Dealers can tackle stock, budget, training issues with remote inventory management

Dealership parts managers face a daily challenge akin to a double-edged sword: Make sure technicians have the right part for the right vehicle at the right time to achieve same-day service, but without accumulating excess parts inventory, which can drain working capital.

A technology known as remote inventory management can help dealers find a balance between the two competing priorities — and in the process boost off-the-shelf fill rates, reduce lost sales, minimize parts obsolescence and ratchet up revenue. It also gives parts managers more time to focus on things easily neglected amid the day-to-day grind, such as training staff and touching base with wholesale customers.

Remote inventory management also can plug the knowledge gap left by a chronic lack of training for less-experienced parts managers, says Brian Crossin, an instructor at the NADA Academy.

“Parts managers generally receive little training on how to properly invest hundreds of thousands of dollars in parts and get a good return on that investment,” Crossin told Fixed Ops Journal. “In those cases, RIM is a good alternative.”

Bryan Klugh, owner of SmartCo Services, which developed a third-party remote inventory management system called PartsEye, says training is very limited.

“There’s no university that offers a parts management degree,” he says.

There essentially are two kinds of remote inventory management services used by dealers: the aforementioned PartsEye and automakers’ in-house systems, management degree,” he says.

There essentially are two kinds of remote inventory management services used by dealers: the aforementioned PartsEye and automakers’ in-house systems, such as Mercedes-Benz StockPro and GM RIM. Some automakers encourage dealers to use their remote inventory management by giving them back-end incentives if they comply with suggested levels of parts inventory. Incentives management degree,” he says.

“Manufacturers felt they had to step in to make sure customer expectations were being met in terms of timely repairs,” Crossin says. “So they came up with their own criteria to move the supply chain to the dealers, rather than relying on the manufacturers to overnight parts to them.”

Dan Earley, parts director at Shaheen Chevrolet in Lansing, Mich., says the dealership uses GM RIM, as mandated by General Motors.

“My purchasing guy loves it,” he says. “It makes his job much easier and takes a lot of the guesswork out of maintaining inventory. It also keeps us compliant with various parameters in a GM parts-purchasing loyalty program, which earns us discounts and other back-end benefits.”

With GM RIM, the dealership maintains an off-the-shelf fill rate in the low-90 percent range. In addition, the store rarely has to special-order parts, and parts obsolescence is not an issue, Earley says.

“GM RIM keeps our inventory very clean and orderly,” he says.

As Earley noted, some automakers require dealers to use their in-house technology. But many other dealers that don’t have such a requirement use Klugh’s PartsEye system.

PartsEye counts a dozen automakers — including Subaru, Kia, Hyundai, Mazda and Mitsubishi — and roughly 5,000 dealerships nationwide as customers. The system is compatible with more than 40 dealership management system platforms, Klugh says.

Individual dealers pay $695 a month for the service; Klugh says automakers that use the technology typically sell the service to dealerships at a lower price.

PartsEye aggregates purchase data culled from a store’s DMS demand history, then compares it with purchasing trends at many similarly sized local and regional stores that sell the same brand. It relies on complex algorithms and is akin to machine learning, Klugh says.

“The best parts manager only sees movement within his store,” he says. “But we see it across many avenues of distribution … and can see developing trends that parts managers can’t see.”

Crossin says remote inventory management isn’t necessarily the end-all and be-all to effective stock management.

“If you interview parts managers, you’d probably get a mixed bag of reviews,” he says. “It’s a polarizing topic. Some love it, some hate it.”

On the “love” side of the ledger, Crossin says, is that some parts managers appreciate how it helps them run a better inventory or gives insightful stocking suggestions.

“Other parts managers don’t like it because they feel it forces them to stock parts that they wouldn’t normally stock and they’d prefer to make their own stocking decisions,” he says.

Count Joe Joyce among the former. The parts manager for Ganley Westside Subaru in North Olmsted, Ohio, says PartsEye dramatically simplifies parts ordering and boosted key inventory metrics in his department.

Joyce says it’s “mindblowing” how much easier it is to order parts and manage inventory with PartsEye compared with how he did it at his previous job.

“I had to go through big, nonsensical 10- to 15-page reports and manually check every number to make sure stock was being replenished,” he says. “It took a half hour to an hour every day to go through the list.”

Now it takes him about 10 minutes with PartsEye.

That gives him more time to do things such as attend to technicians, make phone calls and help service writers and other managers throughout the dealership.

As for tangible metrics, Joyce says the store’s off-the-shelf fill rate is just above 92 percent and the percentage of inventory for stock — a figure that goes hand-in-hand with the off-the-shelf fill rate — is 96.5 percent. So essentially all of the store’s parts inventory is used to fulfill regular demand, he says.

Looking at the big picture, Crossin says parts-purchasing practices generally suffer from a lack of innovation. Historically, many parts managers have relied solely on their DMS to track trends and order parts accordingly. But remote inventory management technology could eventually morph into a full-blown artificial intelligence solution for parts managers.

“Parts departments are ripe for disruption,” he says. “If Amazon can predict when I might be running out of toothpaste and show me an ad for it, I think that in the near future, RIM could have endless possibilities.”

Manufacturers likely know what vehicles and how many are operating in a dealer’s primary market area. And telematics data can show them the average miles of those cars and — in combination with national warranty data — the failure rates of parts, Crossin says.

“So with all that data,” he says, “AI and machine learning could make almost perfect recommendations about what parts stores should stock rather than looking backward only at what’s been sold.”