Dealers and fixed operations managers are taking aggressive steps to dispose of their parts desks' unwanted and obsolete stock, even as factory parts return policies grow stricter. More vendors are offering software and other products to help them do that.
Mike Nicholes, an industry consultant in Post Falls, Idaho, pegs the annual holding cost of a typical dealership's parts inventory at 25 to 28 percent of its total value.
At least 80 percent of inventory should consist of fast-moving parts that will sell within six months of delivery to the dealership, Nicholes says.
"If I have obsolescence back there that's not turning," Nicholes told Fixed Ops Journal, "that's like the used car sitting on the lot for many months."
Traditionally, the industry has defined an obsolete part as one that fails to sell within a year, Nicholes notes. But he and other analysts now say nine months is a more realistic cutoff point.
After that, Nicholes says, if a part can't be returned to the manufacturer — through increasingly narrow return allowances or guarantees in recommended stock programs — a dealership should look for other ways to get rid of it.