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Old 06-04-2013, 04:45 PM   #1
erich03
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Default Is anyone buying obsolete inventory?

Some of us smaller dealers, faced with old employees who didn't do their jobs right, and a lack of.............. well, management, have large amounts of obsolescence. I would be willing to sell all of mine ( over $20,000 ) for 30 cents on the dollar if someone wanted to buy it.

Has anyone else had this dilema, and how did you fix it, or who did you call? I have been managing the department for a bit over a year now and working this list down to a manageable level, and have had no luck to speak of in getting rid of the last of my little problem. Tried OEC, Dealermine, PartsVoice, etc. And now with the new........Parts Program GM has in place, well......................... Dont get me started on this one!
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Old 06-04-2013, 06:59 PM   #2
jbellx02
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Default Dealer Operator

Would gladly take 10 cents on the dollar for my obsolete inventory (100K) +. It was my fault to let my parts managers let things get out of control. I watched the new and used car inventory and did a good job, but was incompetent when it came to parts inventory.

Our new policy is to make the parts manager responsible for complete inventory control. If we make mistakes, ordering wrong parts, accepting broken parts, etc., charge them off immediatly. Take your lumps and move on.
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Old 06-05-2013, 10:55 AM   #3
Lakeshow
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We are in the same boat as jbell. $100k+ in old stuff inventoried, boxed, and on pallets shrink wrapped and ready to go. I'd gladly take 10 cents on the dollar for all of it, so far the best offer I have 8 cents on the dollar and they want to pick and choose their parts. Same deal too, incompetent parts manager not doing his job. Apparently it's my fault for not tending to my babysitting duties.

I've tried Ebay on some of the real old stuff that could be used in restorations, but have had very little action. If someone has a better idea I'd be glad to hear it!
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Old 06-05-2013, 02:12 PM   #4
erich03
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It only helps a little at a time, but when I buy an engine or trans out, and get the discount, rather than take the discount on gross profit, I sell the part at book cost, put the engine or trans into inventory at the cheaper price, and make old obsolete that equals the dollar total of the difference disappear.

A creative solution to a horrible problem I have been told.

Ive also sent lists to some of the big hitters that I have found on Google, but the same thing, they want to pick and choose and take only what they want. One day, maybe, the obsolescence gods will smile upon us and make our old parts once again desirable and we can sell them all!
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Old 06-05-2013, 02:50 PM   #5
43+
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Don't put all the blame on the parts manager.

We have a huge amount of obsolescent parts that are the fault of the service dept.

IE:
1: I ordered the part just in case I needed it.
2: That part didn't fix the problem and we need another part.
3: Service lane parts diagnosis that was wrong.

Our Service dept is a whole lot more INCOMPETENT that the Parts Dept.

Additionally:
1: All the over-the-counter screwballs that didn't pick their parts up. It was cheaper at the auto parts store.
2: Returning parts for BS reasons.... especially the wholesale customers and body shops.
3: Salespeople selling accessories that people really didn't want.

MANAGEMENT Not Listening to the "Writing on the Wall" they were given many years ago by the Parts Manager.

If you want to play the " BLAME GAME ", then put the blame into a correct perspective.

Everyone is to blame... not just just the Parts Manager.

Everyone else's POOP doesn't stink. Yea... it's easier just to blame the DUMB people in the Parts Dept.

I speak from my OWN experiences... I do not speak for all. I would resent any BLAME put solely upon my head. I warned management at least 10 years ago of the problem and how to cure it. That's what happens when Management thought they knew better than I do.

We were at $6000 obsolescense 10 years ago when I put my foot down and was ignored. We are now at near $60,000 thanks to MANAGEMENT..... not me.

10 years ago we had a 6% return reserve. When the nonsense exceeded the 6%... nothing more was returnable.

I got rid of all the obsolescence when GM gave everyone a 1 time to shot to return everything with no penalty. After that, the problem still escalated. Not my PROBLEM! They were WARNED!!!

43+

Last edited by 43+; 06-05-2013 at 03:24 PM.
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Old 06-05-2013, 03:35 PM   #6
Lakeshow
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Quote:
Originally Posted by 43+ View Post
Don't put all the blame on the parts manager.

We have a huge amount of obsolescent parts that are the fault of the service dept.

IE:
1: I ordered the part just in case I needed it.
2: That part didn't fix the problem and we need another part.
3: Service lane parts diagnosis that was wrong.

Our Service dept is a whole lot more INCOMPETENT that the Parts Dept.

Additionally:
1: All the over-the-counter screwballs that didn't pick their parts up. It was cheaper at the auto parts store.
2: Returning parts for BS reasons.... especially the wholesale customers and body shops.
3: Salespeople selling accessories that people really didn't want.

MANAGEMENT Not Listening to the "Writing on the Wall" they were given many years ago by the Parts Manager.

If you want to play the " BLAME GAME ", then put the blame into a correct perspective.

Everyone is to blame... not just just the Parts Manager.

Everyone else's POOP doesn't stink. Yea... it's easier just to blame the DUMB people in the Parts Dept.

