Investing in speed of service
Fixed ops can help your dealership achieve a higher absorption rate and the single largest fixed ops opportunity is mechanical wholesale. Which raises the question; “How do I increase my wholesale parts business?”
The answer is to offer fast wholesale parts delivery. In fact, the number 1 reason shops select a supplier is speed of service. Shops are most likely to select a supplier who can get parts to their door within 45-90 minutes. And achieving this speedy service includes fast response and order processing times in addition to fast delivery.
Shorten your Response Time
The first step to fast order fulfillment is a faster inbound sales process. This means responding to electronic orders quickly and shortening hold times. In some cases, this means dealers shortening their response time on electronic orders from 2 hours to 10 minutes.
While this is not a simple process, it is possible if the dealer parts team has the right focus at the right time. These improvements can come simply moving early morning tasks to the late morning and using existing tools to their full advantage.
Independent shops peak activity levels are a lot like your service department. This means balancing your workload so your wholesale team can focus on mechanical ordering systems and phone calls when customers are calling.
Most collision parts orders are not as urgent as mechanical parts orders. This means spending the morning focused on collision parts is probably not increasing collision sales and is likely reducing mechanical part sales. So instead of concentrating on collision fulfillment in the morning, focus on mechanical orders.
Stop the Busywork
Parts Department incentives focus on cost management. This focuses countermen on accuracy over customer attention. So instead of answering the phone and selling parts, countermen are spending their time double checking EPC driven ordering systems to catch errors that don’t exist.
One of the features of a well-run fixed ops dealership is to use electronic systems effectively. This means parts countermen should stop focusing on pain points that do not exist. One example is to stop double checking highly accurate ordering systems. The time it takes to check a 30-line-item order could be used to receive 3 mechanical wholesale orders or make cold calls. If you need support, 3NG Fixed Ops Consulting Services can help.
Update your Inventory Strategy
Competing effectively in the wholesale mechanical space maintaining the right stock levels. It is not uncommon for dealers to ask; “What are the costs of not holding enough inventory?” The answer is “You can’t sell parts to shops that aren’t in stock, so the cost is reduced sales.”
Dealers Parts Departments are incented to reduce inventory levels and have used a just in time inventory system to lean out their stock. The result of this JIT inventory system has been better profits and less obsolescence at the expense of revenue.
Unfortunately, this focus on cash flow has created closed-loop inventory practices that discourages dealers from stocking parts that the wholesale shops want. And the less dealers sell, the less they stock. So, this ongoing push for less inventory creates a downward spiral that has most dealers and automakers out of the wholesale parts business by the time a vehicle is 10 years old.
Capturing more sales means using new inventory management techniques to break the cycle. And improving the supply chain can come from a few simple steps:
- Track unconverted wholesale inquiries stock parts you didn’t convert.
- Purchase aftermarket demand data. There are great sources of customer demand data that can help identify revenue opportunities.
- Add powertrain to your inventory and inbound sales pitch.
- Inventory management systems such as PartsEye can set the right levels to increase wholesale sales
Add Hotshot Wholesale Parts Delivery
It used to take a lot of investment to build a hotshot parts delivery fleet. Those days are gone. Dealers can now add last mile delivery service to their wholesale parts delivery service almost overnight.
Fleet dispatch software such as Elite Extra organize the dealer fleet for improved efficiency and can improve efficiency from 40% to as high as 90%. This creates time during the day for hotshot delivery.
On Demand delivery services are also a great way to improve service levels. On-demand can be cheaper than using a fleet driver for a hotshot delivery and there is nearly an unlimited pool of drivers, so peak capacity is not an issue. And providers such as Elite Extra and RevolutionParts make local delivery solutions fast and easy.
Stay Close to the Dealership
Focusing initial wholesale efforts on customers near the dealership allows Parts Departments reduces costs, improve service levels and manage growth. And with nearly $9M per year in business per dealer PMA, there’s plenty of business nearby. The illustration below shows how keeping it close can reduce wholesale parts delivery costs and improve service levels.
