Today, we delve into an essential topic for parts managers: measuring inventory turns. A thriving parts department is essential for any dealership, and this metric can give you a LOT of information about your parts department, especially when monitored regularly. Inventory turnover measures how efficiently you manage your parts inventory by determining how quickly you sell and replace stock, and calculating this ratio can provide valuable insights into your department’s overall performance to help identify potential areas of optimization.  

Calculating your inventory turnover rate

Your inventory turns is a ratio that expresses how often your entire inventory is completely sold in a year (though some parts may stick on shelves longer than a year,  another great reason to keep a handle on your obsolete inventory). To calculate this number, divide the Cost of Goods Sold by your Month End Close Inventory Value.

Interpreting your inventory turn rate

The gold standard is somewhere between 6 to 8 inventory turns per year. A higher inventory turn rate can indicate that you are effectively managing your inventory and selling parts efficiently but be cautious of turning your inventory too much or being too conservative. 

On the other hand, a lower ratio suggests inefficiency in inventory management or stagnant sales. By analyzing your inventory turn rate over time, you can gain valuable insights into your department’s growth and identify areas that require attention. Possible areas to review are excess, forced, and obsolete stock.

Optimizing your turn rate

To improve your inventory turn rate and foster growth, consider implementing the following strategies: 

Streamline inventory management: Regularly review your inventory to identify slow-moving or obsolete parts. By removing or discounting these items, you can free up space and capital for more profitable stock. 

Optimize stock levels: Determine optimal stock levels based on historical sales data, customer demand, and lead times. This ensures you have sufficient stock to meet demand without overstocking, thereby improving turnover. 

Enhance ordering processes: Streamline your ordering processes to minimize lead times and ensure timely replenishment of stock. Efficient ordering practices prevent stockouts and enable you to meet customer demands promptly. 

Analyze sales patterns: Monitor sales patterns and identify popular parts or trends. By aligning your inventory with customer preferences, you can increase sales and improve your turnover ratio. 

Invest in technology: Leverage inventory management software and automation tools to streamline processes, accurately track inventory, and generate insightful reports. This enables you to make informed decisions and optimize your inventory turns. 

By closely monitoring your inventory turns, you can gain valuable insights into your department’s performance, identify areas for improvement, and make data-driven decisions. By optimizing your inventory turn rate through streamlined processes and strategic actions, you can foster substantial growth and enhance overall profitability. 

PartsEdge’s one-of-a-kind service helps you analyze, optimize, and improve your inventory daily. Our expert team is dedicated to helping Parts and Service Managers improve their inventory health through custom setups, phase-in settings, and more. We save managers hundreds of hours each year by streamlining DMS management, sourcing setup, and inventory optimization. Our results speak for themselves with our clients seeing an average 20% reduction in total inventory, 15%+ less idle inventory, a 50% increase in ROI, and a 20% increase in parts sales. If you’re interested in utilizing our parts power tool, contact us today!

https://youtube.com/watch?v=QlWlHNKlCU4

Jess Burkhart is the Chief Marketing Officer of SCP Agency, the National Sales Director of Epic BDC, and host of the Chicks in Charge Podcast. With six years under her belt, she has cemented her status as a key player in her field. Her story serves as a beacon of motivation for many.

In this episode, Jess chats with Kaylee about her career. She shares how she worked her way up in the automotive industry. Starting with no knowledge, she climbed to the top, becoming Chief Marketing Officer. They talk about the ups and downs of working in a male-led industry. They also highlight the importance of a supportive community and helping those in need.

Challenging the Status Quo

The automotive industry has long been dominated by men. But a new wave of women, like Jess, are making a mark. Jess started in sales, learning from successful salesmen Brad Pashel and Eric Wilson. They were happy to share their expertise, giving her useful advice.

Overcoming Hurdles

Still, Jess faced many obstacles on her journey to success. One of these was a mindset challenge, which she overcame. After a tough talk with Robin, she felt even more committed to the company. Even when told her pregnancy might stop her promotion, Jess kept going. She eventually got her role as the National Sales Director for Epic BDC.

