CONTROLLING SPECIAL ORDER PARTS IN YOUR DEALERSHIP

Controlling Special Order Parts In Your Dealership

June 14, 2024

One of the biggest challenges in operating an automobile dealership is controlling and managing cash flow. Many areas in a dealership can tie up a sizeable amount of cash if left unchecked. One of these areas is special order parts.

Parts ordered for a customer that end up sitting on a shelf in the parts department create problems for a dealership. Unsold special orders not only hurt customer service and dealership profit potential but also contribute significantly to parts department obsolescence.

The parts department and the service department are often at odds with each other as to whose responsibility it is to follow up on them. The parts department suffers if the parts remain on a shelf unsold, but the service department suffers if a part is returned before the customer can be scheduled to come back into the dealership.

How can a dealership solve this problem?

First, a set of policies and procedures needs to be established assigning responsibility and accountability for these special order parts. Rather than viewing the problem as a parts issue or a service issue, the two departments should work together to ensure that the customers come back in for these parts.

Some suggestions are as follows:

• When ordering a part for a service customer, obtain an estimated date of arrival for the part and, when possible, schedule an appointment for the customer to return for installation, allowing a few extra days for the part to arrive. If a customer is pre-scheduled, he is more likely to come back for the part, and the dealership only has to contact him if the part is on back-order or delayed.
• Have the customer prepay, if possible.
• Have the service manager approve special parts orders.
• When a part comes in for a customer who was not pre-scheduled, the service advisor responsible for generating the customer special order contacts the customer and sets up an appointment.
• Consider holding the service department and the service advisor responsible for the part and any charge-back fee to provide additional motivation for getting the customer back into the dealership.
• Keep all special order parts in a separate bin in the parts department. Assign responsibility to parts department personnel for weekly follow-up.

The key to any policy or procedure is constant review and accountability. Contact Larson & Company Tax Partner Carl Jensen, AutoGPAGroup member, to help establish a special order parts policy for your dealership. Don't let your cash be tied up in a bin full of special order parts!

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Source:  AutoCPAGroup, @2024 Headlights