After 11 years as a Good-year Gemini dealer, Doug Bolt in 1998 felt he needed to change the way his dealership handled parts inventory.
Mr. Bolt, president of Orlando, Fla.-based Florida Tire Inc., said that back then his five stores just weren't turning parts inventory much during a year. The results: Inventory dollars were growing faster than the service department and shelves had become filled with obsolete parts, some of which Mr. Bolt said he had to ``eat'' the cost of over time.
Today, Florida Tire has grown to 10 stores and its parts inventory is managed by supplier Mighty Distributing System of America. Inventory turns six to eight times a year depending on the location, and Mr. Bolt is a Mighty distributor for central Florida, serving almost 150 customers.
``I started interviewing a lot of big companies to find out who can help me with inventory management/control,'' Mr. Bolt said of his inventory problems. ``Nobody could do that...until I got to Mighty, and they immediately started talking about it.''
Norcross, Ga.-based Mighty, a franchisor of sales and service in aftermarket auto parts, has been in the inventory management business for more than 20 years and maintains that tire dealers need outside help with their back rooms now more than ever, according to Jeff Bare, Mighty's director of national sales.
``Proliferation of part numbers is a huge problem,'' he said. ``The dealers don't know where to begin. Today's tire dealer, most tell me that if they can turn their inventory four to six times a year, they're happy.''
Like tire SKUs, the number of auto parts numbers and brands keeps growing with no end in sight, and Mr. Bare said he believes a lot of tire dealers need Mighty's inventory management program because ``most do a terrible job at inventory.'' Many dealers, he said, order parts ``off the hip'' and may not necessarily be stocking the products most likely to sell quickly.
The automotive aftermarket has become more fiercely competitive, Mr. Bare noted, and most tire dealers haven't seen a return on investment from the back room.
``When you can come in and demonstrate there is a way to get return on investment, improve productivity, improve dollars per car, then the dealers get interested because that's what it's all about,'' he told Tire Business.
Mighty offers inventory management as a free-of-charge service to tire dealers who already buy the company's products, Mr. Bare said. ``We want them to buy our parts,'' he explained. ``Our feeling is, if we put the inventory in and help them sell more parts, our business is going to grow naturally.''
Florida Tire's Mr. Bolt has found that letting Mighty control the back rooms of his stores put $100,000 back in his pocket during his first year in the program and helped his sales volume grow each year. He said the biggest problem he used to have before signing on with Mighty was waiting an average of 50 days to get credits back on obsolete and flawed parts-credits that usually amounted to about $2,000-$2,500 per store per month.
Today, Mighty representatives come into his stores weekly, take back parts, enter orders on Palm Pilots, and Mr. Bolt receives his credits within 24 hours of the representatives' visits. ``It was just one more thing that helped me manage my cash and manage my inventory better,'' he said.
With 10 stores now, Mr. Bolt admitted he couldn't manage his inventory by himself. ``We all have the same kind of service mix to tire sales, but the inventory in all 10 of our stores is different,'' he said. ``There is no cookie cutter that we put the same inventory across the board.''
Florida Tire tailors inventory to match the personality of each location, and ``we're much more likely to have that air filter or wiper blades on the shelf when an impulse buy comes in for an oil change,'' Mr. Bolt added.
Mr. Bare said Mighty's program consists of a three-step method:
* Inventory closeup;
* Inventory cleanup; and
* Inventory watch.
Like the names suggest, a Mighty representative visits stores weekly, evaluates the back rooms, suggests ways to correct problems and monitors and adjusts inventory on an ongoing basis. The representative stocks and organizes the shelves and tracks on a Palm Pilot what's moving and what's not.
Common problems are overstock, understock and out-of-stock, according to Mr. Bare, who noted that a dealer with $15,000 worth of parts may think he has great coverage when in reality his coverage may be only 40-50 percent.
In the inventory watch phase, Mr. Bare said Mighty offers ``obsolescence protection,'' meaning parts are constantly rotated so that non-selling inventory is pulled continuously in favor of the hottest selling models.
``So the key is to give (dealers) the opportunity to have a return on investment in the back room, to increase and improve their productivity, meaning they can go to the shelf, pull it off, get it on the car and get the car out the door quicker rather than have to wait on the parts,'' he explained.
Mr. Bare said Mighty tracks inventory for more than 25,000 accounts, but he didn't know how many of those are independent tire dealers.
Mighty also recently announced an inventory parts stocking program for Goodyear's Gemini dealers that became effective Nov. 1. Participation in the program is up to individual dealers, Goodyear said, as Gemini dealers also have the option to participate in similar stocking programs offered by NAPA Auto Parts and Carquest Corp.
``Mighty's full service program, strict inventory management skills and ability to provide local weekly service will enable Gemini participants to be more productive and control their cost of goods by reducing callouts to local parts suppliers,'' Mark Boswell, Goodyear's Gemini manager, said in a prepared statement.