Balancing Work and Personal Life

Jess’s challenges weren’t just at work. As a mom, she dealt with her daughter Kenley’s serious health problems. Kenley was born premature and spent over a month in the NICU. She had ongoing health issues and spent time in two different hospitals. Despite all this, Jess shows that it’s possible to juggle work and home life, even in tough times.

Jess’s Inspirational Journey

Jess Burkhart’s story is truly inspiring. It shows that the right mindset, mentors, and support can break barriers in male-led industries. Her journey also shows that working moms can balance career and family life, no matter how hard it seems.

Takeaways

  1. Seek guidance from industry experts.
  2. Balancing work and home life can be challenging.
  3. Embrace opportunities for growth.

Quote

“We wanted to show that Women in the auto industry are worth listening to.” –Jess Burkhart

Connect

Jess Burkart

LinkedIn: www.linkedin.com/in/jess-burkhart-b99b491b8

Website: www.socialclimberpro.com

Kaylee Felio

LinkedIn: www.linkedin.com/in/gotopartsgirl

Website: www.partsedge.com

https://youtube.com/watch?v=GSzkJCnAJfo

Jill Trotta is a veteran of the automotive industry, having spent 9 years with Repair Pal before embarking on a 9-month long search for her next move. With her extensive experience, Jill brings a wealth of knowledge to the automotive industry and continues to seek out new challenges and opportunities.

In this episode of Parts Girl Podcast, Kaylee Felio interviews Jill Trotta, a former Repair Pal employee who now works with Torqata. Jill Trotta discusses her career journey, her passion for educating consumers about tire safety and replacements, and the importance of offering tire services in the automotive industry. She also shares her thoughts on hydrogen technology and her experience with owning a Toyota Mirai hydrogen vehicle.

Prioritizing Tire Services

The tire industry can bring profitable returns if businesses underscore the necessity of tire services in their auto maintenance and repair catalog. Jill Trotta places importance on enlightening customers about tire safety and the need for timely replacements. Drawing from her personal mishap due to neglecting tire safety in her youth, which led to an unfortunate accident, she underscores the vital need to spread awareness about maintaining tires and the possible hazards of driving on expired or worn-out ones.

Insights on Hydrogen Technology

Towards the end, Jill Trotta shares her thoughts on hydrogen technology. She details her experience as an owner of a Toyota Mirai, a hydrogen-powered vehicle. Hydrogen technology holds great promise to transform the automotive sector, but hurdles related to infrastructure and supply chains need to be surmounted for it to gain wider acceptance.

Conclusion

All in all, this episode is a treasure trove of insights for those in the automotive business and safety-conscious consumers. By offering tire services and enlightening consumers, businesses can boost their revenue while fostering safer roads.

Takeaways

  1. Tire safety should be a top priority for all consumers.
  2. Offering tire services can be a great customer retention tool.
  3. Create different revenue streams.

Quote

“I once thought that selling tires wasn’t a profitable business. But, my opinion has definitely changed.” –Jill Trotta

Connect

Jill Trotta

LinkedIn: www.linkedin.com/in/gwrenchgal

Website: www.torqata.com

Kaylee Felio

LinkedIn: www.linkedin.com/in/gotopartsgirl

Website: www.partsedge.com

We’re excited to feature Dealer Pay as a guest educator on our blog! To learn more about Dealer Payclick here. Enjoy!

Dealerships have been selling and wholesaling parts for decades to consumers and businesses all over the world. Whether these are one-time purchases or regular/repeat purchases, there are only 3 ways these parts are attained: the customer picks them up, the dealer delivers them, or the dealer ships them. The objective in all of these scenarios would be to make this process quick and simple for their customer along with getting paid in full/on time. 

Let’s break this down and review all the payment options available, customer convenience, and any potential risks associated. 

Customer pick up  

This is an easy one, assuming your dealership has the staff to manage these orders and collect payment in person. A simple exchange of cash, check, or card is the most obvious.   

Cash is cash, smile and make the change. For card processing, using an encrypted payments device: swipe, chip, or tap and DONE. However, check acceptance requires a bank deposit, (either manually or electronically). In some scenarios, these checks bounce or are returned for insufficient funds, closed accounts, or even worse, stop payment.  Whether it was an accident or on purpose, this does require some action toward collection. Otherwise known as a GIANT PAIN IN THE BUTT. Hopefully, in most cases, your customers make good, but in other cases, this could be a loss.  What can your dealership do? Either stop accepting checks or use a check guarantee company to insure them. Though this is an added expense, it might make sense to avoid future losses. 

Payment in person, for the most part, seems straightforward, but is it the most convenient option for your customers? 

Next, let’s review the concept of Dealer delivery! 

Just like a pickup, all orders take place ahead of time by phone or online. This is a great time to also collect payment!  That’s right! Get paid before you deliver and get that card payment processed! Stay PCI compliant and don’t write the numbers down or store them ANYWHERE. With the customer on the phone, confirm the delivery address and payment amount. Next, type or punch the card numbers directly into your payment device or virtual terminal. Assuming the transaction is approved, you are good to go. There are options to also take checks by phone if you have a check processing provider for ACH or Check 21. If so, the same rules apply but, in this case, you would be key entering a routing and account number likely along with obtaining a driver’s license number or business phone number as well. These processes are still somewhat cumbersome with high-volume operations. What if you could send a payment request by text or email to the customer to capture a card or check for payment? That is a splendid option because you are technically paid before you leave for delivery. Not only is it fast and easy, but it is also convenient for your customer. 

Now, if upfront payment is not an option using a card or check, you will need to collect that payment upon delivery. This is where it gets tricky. If they give you a card, you will feel compelled to either write down the number (DON’T DO IT), call it into a colleague at the dealership or your processing provider, if that is an option. For checks, this could be trickier, you may have to simply take the paper and cross your fingers. Again, some check processors have the ability for you to pre-authorize the check, but for dealers with larger delivery operations this could cause delays…unless you have newer technology and mobile options for payment acceptance. MOBILE! These options are in the form of a mobile app/device or online. Most of these solutions are great to accept a card payment and if using a device, cheaper than key-entering it. Wow, wouldn’t it be great if you could also use a mobile device to image a check for processing? You bet and the technology is available. (Dealer Pay plug). 

I must say, getting your parts delivered by a driver is convenient and effective, but it may not be an option for all your customers based on logistics, etc. 

Let’s start shipping! 

Just like delivery, the best method is to get paid upfront. However, with shipping, there are a few more areas of risk worth mentioning. For example, the address here is key. When taking the payment, again, either by phone or online, you should also validate the address for a few reasons. Your processor should be validating the address that you enter or that your customer enters online to make sure it matches the records of the issuing bank. If it does not match, there is likely a fraudulent situation at play. The next reason the address is important, is you want to avoid at all costs, shipping parts to an address with a different billing address. This also screams chargebacks/disputes and attempted fraud. Even if this order is done online or with a 3rd party, your likelihood of loss is much higher. 

All of this talk of risk and fraud is depressing but realistic. Let’s see how this would change using modern payment methods to apply here in all three of these scenarios.   

If your payment provider is DMS integrated or has a sophisticated point-of-sale solution, you may have even more payment options, making the process efficient and the parts department more productive.   

We have already discussed sending hosted links or payment requests by text or email, mobile, and imaging, but what if your customer elected to have you store a card or check for future use? Many parts customers are repeat buyers or business-to-business. If you were to securely store their payment information in a Safe vault, using a token, you can simply apply payment when it is due. This can be in the form of a card or ACH token, stored and identified by your customer or business name.  ]This avoids fraud, data collection, inconvenient phone calls and more. Plus, these stored records can also stay updated with an Account Updater service so that you don’t have to worry about expired/closed cards. If you have multiple stores, you would be able to access the Safe vault, across all locations, to maximize your options and keep the accounting in line by store. All these options are 100% PCI compliant. 

About the author, Julie R. Douglas: As an experienced enterprise sales professional, I strive daily to attract, build and maintain long-term and quality business relationships. I have an assertive yet honest approach to sales and business practices and rely on references and referrals to generate new sales. My greatest reward is being a happy and long-term customer. I provide solutions for payment acceptance, with a focus on advanced technology and security, mobile and virtual payments, customer loyalty/rewards, real-time reporting, and much more! My goals are to provide the automotive/retail industries, with increased sales and profits, improved customer loyalty, great security, technology, and support.