Technology & Trends
Principal Parts Investment Performance Factors
Dealerships (regardless of OEM franchise) employing the “major” Dealer Service Providers (DSPs) array all Stockkeeping Unit (SKU) data such as sales history, credits, receipts, returns, supersessions, on-hand and on-order counts, etc. according to “status”.
The “status” (“Stocking” Status or “Special Order”) of the SKU determines the method by which inventory is purchased and how the inventory investment is measured and how it performs – in relation to dealership profit and ROI objectives.
The “Stocking Status” investment and the related SKU records are manipulated by the computer to determine inventory breadth (number of SKUs) and depth (number of pieces of each SKU) to generate a suggested stock order.
SKUs that are not “Stocking” Status are “Special Order Status” and while the SKU history is retained, inventory breadth and depth algorithms are not applied. Consequently, the “Special Order” investment is not controlled by the computer.
Inventory depth and breadth for “Stocking Status” SKUs are determined according to “Ordering Rules” which should reflect the financial and operating objectives of the dealership.
Finally, for many DSPs the entire matrix of SKU records is further arrayed and controlled by “Source” code. The Source code is simply an arbitrary numeric code, assigned by the parts manager, by which the parts manager may segregate and manage the inventory investment.
However, the “Source Code” is very important since the Ordering Rules - the algorithms used to classify SKUs by status and determine stock status inventory depth and breadth - are applied according to the Source Code.
ADMI has developed a very sophisticated, detailed and in-depth business model to display the performance of the inventory investment in terms of profitability, idle capital, inventory turn, etc. in relation to inventory status and in relation to the source codes and ordering rules.
This computer model is incorporated into analysis and consulting resources to enable the parts manager and dealer a close-up and detailed view of all aspects of the inventory investment and to observe how each status, each ordering rule and each source code is performing in relation to dealership objectives.