Welcome to the Parts Obsolescence Information and Tips Page!
Parts Obsolescence Information and Tips
A lot has been said regarding what determines if a part is considered obsolete. The industry standard has been if a part hasn't experienced a sale within 12 months it is considered obsolete. Now some experts are saying that 9 or even 6 months should be the rule. Here is what some of the industry experts are saying.
(Mike Nicholes) " When a part goes 6 months with out a sale the probability of a sale in the next six months is about 65%. If the part goes 9 months with out a sale the probability is about 85% that the part will not sell again."
Consider these steps in order when preparing factory parts returns:
1. When preparing a suggested parts return through your DMS, always set the dollar amount greater than your total obsolescence. This will list every part and allow you the Parts Manager to analyze what to return, scrap etc. 2. Review your total obsolescence. Utilize other sources such as Motorcraft
distributors (Ford dealers) and AC Delco distributors (GM dealers) to return
parts, that is if you purchased the parts from them. If your manufacturer provides return privileges for recall and TSB parts, be sure to utilize it as well. 3. Return parts that are soon to be non-returnable. These parts usually consist of parts that have been superceded or soon to be obsolete parts. Purge these parts first . 4. Return parts that have been in your inventory the longest amount of time without a sale. 5. Return parts that have never experienced a sale. These parts were more than likely forced into your inventory by a customer order or order in error. 6. Return parts that have experienced the least prior year sales.
Some tips and suggestions to consider when your obsolescence is greater than your factory return allowance:
Scrap the parts and take the tax write-off. See your CPA about your particular state's tax laws.
Donate the parts to a school, university or charity. See your CPA about your particular state's tax laws.
Use an obsolete parts buyer to find a buyer for your obsolescence. (see our listing of obsolete parts buyer/sellers in the parts business directory)
Preventative Tips on reducing obsolescence
Determine where the obsolescence is occurring. Check your DMS management report to see if the obsolescence is originating from customer orders or from suggested stock orders or both. If you determine the obsolescence source is special orders, review your special order process. For more ideas on special orders review the special order tips page. If you determine that the source of the obsolescence is normally stocked items that have been suggested for stock by your DMS settings, you probably have the source(s) set too liberal. Just identify those sources and set the phase in a step more strict until the obsolescence is at an acceptable level. Warning, the effects of this adjustment make take months, so take a wait and see approach. The adverse effects could reduce your off the shelf fill rate. I would also suggest to set your phase out setting to 0 sales after 6 months. This simply tells your DMS system to not suggest a reorder on any parts in this source if a part with no sales history of 6 months or greater is sold. When ordering parts for customers that are in package quantities consider telling the customer that the part is only available in a package and that it is the dealership's policy for the customer to purchase the entire amount. Another option is to check a parts locator (see our listing of parts locator services in the parts business directory) for a nearby dealer that has the part in the quantity that the customer desires and purchase the part from them rather than taking the risk of purchasing an entire package for one or two pieces and the rest end up as obsolescence. You would be surprised at how much these unsold broken package quantities can add to your obsolescence.