MONTH



The New Checklist and Key for 2015

A quick reference for the Dealer, General Manager, Accounting Office & Parts Manager for the Parts Department Monthly Checklist.

This document has been placed in the public domain by Mike Nicholes;

The only request is that proper attribution be given by those using it.

Mike Nicholes

miknik@



MONTH

DEALERSHIP

DATE

PARTS DEPARTMENT MONTHLY EVALUATION CHECKLIST (v.2015)

|1. PART NUMBERS | |19. EXCESS STOCK $ / % |

|CONTROLLED | | |

|2. TOTAL CONTROLLED | |20. TRUE EXCESS STOCK $ / % |

|INVENTORY $ | |LINE 19 MINUS LINE 21 = TRUE EXCESS STOCK |

|3. RECONCILED INVENTORY | |21. PARTS > 6 MONTHS |

| | |NO SALES $ |

| | |(Technical Obsolescence) |

|4. NS PART NUMBERS # / % | |22. ALL PARTS > 6 MONTHS |

| | |NO SALES % |

|5. NON-STOCK | |23. PARTS > 12 MONTHS |

|DOLLAR VALUE $ / % | |NO SALES $ |

| | |(Absolute Obsolescence) |

|6. GROSS SALES | |24. PARTS > 12 MONTHS |

|(Annualized) $ | |NO SALE % |

|7. GROSS PROFIT | |25. NEW PARTS |

|(Annualized) $ | |NO SALE $ |

| | |(No Movement New) % |

|8. COST-OF-SALES | |26. TOTAL DEMAND (Pieces) |

|(Annualized) $ | | |

|9. GROSS PROFIT | |27. EMERGENCY PURCHASES/ |

|MARGIN % | |CUSTOMER ORDERS (Pieces) |

|10. INVENTORY F/S $ | |28. LOST SALES (Pieces) |

|(Actual Cash Value Inventory – General Ledger) | | |

|11. LIFO RESERVE, IF USED $ | |29. FILLED FROM STOCK RATIO % |

| | |Calculated with ‘pieces’ |

|12. GROSS TURN RATIO | |30. MONTHS/DAYS OF SUPPLY |

|(COS ( INV.) | |(F/S INV. ( AVG. MO. COS) |

|13. PURCHASE EFFICIENCY (Factory Stock Orders) | |31. # of Parts Personnel |

|(Annualized) $ | | |

| | |___________________ |

|14. PURCHASE EFFICIENCY (Other Sources For Stock) | |32. NET PROFIT (% of Sales) |

|(Annualized) $ | |PARTS DEPARTMENT % |

|15. PURCHASE EFFICIENCY (Optional, Other Factory) | |33. PERSONNEL EXPENSE |

|(Annualized) $ | |(PERS EXP ( GP) % |

|16. TOTAL EFFICIENT (Total Lines: 13 thru 15) | |34. PRODUCTIVITY |

|PURCHASES $ | |(Pieces/Employee/Month) |

| | | |

| | |(Dollars/Employee/Month) $ |

|17. PURCHASING PERFORMANCE (TEP $ ( COS) TOTAL PURCHASES FOR STOCK | |35. ABSORPTION RATE = % |

|% | |[GP Parts, Service & Body (YTD) |

| | |(YTD) Total Dealer Fixed Overhead Expense] |

|18. TRUE TURN | |36. SERVICE PROFICIENCY % |

|(SOP % x GROSS TURN) | | |

You may copy this checklist as necessary

INTERPRETIVE KEY TO v. 2015 MONTHLY CHECKLIST

Updated Version

This new version, v2012, is a final compilation of many changes both in the data being analyzed and the sources of that data. It includes some additions of data that are essential to good inventory management. It has deleted some data that is no longer effective or that has been replaced by a measurement that is more precise or defining of the efficiency and productivity and profitability of the parts department.

