NADA Academy instructor Brian Crossin emphasizes the importance of managing parts inventory effectively to maximize a dealership’s cash investment on the latest episode of the NADA podcast, Dealer Driven. 

Crossin—a former parts manager and industry veteran with 25 years of fixed operations experience—offers several ways to tap into often-overlooked parts and service opportunities to boost your bottom line:

1. Understanding and Evaluating Parts Inventory
   Dealers should utilize standard KPIs. Financial statement composites and DMS reports can provide deeper insights beyond surface-level inventory values.
2. Why Parts Inventory is Often Overlooked
   Unlike visible new and used car inventories, parts inventory is tucked away. And managers may lack training in using essential DMS reports.
3. Risks of Neglecting Parts Inventory
   Poor parts management affects efficiency across departments. Without the right parts at the right time, service departments slow down, frustrating technicians and customers. This can also impact new and used car sales if necessary accessories aren’t available.
4. Best Practices for Parts and Service Collaboration
   Communication is crucial. Crossin recommends a 10-minute daily meeting between parts and service managers to review backorders, recalls and daily priorities. Utilizing modern DMS tools for tracking orders and customer follow-ups can further streamline operations.
5. Maximizing Existing DMS Tools
   Many dealerships underutilize their DMS capabilities, taking unnecessary steps in processes that could be automated.
6. Striking the Right Balance in Inventory Investment
   A well-balanced inventory prioritizes fast-moving, frequently reordered parts while minimizing obsolete stock. Dealers should go beyond the standard "month supply" metric and analyze DMS reports to assess investment quality.
7. Key Inventory KPIs
   He recommends tracking the amount of inventory, based on NADA guides, for frequently sold, obsolete and phasing out parts.
8. Manufacturer Vendor Managed Inventories (VMIs)
   While VMIs help manage stock by analyzing sales data, a well-trained parts manager remains the best resource for optimizing inventory.
9. Steps to Maximize Investment Quality
   Gather data, identify aging stock and develop strategies for offloading it, as well as observing operations and listening to feedback.
10. Offloading Aging Parts
    Crossin offers creative strategies for proactively managing obsolete inventory rather than holding onto parts indefinitely. 

By focusing on data-driven inventory management and better utilizing DMS capabilities, dealers can improve efficiency, cash flow and overall profitability. Learn how by listening to this episode of Dealer Driven today wherever you find podcasts.

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