I speak from my OWN experiences... I do not speak for all. I resent any BLAME put solely upon my head. I warned management at least 10 years ago of the problem and how to cure it. That's what happens when Management thought they knew better than I do.

43+
Sure the service dept. is to blame for some of it, and the goofy over the counter guys too, and a wholesale account or two. I've worked in every corner of a dealership so I have no problem giving you that. But who is to blame for the boxside that was ordered for the wrong side when the estimate clearly shows the correct side? Who is to blame for the Lucerne headliner that is the wrong color? Who is to blame for the multipack of rear bumpers that were ordered when we only needed one? And why didn't some of this stuff get returned when GM had a decent return program?

I mean no disrespect, but I hired a Parts Manager to control inventory(even says so in the job description he signed). And as far as I am concerned even if 50% isn't his fault, that's still a huge FAIL. Say what you will but it's my Parts Manager's job to control inventory and that did not happen. Passing the buck, playing the blame game, and saying it's not your fault just doesn't cut it for me. I take responsibility for my actions everyday, and expect my employees to do the same. ESPECIALLY when they are being paid to do so. I do blame myself for not monitoring the situation more closely, so I am taking some of the blame(for the job I paid someone to do).
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Old 06-05-2013, 04:30 PM   #7
erich03
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Quote:
Originally Posted by 43+ View Post
Don't put all the blame on the parts manager.

We have a huge amount of obsolescent parts that are the fault of the service dept.

IE:
1: I ordered the part just in case I needed it.
2: That part didn't fix the problem and we need another part.
3: Service lane parts diagnosis that was wrong.

Our Service dept is a whole lot more INCOMPETENT that the Parts Dept.

Additionally:
1: All the over-the-counter screwballs that didn't pick their parts up. It was cheaper at the auto parts store.
2: Returning parts for BS reasons.... especially the wholesale customers and body shops.
3: Salespeople selling accessories that people really didn't want.

MANAGEMENT Not Listening to the "Writing on the Wall" they were given many years ago by the Parts Manager.

If you want to play the " BLAME GAME ", then put the blame into a correct perspective.

Everyone is to blame... not just just the Parts Manager.

Everyone else's POOP doesn't stink. Yea... it's easier just to blame the DUMB people in the Parts Dept.

I speak from my OWN experiences... I do not speak for all. I would resent any BLAME put solely upon my head. I warned management at least 10 years ago of the problem and how to cure it. That's what happens when Management thought they knew better than I do.

We were at $6000 obsolescense 10 years ago when I put my foot down and was ignored. We are now at near $60,000 thanks to MANAGEMENT..... not me.

10 years ago we had a 6% return reserve. When the nonsense exceeded the 6%... nothing more was returnable.

I got rid of all the obsolescence when GM gave everyone a 1 time to shot to return everything with no penalty. After that, the problem still escalated. Not my PROBLEM! They were WARNED!!!

43+
Ultimately, it is my responsibility for anything that happens in the department now. I have to take the blame, get the ass chewing, and catch all of the crap that rolls downhill for anything any of my employees do. So, that is why I said in my earlier post that it was lack of management. I can also say, in my case, that the lack of management caused a lack of training. One of my people before I started was just going into RIM and clicking temporarily exclude becuase "thats what the manager told her to do."

Can't blame someone for doing what they are told.........

However, you are absolutely correct about the service dept ordering a "test" part, or the screwball over the counter bringing back the part because he ordered the wrong one, etc. Ill give you that. Certain things are going to happen no matter what you do. It just boils down to how the manager manages, and how he or she keeps tabs on what is going on.

Management, you are correct, seems to know it all. Even when it breaks, and you have already told them it needed to be fixed, somehow they still end up being right and knowing what to do........

I didn't mean to stir the pot (although that is what I do best) when I made this post. I was simply trying to find some advise on getting rid of my obsolescence...............................
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Old 06-05-2013, 05:08 PM   #8
43+
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Thanks for the honest feedback.

My situation was a bit more unique.

Yes... I was in charge and everything was ALL my responsibility.

However.... I was being limited as to how much control I actually had.

I wanted all SOPs paid for in advance with no returns unless the parts dept. made the mistake. That was not not permitted.

I wanted no returns from body shops unless WE made the mistake. They didn't want to tick off the larger Body Shop accounts.

I wanted no returns from any shop misdiagnosis. I had to put the " Performance Tested " part back on the shelf and usually with no original - or damaged packaging. I was not allowed to charge it back to Service.

Did our parts dept make any mistakes? Of course we did.... but not anywhere near as much as all the other failures of our system.

This disasterous method of thinking by management 13 years ago led to the gross obsolescence.

Most PM's don't have to put up with this crap. I HAD to put up with it. That is why they have all those garbage parts they cannot unload.

13 years ago I had 30 years GM experience and now I am going on 43+.

Many years ago... some companies were buying total inventories. I am not aware of any that currently do that.... but I would suggest doing some internet homework.

