The late Larry Miller, who built a Utah-based car-dealership empire, began his career as a parts manager.
The story goes that he excelled at that job because his photographic memory let him memorize an array of parts numbers.
Sounds impressive. But does it help in serving as a parts manager?
Not really, says parts management guru Gary Naples.
”The photographic memory might have helped him in other aspects of the business,” Naples says of Larry Miller. “Remembering part numbers may make you a good counter person. But once you move to management, it’s a different animal, especially when it comes to knowing what and what not to stock.”
The parts department is a low-profile but highly essential part of a dealership.
WardsAuto discusses departmental best practices with Naples and Tully Williams, parts and service director for The Niello Co., an 11-store dealership group based in Sacramento, CA.
Williams takes a methodical approach to his job. He’s also a practitioner of rewarding positive employee behavior.
Naples is the author of books on parts management, including newly revised editions of “By the Numbers: Principles of Automotive Parts Management” and “Beyond the Numbers: Managing the Assets of an Automobile Parts Business,” published by the Society of Automotive Engineers.
“The focus should be on three things: inventory control, financial knowledge and satisfying customers,” Naples says. “Those things haven’t changed since the beginning.”
Williams says it’s essential for service and parts managers to work as teammates. Otherwise, it’s mutually destructive.
“You need to be 100% focused on the shop,” he says. “How do we drive parts and service? We sell repairs. By selling more service hours, we sell more parts.”
Parts management is digitalized today. The inventory control system is part of the dealership management system (DMS).
But it’s a bad idea to flick the switch, sit back and let modern technology do the ordering.
“The key to maintaining customer-responsive inventory is how well you know the tool you are using to manage it,” Naples says. “The parts manager must know what’s happening within the department. To do that, you need to know the inventory system.”
The digital tool is only as effective as how well it is calibrated on an ongoing basis. That requires monitoring and familiarity.
He cites the need to oversee the system’s recommendations on what to order and what to no longer order.
For instance, there’s a phase-in of new parts as automakers roll out new vehicle models. Conversely, there’s a phase-out function of thinning the stock of parts with lessening demand.
“If the system is not calibrated properly, the effect will be undesirable,” Naples says. “If the phase-in is too restrictive, you will be slow in meeting demand.
“On the other hand, if the phase-out is too aggressive, you may not be ordering enough parts. That could hurt.”
It often leads to emergency orders, which increase acquisition costs and hurt profitability.
“Parts managers must monitor those settings and how they’re affecting inventory,” Naples says.
An effective parts manager also reviews monthly financial documents, with an eye on profits and losses. But some dealership brass hold financial information to their chest too closely.
“The parts manager either gets drips and drabs of it or doesn’t see the profit/loss statements,” Naples says.
He adds, the financial statements together with the inventory-management reports showing turnover “should produce a picture of whether you are satisfying customer needs and making money.”
Williams says his dealership group’s setup is for parts department employees to deliver parts to auto technicians who digitally request them from their workstations.
“For one thing, we want the technicians working on cars, not walking over to the parts department, filling out an order and waiting for it to be fulfilled.”
So, the Niello system is for parts employees with carts who deliver requested items directly to technicians.
An added benefit: It gets the counter people out and about the shop. “It helps them be part of the family,” says Williams.
How will emerging artificial intelligence affect the parts department?
Here’s Naples’ take on it: “AI will be outstanding for predicting what parts will be on the shelf. A human can’t respond as quickly to changes, such as customers' purchasing habits.
“That said, there still must be interaction with department personnel and customers. AI makes decisions based on numerical data, which takes out the human factor. AI will enhance the tools the parts manager already uses.”
Despite its importance, parts seem like the least visible of dealership departments.
“I think it’s invisible to the dealership itself sometimes,” says Williams. “We’re trying to break that mold.”
Yet, parts touch virtually all other dealership departments.
Obviously, it affects service department operations. But it also serves the new-car department by selling accessories. The used-car department relies on an efficient parts department for quick reconditioning of acquired pre-owned vehicle inventory.
It’s a balancing act to stock enough parts – but not too many of the slow sellers.
