Turn Your Parts Department into a Profit Center - RVDA Davis PPT … · Turn Your Parts Department into a Profit Center Dealers Deserve a Return on Investment Presented by: Rod Davis

Turn Your Parts Department

into a Profit Center

Dealers Deserve a Return on Investment

Presented by:

Rod Davis

• Pricing Strategies for Increased

Profit Margins

• Customer Driven Processes for

Increased Sales

• Inventory Controls

Course Objectives

Copyright 2014 RVDealerPRO LLC ©

Mark-Up & Profit Margins

Markup Versus Margin

a) 67% Mark-up is a 40% Gross Profit Margin

• Based on industry standards, the guide for profit

margin is:

40% (Retail)

35% (All Accounts)


Pricing Strategies

Design Pricing Matrix

a) Manufacturer Margin 50%

b) Supplier Margin 45%

c) Accessory Margin 35%

Identify Opportunities for Profit

Improvement


Sample Variable Pricing

Matrix (Manufacture)

$0.00 to $0.99 400%

$1.00 to $2.99 350%

$3.00 to $5.99 300%

$6.00 to $9.99 255%

$10.00 to $24.99 210%

$25.00 to $99.99 155%

$100.00 to $199.99 120%

$200.00 to $9,999,999.00 100%

Cost Plus Matrix (Manufacture)



Matrix (Supplier)

$0.00 to $1.99 300%

$2.00 to $4.99 260%

$5.00 to $9.99 200%

$10.00 to $19.99 155%

$20.00 to $24.99 125%

$25.00 to $29.99 110%

$30.00 to $49.99 100%

$50.00 to $99.99 85%

$100.00 to $199.99 72%

$200.00 to $9,999,999.00 67%

Cost Plus Matrix (Supplier)



Matrix (Accessory)

$0.00 to $1.99 200%

$2.00 to $4.99 170%

$5.00 to $9.99 120%

$10.00 to $19.99 100%

$20.00 to $24.99 90%

$25.00 to $29.99 85%

$30.00 to $49.99 80%

$50.00 to $99.99 75%

$100.00 to $199.99 70%

$200.00 to $9,999,999.00 67%

Cost Plus Matrix (Accessory)


Profit Margins are Important?

• Profit Margins are one of the few things you

should have total control over

• The management teams responsibility is to

reach margins that produce profits

• Install a Parts Pricing Matrix

• Eliminate Unauthorized Discounts

• Offer Choices

Gross Profit is a Matter of Discipline


Impact of Un-Authorized

Discounts Labor

Sale Amount $100.00

Cost of Sale -$30.00 30%

Gross Profit $70.00 70%

Expenses:

Personnel $31.50 45%

Semi Fixed $13.30 19%

Fixed $11.20 16%

Total Expenses $56.00

NET Profit $14.00 20%

Discount -$15.00 15%

Net after Discount -$1.00

Parts

$100.00

-$70.00 70% of Sales

$30.00 30% of Sales

$15.00 50% of Gross

$4.80 16% of Gross

$4.20 14% of Gross

$24.00

$6.00 20% of Gross

-$15.00 15% of Sales

-$9.00


Customer Driven Processes for

Increased Sales

• Parts Walk for all New and Used Sales

• Those Dealers that perform a good parts

walk during the delivery and after, see an

additional $400.00 in sales


Offer Choices (Why)

• Why Offer Choices?

• Customers want it

• It educates the customer

• It increases profit margins

• It increases closing ratio


Offer Choices

• What to Offer Choices on:

• Sewer hoses

• Power Adaptors

• Awnings

• How to Offer Choices:

• Show them the accessories and the different

options


Offer Choices

• Offer Choices for Fast Moving Parts

(Good – Better – Best)

• Good – Competitive Profit Margins

• Better – Good Profit Margins

• Best – Very Good Profit Margins

• Offer a minimum of two choices

• Offer no more than three choices



Increased Sales

• Maintenance Menus for Service Advisors • Reliability – Customers want to know about

maintenance

• Increases Sales

• Increases Gross

• Increases Customer Satisfaction







Increased Sales

• Technician Courtesy Inspections for all RVs • Safety – it gives the customer piece of mind

