The Importance of Data Analytics in Auto Parts Management

Effective parts management is crucial to the success of any automotive dealership. At NCM Associates, we emphasize the role of data analytics in optimizing parts departments. Rick Wegley, an expert instructor and consultant at NCM Associates, highlights the importance of utilizing Dealer Management Systems (DMS) and key performance indicators (KPIs) to improve efficiency and profitability.  

Leveraging Analytics Tools to Improve Parts Management Efficiency  

At NCM Associates, we believe the best analytics tool is a well-trained parts manager. As Rick Wegley explains, "The best 'analytics' tool is a parts manager who has been fully trained on inventory management, fully trained on DMS functionality and utilization Best Practices, and who has the discipline to manage 'By The Numbers.'" Understanding your DMS functions and settings is key to optimizing inventory management and streamlining operations.  

Reducing Inventory Costs with Accurate Data Forecasting  

Accurate forecasting is essential for lowering unnecessary inventory costs. The "Dollars Day Supply" method, which calculates target inventory levels based on sales and gross profit, can ensure efficient inventory management by minimizing the risks of overstocking or understocking.  

For example, if a dealership's cost of sales is $300,000 per month, using a target of 45 to 55 days of supply would provide a target inventory level of approximately $450,000. This method ensures that inventory levels remain healthy and unnecessary costs are avoided.  

Overcoming Challenges in Adopting Data-Driven Strategies  

Adopting data-driven strategies can be challenging if data is not accurately recorded. As Rick Wegley points out, "You can't use data to manage a parts department that isn't recording the data properly." Recording lost sales and emergency purchases ensures more accurate metrics, improving stock order efficiency and better fill rates.  

Ensuring Parts Availability During Peak Demand  

A primary concern for parts managers is ensuring that critical parts are available during peak demand periods. By utilizing the proper settings in the DMS, parts managers can ensure that their inventory levels are aligned with demand trends.   

Part managers can use DMS settings like Phase In, Phase Out, and Day Supply to maintain optimal inventory levels and avoid stockouts during peak demand. While it's not recommended to stock parts with no prior or limited demand, it's important to anticipate seasonal and product-specific demand so that critical parts are available when needed.  

Key Performance Indicators (KPIs) for Parts Management