Question about Chrysler's ARO Parts System

[sadie1]

We are a small CJD store in a rural area, we typically stock somewhere around $40,000 worth of parts inventory. I understand that at some point in the near future Chrysler is going to make all dealers use the ARO system. I am currently using the Mopar 5300 SSO system and not sure if I should hold off in switching to the ARO or if I should just switch over right away. Please let me know what your experience is with the ARO and if there is any problems or catches returning their suggested stock after 9 months. Any Input would be greatly appreciated...

[XDCX]

sadie1 - It looks like your topic concerning the ARO Parts System deserves its own thread.

I'll create a new thread in the parts section and then move both of these posts.

[XDCX]

Originally Posted by sadie1

Any Input would be greatly appreciated...

Hopefully we'll get some input on the ARO System for you because I know that I will not be able to offer any help.

It's been a long time since I've studied Chrysler's parts return programs and I don't have any first hand experience with the Automatic Replenishment programs.

Does anyone have some feedback on Mopar's ARO System? Any reasons why a dealer would want to delay signing up for this program?

[JoeRocket]

Originally Posted by sadie1

We are a small CJD store in a rural area, we typically stock somewhere around $40,000 worth of parts inventory. I understand that at some point in the near future Chrysler is going to make all dealers use the ARO system. I am currently using the Mopar 5300 SSO system and not sure if I should hold off in switching to the ARO or if I should just switch over right away. Please let me know what your experience is with the ARO and if there is any problems or catches returning their suggested stock after 9 months. Any Input would be greatly appreciated...

Wellll.....here's the deal. Non-ARO dealerships earn less return allowance and have lower Dealer Generated Return percentages than ARO dealerships. Purchasing discounts are also worse. Now, since you are only holding 40K or so, that might not matter to you much.

That said, I'm sure you have heard this sales pitch from Chrysler about how rosy things are on the ARO side of the fence. OK, sure, the ARO controlled parts are protected against obsolescence, right? So you feel 100% protected, correct? *cough* Uh huh, sure.

In a perfect world with ARO, with perfect people at your store, you will never grow obsolesence and your return allowance will be just enough to cover special order errors/returns. But the world, and it's occupants, are far from perfect. You sell a part to the shop, ARO reorders the part, it comes in and lands on the shelf......and wait. The shop misdiagnosed the issue and sends the part back to Parts Department. Now you have 2 of these parts. The Best Stocking Level (BSL) is 1, right? So what do you do with the other one if there isn't demand for that part again? If you guessed, "Hey, I'll break out the ketchup and eat this sucka!", you get the gold ribbon. Same if the counterman screws up a lookup, same if a wholesale customer returns the part, etc, etc, etc. It adds up. Throw in the parts re-designs that render a given part obsolete...you get the idea. Now, if you set aside a certain amount each month from parts gross for inventory cleanup, that might cover what you eventually accumulate.

Oh, but you have return allowance, right? Yyyyyeeeaaaahhhhh.....You are using that up with special order no-shows, look up errors, wholesale returns and a poorly structured service parts-ordering accountability procedure. Don't count on that to cover any of ARO's deficiencies.


At any rate, it's not a perfect system. It is however a perfect system for the manufacturer. You didn't think these manufacturers are going to RIM/ARO type systems to protect you, do ya? Bwahahaha. Sucker. It's to protect them. This way, they can better forecast stocking levels, fence you in with BSLs, exclusions, etc, and keep less of the higher risk parts on-hand. The worse news is that they will keep penalizing non-ARO dealerships more and more until you don't have any other choice but to sign up.

Expect your inventory investment to swell once you pull the trigger. I'd say 20% before it plateaus isn't uncommon, but your tiny little 40K makes me seriously doubt it would be ANYWHERE that low. The good news is that the breadth of your inventory will increase, thereby greatly increasing your "off the shelf" availability. That's part of the sales pitch, but it's true. Of course, your GM will have no background in fixed-ops whatsoever so he'll whack out when your inventory grows exponentially and you'll have to draw him a picture with your kids crayons before he understands what the hell just happened. Even then, you'll probably have to stick pins in a voodoo doll to finally get him out of your hair again....lol.

Another benefit to ARO is that eliminates the russian-roullette game of "Lets do a Stock Order" from the PMs life. Sure, using good phase-in/phase-out parameters, watching sales demand, and having solid market knowledge definitely works. But it's still like investing in Wall Street. You know you're gonna get burned. It's a question of when, not if....lol.

Might as well jump in with both feet. If y'all aren't being shut down, then you will be on it sooner or later anyway. Might as well get after it and learn it. That way, if something happens and you get axed you can look the GM at the next dealership in the eye during the interview and say sincerely "Yes sir, I'm very familiar with ARO....."

[XDCX]

JoeRocket - First post - Welcome to DealershipForum

And what a great first post it was - thanks for your information and insight.

I'll send an e-mail to the original poster to make sure he sees your post and can benefit from your experience. :thumbsup_old: