As a Parts Manager, optimizing your fill rate is crucial for maintaining customer satisfaction and maximizing profitability. While the traditional measure of fill rate can be misleading, focusing on off-the-shelf performance or job fill provides a more accurate picture. In this post, we will explore the significance of fill rate and provide actionable tips to help you improve it effectively.
Understanding fill rate
The challenge with relying solely on fill rate is that it can be easily manipulated based on how parts are receipted into your inventory system. Different dealerships with varying wholesale, retail, and warranty mixes will yield different fill rate figures. To obtain a more reliable measurement, it is essential to consider the off-the-shelf level of performance or job fill. This metric takes into account the unique characteristics of your dealership and provides a clearer understanding of your inventory’s ability to meet customer demands.
The impact of phase-in and phase-out criteria
In our industry, managing a reactive retail inventory with a vast range of part numbers is the norm. The way you establish your phase-in and phase-out criteria plays a pivotal role in inventory performance. If these criteria are set too strictly, your fill rate may suffer, while setting them too loosely can result in excess inventory. The key is to align your criteria with the goal of fulfilling true demand, regardless of its source. Striking the right balance will contribute to improved fill rates and optimized inventory levels.
Setting realistic goals: The 90-95% fill rate
To provide exceptional off-the-shelf service to your customers, aim for a fill rate of 90 to 95 percent as a long-term goal. This target ensures that the majority of customer orders can be fulfilled promptly, enhancing customer satisfaction and loyalty. However, it’s important to note that achieving and maintaining this level of fill rate requires a comprehensive approach that involves analyzing and optimizing various aspects of your inventory management processes.
How to improve your fill rate
To enhance your fill rate effectively, consider implementing the following strategies:
- Evaluate phase-in/phase-out guides: Review and fine-tune your phase-in and phase-out criteria to strike a balance between meeting customer demands and preventing excess inventory.
- Analyze days supply settings: Adjust your days’ supply settings based on historical data and demand patterns. Optimizing these settings ensures you maintain an adequate stock level without overstocking or running out of critical parts.
- Monitor excess inventory: Regularly generate and analyze your excess inventory report. Identify slow-moving or obsolete parts and develop strategies to reduce excess stock, such as offering promotions or exploring alternative sales channels.
- Track true demand: Develop a robust tracking system to accurately monitor true demand, regardless of its origin. Utilize historical sales data, customer feedback, and market trends to forecast demand and adjust your inventory accordingly.
Improving the fill rate is a vital objective for overall operation success. By focusing on off-the-shelf performance and implementing the suggested strategies, you can optimize inventory levels, enhance customer satisfaction, and boost profitability. Remember, achieving a 90% to 95% fill rate requires ongoing evaluation and adjustments to align with ever-changing customer demands.
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!