Ford Parts Advantage Program
Bob Pearson Enterprises “Parts Specialists” can improve the efficiency and profitability of your Ford/Lincoln/Mercury Parts Department. Ford Motor Company is the only “Domestic Manufacturer” that allows the Parts Manager to control their parts inventory.
Setups relating to “Phase-In & Phase-Out” criteria determine at what point a part becomes active stocking and at what point it becomes inactive. Changes can be made to improve part number coverage.
Ford Motor Company allows Parts Managers to calculate a daily stock order based on parts sales history from dealership’s Parts Department, not national sales averages. Sourcing based on the piece sales a part has in a twelve (12) month period can be installed. Days supply can be set for each source based on the twelve (12) month piece sales. This will ensure slow selling parts will not be overstocked and fast selling parts will not be understocked.
Dollar value of “AP” (Automatic Phase-Out) parts inventory should be less than 10% of total Ford and Motorcraft Inventory. The Ford “AP” part numbers must be returned to carline each month as PIPP Return Reserve becomes available. Motorcraft Supplier should allow inventory protection for Motorcraft “AP” parts.
Ford’s Daily Parts Advantage Program allows Parts Managers to calculate daily stock orders. This program has reduced stock order discounts from 5% to 1% and PIPP allowance has been reduced from 5% to 2%. Ford introduced Inventory Management Allowance as part of new program. If Dealers Off-Shelf Fill is 75%-100% and Idle Capital is less than 21%, dealer will qualify for 1-5% IMA allowance (based on Dealer purchases) on ascending scale. (Recommend a percentage of the IMA monies to be setup in a reserve account to allow additional inventory protection for “Obsolete” inventory).
Active stocking part numbers should equal 80-85% of total inventory value. Normal stocking part numbers are part numbers inventory control system will suggest quantities to order when stock orders calculated. Parts Manager will add active stocking part numbers based on sales/lost sales.
“N/S” part numbers are part numbers added to inventory control system when part numbers are Special Ordered and when parts personnel add part numbers to inventory control system due to request for part number from In-House (Mechanical Department, Body Shop, etc.). From outside customers (Wholesale and Retail) that was not previously (prior to request) included in part numbers controlled by dealer’s inventory control system. Dollar value of “NS” (Non Stock) parts inventory should be less than 5% of total Ford and Motorcraft Inventory).
Parts and Service departments must cooperate with each other to prevent buildup of special orders in Parts Department. Special orders must be delivered to customer to prevent increasing part inventory dollar value in slow and non selling Ford inventory. (With Ford’s daily Parts Advantage Program dealership will not qualify for Inventory Management Allowance if Idle Capital is not controlled. Parts Department will no longer earn enough PIPP return to return special orders and “AP” part numbers). Ford’s forty five (45) Day Return Program allows special orders not delivered to customer to be returned, but to be returnable parts must have a cost greater than $15.00 and must meet Ford’s Packaging Standards.
In the current economic environment Dealers Fixed Coverage (Absorption Rate) must be as high as possible. The Cost to Break even must be as low as possible. Pricing polices should be established to maximize return on investment while remaining competitive in dealership market area.
Do you know Parts Department Cost to Break Even?
Contact Bob Pearson Enterprises for details on how our “Parts Specialists” can improve the efficiency and profitability of your Ford/Lincoln/Mercury Parts Department.
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