• Increases Sales

• Increases Gross

• Increases Customer Satisfaction

• Parts personnel Have Customers come in

to see products IE: 5th wheel hitch, brake

controller


1. Inspection of Step Assembly for Operation and Damage

2. Inspection of Wiper Blades

3. Inspection of Awning Hardware

4. Inspection Exterior Lights

5. Inspection of Tires for Proper Wear

6. Inspection of Smoke and LP Detector for Proper Operation

7. Inspection of CO2 Detector for Proper Operation

8. Inspection of Fire Extinguisher for Service

9. Inspect Coach A/C Filters (if accessible) .

10. Inspection of Roof for Sealants and Damage

11. Inspection of Roof Antennas

12. Inspection of Roof Vents

13. Inspection of Engine Air Filter (if accessible)

14. Inspect Radiator and Heater Hoses

15. Inspect Engine Drive Belts

16. Inspect Engine and Transmission for Visible Leaks

17. Inspection of Batteries and Cables for Corrosion and Servicing

18. Inspection of Brake Fluid Condition and Leaks

19. Inspect Generator for Leaks and Servicing

20. Inspection of Leaf Springs and Suspension

21. Inspection of Coach Leveling/Stabilization System for Leaks and Damage

22. Inspection of Slide-Outs for Leaks, Seals and Alignment

23. Inspection of Waste Water and Fresh Water Systems for Visible Leaks

24. Inspection of Shocks for Leakage and Condition

25. Visually Inspect LP Tanks for Damage and Date

26. Inspection of Brake Pads/Shoes (if visible)

27. Inspection of Trailer Coupler

Vin #: (Last 8)

ABC RV 27-Point Coach Inspection

Customer Name: Mileage:

The following visual inspection is performed at NO CHARGE

OK NEEDS ATTENTION


Inventory Controls

• Special Order Parts (POO Sheet) • All personnel are responsible for ordered parts

• The #1 reason for obsolescence

• Controlled by management

• All personnel are responsible for controlling SOP

• Retail Customer must Pre-pay

• Work In Process Report (WIP) • Meet weekly to cover reasons

• Have a plan for each


Special Order Parts

(POO Sheet)


Date

Ordered

RO

NumberOwners Name YR Make Parts Ordered ETA Received

Appt Date &

Time

15-Oct 123456 Bob Smith 2004 22-Oct 22-Oct 10/27/14 8:00 AM

Parts On Order (POO Sheet)

Inventory Controls

Annual versus Continuous (Perpetual)

Inventory

• Annual Inventory – An inventory done once a

year

• Continuous (Perpetual) Inventory – an

inventory that is done perpetually (Daily –

Weekly – Monthly)

• 10% of your inventory per month


Inventory Controls

• Parts (consumables) under control of the

Parts department, not Service – bill to R.O.

• Plumbing fittings

• Sealers

• Parts billed to a repair order before they

leave the parts department – No Exception!


Inventory Controls

• Turning Inventory (What)

• Definition: How many times the inventory value is

sold per year

• Guide: The inventory should turn 5 times per year

• Stocking levels for maximum inventory turns

Should be: 3 Months supply

• Parts Inventory in DMS versus the

Accounting Inventory from the General

Ledger

• This is what Inventory is about Copyright 2014 RVDealerPRO LLC ©

Inventory Controls

• Manage the DMS to track Obsolescence

• If history shows no sales in 6 Months

• Who is empowered to order parts?

• Limit the number: Advisors only for Work Orders

• Find your best aftermarket (accessory) vendor

• Focus on accessories

• Incentivize Sales staff


27

• This is the minimum or maximum

days of supply a manager would

allow for a part in a particular

source.

Low/High Days Supply

28

• When a normal stocking part goes below the minimum days of supply, the system will suggest an order up to the maximum days supply of a particular part number.

• Note: Days supply may vary pending source stock and movement.

Low/High Days Supply

Presented by:

Rod Davis

Turn Your Parts Department into a

Profit Center

Questions?

Dealers Deserve a Return on Investment

Documents

Turn Your Parts Department into a Profit Center - RVDA Davis PPT … · Turn Your Parts Department into a Profit Center Dealers Deserve a Return on Investment Presented by: Rod Davis