The most important addition is a measurement from the service department, the prime customer of the parts department and the ‘face’ of CSI to the marketplace; it is ‘service efficiency’ that really defines how well the parts department has ‘fed’ the technicians who in turn move the cars into and out of the service department.

This monthly checklist is a summary of important interpretive data for the Dealer, General Manager and Parts Manager. It is intended to be produced at the end of each month with data taken from four sources, along with some calculations, that should be reviewed by the Dealer/General Manager and Parts Manager.

This version has also been re-sequenced to reflect the additions and/or deletions of data.

The information is derived from the following sources:

1. The dealership financial statement;

2. The monthly summary data from the computer system (or the same information taken from report generators);

3. Specific purchase information(usually available from the Factory. Included in this is additional information taken from the accounts payable records from the detailed general ledger;

4. Specialized information from the DMS system (the accessibility of this information will vary from system to system);

5. Calculations comparing different pieces of data to each other to achieve numbers upon which management decisions will/should be made.

This summary is intended to be just that(a summary(and not an all inclusive discussion of the background and source of the numbers. The detailed information is found in great detail in the Manuals produced by Nicholes Capital Management and is available from the company.

A new version of the manual, accommodating this newer checklist is also available. To get more detailed information go to .

1. Part Numbers Controlled. These are the part number records in the computer systems that are monitored by the system for sales activity and other information. This number represents only those numbers placed in the computer system by the parts manager(at the time of demand. Not all of these numbers are considered part of the physical stock on hand, but rather a list of all part numbers that have been requested, or inquired about, from the parts department.

2. Total Controlled Inventory Value (Replacement value currently stocked and shown in the DMS system). This number represents the cost of the part currently shown on the master tape of the manufacturer. It is updated frequently and represents the ‘replacement value’ of the inventory on the shelf(not necessarily the amount paid for the parts. A comparison between line #3, the reconciled inventory and line #10, the figure from the financial statement, will and should be made continuously.

3. Reconciled Inventory. This figure is similar to that seen at the completion of an annual physical inventory. It does not necessarily replace a physical inventory (but could do so under stringent conditions) but is a monthly check and reconciliation of all parts (value) that are now in limbo - such as work in process, overlapping billings/receipts, etc. It is this figure that should be compared monthly, with line #10, the figure for inventory from the general ledger. This figure and the G/L figure should not vary more than 1-2% of each other on a monthly basis. See the ‘Reconciliation Sheet’ at the end of this summary.

4. Non-Stock Part Numbers and the percentage (%) of them carried in the system show the number and percentage of part number demand that is being tracked by the system, but are not yet active. Most of these should not have (in theory) an on-hand value. The use of this feature in a computer system is, in the opinion of the writer, second only in importance to the production of a stock order. The feature enables the parts department to pre-test every number that presents itself at the counters or on the phone with the possibility of stocking the number once sufficient demand has been established. The guideline for this figure is 50% + line #1.

5. Non-Stock Dollar Value [A PRIME NUMBER FOR EVALUATION] shows the value of those parts that are being carried on an NS or Non-stock status in the system that also have an on-hand value. This process is also called ‘Watch’ in some DMS systems(the application and theory are the same. In theory, the on-hand value of non-stock numbers should be zero. In practice there are some cases where an on-hand value is justified(such as special orders that have not yet been picked up by the customer or recommended stocking guides for new models that the manufacturer is suggesting be stocked to the shelf before any actual demand has taken place. The guideline for this figure is Max/BSL/High Guide

It should be noted that before any definitive decision or conclusion is made based on this number that the following rule should be observed:

All obsolescence is excess, but not all excess is obsolete

Some computer systems have these reports ‘built into’ the user programs, while others need to use a report generator to obtain the report. The total value of the report should be the amount that is ‘in excess’ and not the on-hand value of the part number. Unfortunately, this error is found in one major system.

The general guide, and this should be a ‘trended’ guide, for total excess stock is ................
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In order to avoid copyright disputes, this page is only a partial summary.

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