Hi Sara,
My parts inventory seems overwhelming, and I have A LOT of money tied up in parts, but I never seem to have what my customers actually need. Help!
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How to Stock the Right Parts Without Losing Your Mind
Running a parts department is no small task. It’s the first impression for many customers, the lifeline for your service department, and can sometimes feel like a juggling act. Some days, you’re trying to make everyone happy while keeping a thousand spinning plates from crashing to the ground. But don’t worry. Getting your parts department running like a well-oiled machine comes down to three simple processes: stocking the right parts, knowing when to add or drop inventory, and maintaining proper stock levels.
Let’s break it down so that it won’t make your head spin.
- Stock the Right Parts: Your “Fill Rate Out of Stocking Inventory” Matters
Your parts department has one big job: making sure customers and your service team get what they need when they need it. This is where your fill rate out of stocking inventory comes in. Think of it as your batting average for having the right parts on the shelf. A good fill rate means fewer annoyed customers, fewer emergency orders, and way less stress.
To calculate it, subtract emergency purchases and customer orders from the cost of parts sales, then divide by the cost of sales plus lost sales.
Aim for a fill rate in the high 80s to low 90s to minimize “we don’t have that part” situations that no one enjoys.
- Know When to Keep or Kick Parts: Phase In and Phase Out Like a Pro
Your parts inventory is like a service technician’s toolbox. Essential tools—like wrenches and sockets—are always within arm’s reach, while specialty tools that only come out once a year stay in the bottom drawer.
Phase In
A part earns its spot when it proves it deserves to be there. Track lost sales every time a customer or the service department asks for a part you don’t have. When a part gets three requests (including lost sales) in 90 days, it’s time to welcome it to the team.
Phase Out
We start the process of phasing out a part when it hasn’t had a demand in, you guessed it, 90 days.
My one caveat to this is that the service department, the parts department’s biggest customer, can ask for hard-to-find parts that haven’t been requested in 90 days, but they will pay a little more for that opportunity. More on that in a minute.
Parts that are in high demand should always be stocked and ready to go, while rarely used ones can be removed to make space for what’s needed most.
- Restock Like a Boss
Even the best parts department can grind to a halt without a solid restocking process. This is where your dealership software can save the day. Use it to set minimum and maximum stock levels for every part.
For example, if mower blades are flying off your shelves, set a minimum stock level of six and a maximum of 18. Once your inventory dips to six, your system will nudge you to reorder. No more running out at the worst possible moment.
This keeps your shelves efficient, minimizes emergency orders, and avoids the dreaded “We’re out of stock” conversation.
Bonus Process: Handle Service Department Requests Like a Pro
The service department has a habit (eh, right) of requesting parts that may not have long-term demand. To make sure these one-off requests don’t mess up your inventory, add five percent onto the price of all parts that the service department sells. This provides a cushion to help cover the cost of returns or dead inventory so you stay in the black while keeping the service team happy.
Why These Processes Matter
Having the right parts, phasing inventory in and out smartly, and restocking like a champ isn’t just about organization. It’s about making life easier for your customers, your team, and most importantly you. When your parts department runs smoothly, everything else falls into place.
So, embrace your inner inventory ninja. Focus on your fill rate out of stocking inventory, give parts a fair shot to prove themselves, and keep restocking levels on point. You’ll not only turn chaos into order, but you’ll also turn your parts department into a profit-making machine.
Let’s make your parts department thrive!🌟
Sara Hey
P.S. – Want answers to more dealership challenges? Join our webinar, Mastering Cash Flow, Customers, and AI: Your 2025 Dealership Game Plan, on Tuesday, January 21st at 1 pm CST. We’ll tackle cash flow mysteries, managing online reviews with ease, using AI to streamline your workload, and so much more. Don’t miss this opportunity to set your dealership up for success!
