Three Stats That Improve Parts Operations
Every day, Arden Toguchi’s doorway provides a clear indication of the progress his parts department is making.
Over the years, the parts manager at Big Island Toyota in Hilo, Hawaii, has become rather obsessive about analyzing the data collected within his facility’s management system. And, Toguchi prints out multiple key data points each day, posting them on his door in an effort to inspire his employees to take note of their successes—as well as where they have room for improvement.
“I post the daily tracking every day, where we’re at within the month on wholesale, retail and gross―each person,” says Toguchi, a veteran of more than two decades in the industry. “Because if they’re not aware of what they’re selling, then it doesn’t make sense. And it’s more competitive if you show others.”
Whether a parts department runs reports via its management system on a daily basis, every 10 days, or even once per month, the reports can provide a roadmap for improvement. Studying the data collected by your management system can help you steer clear of potential potholes, too.
Toguchi shares his thoughts on the top statistical elements to track within your management system to improve parts operations.
Net to Gross
Before you can solve your department’s problems—like having a lack of employees answering phones, or not having the right parts in stock, for example—you need to pinpoint developing trends. That’s why Toguchi has developed such a passion for tracking parts department stats both big and small, like off-the-shelf fill rate.
And Toguchi, who has worked at Big Island Toyota for eight years, especially makes it a point to document the fluctuation of his department’s net to gross numbers, at least twice per week.
“Because,” he explains, “if the net to gross isn’t there, then we’re not making a profit. Or, let’s say the counter person is giving discounts, [and] if they’re giving discounts, they’re giving away the net profit. We analyze that a lot.”
Trends in Wholesale, Retail
Toguchi feels studying recent movement in wholesale and retail figures provides a clear indication of how the market is doing at a particular juncture.
“I can kind of see how the trend is going,” he says. “Because if the front is very busy, then I know that the economy is doing well.
“If we’re not hitting a certain percentage in the wholesale, retail, then there’s some discounts being given that I can analyze. … You’ve got to watch the personnel, and make sure that they’re not giving discounts—discounts are one of the No. 1 killers, I think, for a lot of the parts departments. In our system, we can look if anything’s discounted. We can pull up a list, and every morning, we run a discount report.”
Taking note of any parts in your inventory that have sat on your shelves for 12 months or more (i.e., obsolete parts) is a key way to shore up a cost drain in a parts department. Obsolescence is easiest to keep tabs on through the use of month-end reports.
Parts department personnel need to examine their shelves periodically, and pinpoint inactive inventory. Then, the required paperwork can be filled out, and returns can be made to OEMs, which could save your department thousands.
On occasions when Toguchi notices an alarming trend in the numbers housed within his facility’s management system, he promptly points out the issue to his staff. Then, he explains why rectifying that developing issue is in the staff’s best interest (occasionally, employee bonuses are at stake, for example).
Ultimately, Toguchi feels it’s important, as the leader of a parts department, to take a step back on occasion and analyze all data collected in your management system. Then, you can make alterations to your department processes.
“Sometimes we’re just so involved in doing what we do on a daily basis that we miss the big picture,” Toguchi says. “Sometimes, it’s really obvious, if you step back and look at it, where the flaw is within the system.”