What is the biggest challenge facing dealership parts departments right now?
Keith Ely is the managing partner of Keith Ely & Associates, a consultancy specializing in heavy truck dealerships. www.keithelyassociates.com,
Keith@keithelyassociates.com
I think in today's environment, the biggest one is just maintaining the customer base. The economy has impacted the class
five, six, seven and eight truck users. Spending has really tightened up. The discretionary spending that was available even
a year ago is non-existent. The repairs that are being done are being done only if it is necessary to keep the truck safe
or on the road. In some cases they aren't even doing that, because they have an idle truck. They will choose to not repair
a truck because they have one sitting there.
So the first challenge is keeping their volume in place because of competition for that top-line number. Their margins have
been squeezed.
I would say another big issue is the management of the physical inventory itself. Keeping the level of inventory as low as
possible without impacting fill rate. The customer wants it now. Fill rates are important, but the dealer can't afford to
have any extra inventory. There is a high cost to holding those parts.
I think also a continuing challenge is personnel. Finding and retaining qualified people is not easy, and it continues to
be a challenge even as the economy slows down and there is higher unemployment. It is still hard to find those qualified people
to move into a parts leadership position.
What are some ways dealers are drumming up more business for their parts and service departments?
I think anything they can do to improve customer service is one of the best strategies we've seen. Being able to deliver is
important. You probably don't want to start out competing on price, but price will enter into the discussion at some point.
But the level of service, more than anything, is what really differentiates the dealerships.
