Parts Pricing

Avoid Lost Sales

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Parts Case Study_0717

For 27 years, John Gerdy has been a proud employee of Peruzzi Nissan, in Fairless Hills, Pa. He appreciates working for a family business in a friendly environment.

And, Gerdy has tried to set a tone by producing thorough, detailed work, serving as the facility’s parts director for the last 17 years. He’s the kind of department leader who scans DMS reports religiously.

“I’m kind of a hands-on manager,” Gerdy notes. “So, daily, I know the inventory. I check every day, do the stock orders. So I know what’s coming and going.”

Yet, in 2016 Gerdy was reminded just how important it truly is to document each inventory detail in a shop’s DMS. Gerdy and Peruzzi’s countermen had begun to neglect posting lost sales for parts―in other words, they often failed to have parts in stock at the time they were requested for their facility, which does $260,000 in sales per month. As a result, Peruzzi’s parts inventory had become muddled. That fact―and the resulting off-the-shelf fill rate that had dipped to around 63 percent―eventually left Gerdy unnerved.

Gerdy knew that, if he didn’t reign in his staff’s documentation of its parts inventory, things in his department could spiral out of control. Fortunately, he sent that message to his staff clearly―resulting in a spike in net profit―in a process he shared with Fixed Ops Business.

 

The Problem

Gerdy is a shop leader that strives to maintain order. Yet, a couple years ago, he needed to restore order in Peruzzi’s parts department.

“We weren’t getting the right parts in when we probably should have,” Gerdy explains. “We’d have to order the parts instead of having it that day for the technician to fix the car.

“I saw just a process they had to start. It wasn’t something that I was keeping an eye on myself.

“I learned it needed to happen for us to improve.”

Simply put, members of Peruzzi’s parts department, which has nearly $230,000 in inventory, had settled into a poor routine. As a result, Gerdy set out to disprove the theory that old habits die hard.


The Solution

By late 2016, Gerdy had determined that completely documenting lost sales needed to be a point of emphasis.

So, at every morning meeting, and throughout each work day, he began reminding his staff to post their lost sales. And, after roughly one month, the message stuck.

“After a while, it just becomes habit,” Gerdy says. “I just had to explain how important it was to do. ... I explained the process, and that we may be losing sales.”

The parts director also illustrated just how easy it is to keep tabs on lost sales within Peruzzi’s DMS, by simply typing “LS,” and inputting the desired quantity. He says the key to turning things around, ultimately, was open, detailed dialogue with his small staff.

It was, he says, “just communication with the countermen.” Gerdy tried to implore compliance from his subordinates by being persistent, and positive. And, when further explanation was required, he tried to exhibit patience.  

Now, his staff makes sure to order parts promptly when demanded, even after a customer has cancelled an initial order. As a result, parts are now more adequately stocked.  

“I think sometimes you just expect people to do the right thing, and you really have to just tell them how to do it,” he says. “You show them the right way to do something, rather than saying ‘You’re doing it wrong.’ You explain it to them.

“And, if they need to be shown, you show it to them.”


The Aftermath

These days, Gerdy sounds at ease. And he has reason to be.

After beginning to stress full documentation of lost sales for parts nearly a year ago, he has seen his department’s vital signs improve.

Gerdy says his staff has helped spur an increase in net profit from approximately $187,000 in 2016 to a projected $236,000 this year. Additionally, Peruzzi’s off-the-shelf fill rate has jumped roughly 25 points, to 88 percent.

 

The Takeaway

If the last couple years have taught Gerdy anything, it’s the importance of consistently sticking to department procedures.

“Processes, they’re there for a reason,” he notes. “You’ve got to explain to people sometimes to know why they’re there.

“Sometimes we all learn together.”

With that lesson learned, the parts director is confident his department is destined for continued success, well into his third decade at Peruzzi.  

“Everything’s positive,” Gerdy declares, and “going forward.”

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