existing projects in process
2. Accomodations to 40 franchises - not just your specific need
3. Analysis of demand to a few or the majority of clients - custom programs VS general releases
4. Analysis of amending existing programs or starting over with all new code.
5. Supportabiliy, installability, and testing in several different combinations.

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The trend du jour.

Seems the rage is wanting to move from 3 months with sales to 3 weeks with sales to phase-in. Or some variant of that theory.
At first, I agreed with the idea, then I backed off.

Phasing in a part is a gamble of CSI VS obsolesence.
If the system is told to track/test the part for 90 days (3 months) to prove stock-worthiness, then we
can at best have the part stock itself automatically after 62 days (beginning of the 3rd month) if all the conditions are met.

Changing the criteria to 3 weeks with sales can and will turn a part into stock within a month. There just seems to be too many flukes of demand. The risk of obsolesence is much greater - as its easier to begin stocking a part than it is to remove an unwanted part from inventory.

For those that want to begin implementing a theory of weekly demand, all we need to do is run a simple report of parts that meet this criteria.

LIST PART-NO. WITH YRSL GT "3" AND WITH CUR GT "0" AND WITH SS "NS" JAN FEB...DEC YRSL LOST O.H. O.O.

If you feel this part is worth stocking, then simply change the status to blank or stocking.
I think you'll find the list is a gamble and many of the parts do not deserve a bin label just yet.

Dale

A note on Dale Here is a talented ADP person who sees both sides of the fence and has expert experience and talent to assist. On many occasions on this forum Dales advice and comments have possibly saved ADP a client and definitely has solved problems.

Perhaps unknown to most is that Dale does the work on this forum on his own time as someone who is very interested in helping others.

So here is a note of appreciation Dale for your help and all the good work you do . hope ADP appreciates your initiative and talents fully.

Peter ... I re-read the posts here and notied your question ... hope Chuck you dont mind I answer this.

YOUR QUESTION ....
Chuck- regarding your suggestion that the order formulas be changed to look at weeks rather than months, are you also saying that this change would mean you would examine a smaller period of sales history? If you currently look at 12 months of history, you would no longer look at 52 weeks of history but something less than that?

Here is what would be a good starting point.

Three years sales history.

One of the reasons this is desirable is that you now have solid reference points of sales history and of TIME.

This is desirable for three main types of sales

1) SEASONAL SALES ...identifying recurring patterns.

2) LONG TERM CYCLIC. (RECURRING)

3) SHORT TERM CYCLIC.

This would allow for detailed analysis and a solid reference to compare current activity.

Interesting how DMS vendors are saying that information can be data mined by merging history into EXCEL or ACCESS ...yet the software history file contains only one prior year (or on occasion 2 years history) available. So merging the data into Excel is only giving one window of time to compare and this is simply not enough information to base decisions on.

This lack of sales history is one of the reasons stock orders generally do not perform as well as they should be able to.

At one time technology (hard drives) could not hold this much data; however things have changed to allow for this. Once again here is a suggestion that has been voiced for several years with virtually no vendors saying yes lets do this.

Going to weekly calculations (or even daily) dramatically increases the sensitivity of the calculations. Parts sales are far more fluid and dynamic today then say 5 years ago. The result is that staying too long a time period with a weighted calculation (value) does not allow the computer system to react quickly enough to the changing sales environment.

In order to appreciate this fact a further study of "Univariate Forecasting" and calculations is suggested.