43+

Last edited by 43+; 06-05-2013 at 05:13 PM.
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Old 06-06-2013, 06:15 AM   #9
birch3x
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Some real good opinions and points on this topic. Obsolete parts are a part of this business, always have been and always will. We went through management changes and inventory strategy changes for years. What we finally did several years ago is workong very well. Every time we stck in a used vehicle (retail) we charge a small amount of money to the unit and put it to a parts account to offset obsolete parts. The parts are then charged to an invoice to balance the books, then the part is thrown away.
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Old 06-06-2013, 07:29 AM   #10
zep33
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All dealership woes are the fault of the parts department
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Old 06-06-2013, 12:26 PM   #11
43+
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Thanks for the compassion ZEP.

You obviously understand what can be oblivious to others due to MANAGEMENT wearing BLINDERS.

In my 43+ years at many other dealerships, I was never dismissed for incompetence. I used to provide a very lucrative EXTRA profit until GM screwed the entire system up.

43+
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Old 06-06-2013, 05:04 PM   #12
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I used to buy A/C Delco parts at 15% - 30% below cost with FREE shipping. 6% return reserve and an option to put the reserve balance in my pocket.

I was purchasing $6000 - $ 10,000 from the the WD.

I was admonished by the Dealer Principal month after month because HE had to cut a check to them every month.

I never got a extra cent from him for getting him the extra THOUSANDS of dollars I put in his pocket every month.

There are two sides to every story.

43+

Last edited by 43+; 06-07-2013 at 02:53 AM.
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Old 06-06-2013, 05:44 PM   #13
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Quoting LAKESHOW:

"Say what you will but it's my Parts Manager's job to control inventory and that did not happen. Passing the buck, playing the blame game, and saying it's not your fault just doesn't cut it for me."

When the Parts Manager has 100% control of everything then I agree.

43+

Last edited by 43+; 06-07-2013 at 02:49 AM.
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Old 08-19-2013, 09:36 AM   #14
phazeone
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Default obsolescence

I don't worry about naturally occurring "phase out" or obsolescence. I do worry about unsold special orders and returns. When I first arrived at this dealership they were having difficulty keeping the obsolescence under 10%. The first thing I did was to offer a spiff to our appointment coordinators and our ASM's if they would keep their unsold SOR's to fewer than 5%. We later reduced that to fewer than 3%. This prompted a quick reduction in unsold aging warranty parts. We then instituted a policy that required prepayment of any non-warranty special orders. We do make exceptions for customers with a track record of 10 or more visits to the store. We also make exceptions for special customer satisfaction issues. The next policy was a 45 day hold policy. We will hold special orders for 45 days before they are eligible for return or sale. We have a monthly return allowance to the manufacturer. For the next several months we ran reports on unsold special orders that were 45 days or older. This report would include returns both internal and wholesale. From this report our returns were built. If our unsold special orders and our returns took up our entire return allowance so be it. If it did not, we would run our obsolescence report and pull the oldest parts from it for return. We watched our obsolescence grow to over 18% during the next couple of months. Due to the policies we installed, however, it was a short run of high obsolescence. While the naturally occurring obsolescence grew we knew these parts were much more likely to still enjoy an occasional sale where the unsold special orders and the returns had a very low likelihood of selling. We were betting on the future and it paid off. After 7 months our obsolescence was under 3%. After a year it was consistently at 1 to 1 1/2 percent. We had caught up with the curve. We still send back unsold orders and returns first and naturally occurring obsolescence second.
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Old 08-19-2013, 10:51 AM   #15
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Quote:
Originally Posted by phazeone View Post
I don't worry about naturally occurring "phase out" or obsolescence. I do worry about unsold special orders and returns. When I first arrived at this dealership they were having difficulty keeping the obsolescence under 10%. The first thing I did was to offer a spiff to our appointment coordinators and our ASM's if they would keep their unsold SOR's to fewer than 5%. We later reduced that to fewer than 3%. This prompted a quick reduction in unsold aging warranty parts. We then instituted a policy that required prepayment of any non-warranty special orders. We do make exceptions for customers with a track record of 10 or more visits to the store. We also make exceptions for special customer satisfaction issues. The next policy was a 45 day hold policy. We will hold special orders for 45 days before they are eligible for return or sale. We have a monthly return allowance to the manufacturer. For the next several months we ran reports on unsold special orders that were 45 days or older. This report would include returns both internal and wholesale. From this report our returns were built. If our unsold special orders and our returns took up our entire return allowance so be it. If it did not, we would run our obsolescence report and pull the oldest parts from it for return. We watched our obsolescence grow to over 18% during the next couple of months. Due to the policies we installed, however, it was a short run of high obsolescence. While the naturally occurring obsolescence grew we knew these parts were much more likely to still enjoy an occasional sale where the unsold special orders and the returns had a very low likelihood of selling. We were betting on the future and it paid off. After 7 months our obsolescence was under 3%. After a year it was consistently at 1 to 1 1/2 percent. We had caught up with the curve. We still send back unsold orders and returns first and naturally occurring obsolescence second.
phaseone - First post - Welcome to DealershipForum.

Thanks for sharing some great information. I loved the idea of paying the ASMs an incentive for making sure the SOP parts were installed.

I also like the mentality that if you're going to have aged inventory it may as well be parts that you actually have a chance of selling. Making a priority of getting rid of unsold SOP parts and returns makes a lot of sense.
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