History Repeats
Do you ever get tired of new, new, new? It seems like everything these days is "new and improved." But sometimes we can still find real value in the "old." This issue's link will take you back to an article originally published in 2003. Today, it still offers sage advice. It's all about attitude. Read more about the value of an attitude adjustment by clicking on Does Your Business Need an Attitude Adjustment.
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Checkmate Tip: Sales Contribution from Parts and Part Groups
Do you ever wonder which part groups generate the most sales? Or which ones are almost insignificant? There is a report in the Checkmate Advanced Management Reports that can show you that and more. The first step in preparing this report is to build a Part Evaluation (5,4) for the period you want to see. Then go to 5,12,5 (V12,5 in Classic) and build a Summary Report. Build it for all parts. Accept the default choices for the remaining questions. This report should either be printed on wide paper or to a text file that you can open in MS WordPad or another word processing program.
The resulting report (see below) shows your part categories ranked by sales. The first item will be the part group that contributes the greatest amount of sales to your total. The report also shows other valuable information such as Lost Sales Ratio (the number of times you had the requested part in stock but did not sell it) and Not in Stock Ratio (the number of times you did not have the requested part.) It also shows the average number of days parts that were sold had been in stock, the average age of the parts still in your inventory, and the number of parts in stock.
This report will help you identify the part categories most important to your business and will also help you identify those that need further review. As an example, if you see that Engines show high Lost Sales, print another report sorted by Lost Sales (5,12,8 or V12,8 in Classic) for engines only by Interchange. You will then have a list of engines sorted by Lost Sales. You will also see Checkmate's comments as to whether the specific interchange part is overpriced or underpriced, and whether you need more or have too many of that part. You can also create reports by part categories that are sorted by Not in Stock, Sales, or Requests.
These reports provide you with a wealth of information to help you more effectively manage your inventory. A periodic review of your most significant part codes will pay real dividends by helping you manage current inventory and suggest parts you should purchase based on your own history. A cycle that reviews your top 12 part categories each quarter can be implemented easily by establishing a rotating schedule whereby you review only 4 part categories each month, or only 1 part category each week. Get in the habit! You will profit from it.
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