March 2012, Auto Dealer Today - WebXclusive
Led By a Diverse Parts Powerhouse
Hustle and bustle in the dealership is welcome in all departments, and at Sanderson Ford in Glendale, Ariz., much of it goes on behind the scenes in fixed ops, especially in the parts department, which consists of two large parts warehouses. The main warehouse commands 110,000 square feet, while the other spans 10,000 square feet.
For optimal use of both warehouses, Stan Wibben, general manager of the parts operations and the truck and RV center, made sure each warehouse had a second level to stock inventory. He said, “I don’t believe in warehouses without mezzanines. Everything above your top shelf is wasted space [without them].”
When he began working at Sanderson Ford in 2001, the parts department was selling about $2 million in parts a year, and the dealership’s parts inventory was spread across five buildings on the company’s 63 acres of land. To help correct the inefficiencies created by having inventory across so many locations, the dealership conglomerated its parts into two buildings in 2004. Between the two warehouses, the dealership has a parts inventory worth $6.5 million and about 32,000 part numbers on hand. On average, the dealership currently sells $2.3 million in parts a month, so having an efficient and smooth-running operation is vital.
Due to its immense success, the parts department at Sanderson Ford has won several awards. Here, the parts management team holds up two awards for selling Ford Power Stroke Diesel parts, one for achieving the $2 Million Club and the other for volume and growth. Pictured from left to right: Parts Manager Dave Beard, Assistant Parts Manager Sindi Barnes, and General Manager of Parts Operations and Truck/RV Center Stan Wibben.
A parts operation doesn’t grow to be this size overnight. Dealer David Kimmerle explained, “We started in 1955, and we were selling about $100,000 in parts a month.” To successfully grow a parts operation, he said, “You have to have a passion for parts, or it doesn’t work … One of our goals was to sell parts all over the country, and we have [achieved that]. It’s been an interesting niche for our dealership.” He added, “We just keep finding ways, even in this economy, to sell parts.”
For any dealership selling a large number of parts, inventory management is key. At Sanderson Ford, there are several people involved in the inventory management process to ensure the proper parts inventory is on hand. Wibben explained, “Our parts manager, Dave Beard, supervises a staff of several clerical people in our parts business office who control our posting and database management. We also have an inventory specialist that makes certain our stocking levels are accurate and manages our purchasing and our inventory sales programs.”
Kimmerle expounded on the dealership’s strategy for parts inventory management. “One of our philosophies on how to be successful in the parts business is to know when to put a part on [the shelf] – when it’s new – and when to take it [off] – before it becomes completely obsolete … We put on parts earlier and leave them in inventory longer than most people.” The goal of this strategy is customer satisfaction and retention. He said, “If someone’s looking for a hard-to-find part and we have it, they don’t have to bother calling anybody else.”
Another way to keep parts customers happy is timely shipping, and considering about 70 percent of the parts business is wholesale, a smooth-running shipping department is vital. Wibben said, “We use, of course, all of the common carriers as well as two delivery services for in-state customers. We offer standard next-day delivery to almost all of Arizona. In the Phoenix metro area, we have 13 delivery trucks.”
Kimmerle stressed the importance of shipping, and how it’s a pitfall dealers need to watch out for. “Shipping can be a problem,” he said, adding that dealers need to keep customers happy but also do what’s best for the dealership. He provided the example of shipping to Blythe, Calif., which is about 150 miles away from the dealership, just across the Arizona-California border. To send a delivery truck to Blythe alone, he said, “wouldn’t pay for itself.” However, if the department sells enough parts so that the driver can make multiple deliveries along the route to Blythe, the trip will turn a profit.
The Internet is another important component of the parts operation. In addition to having a parts section on the dealership’s main website, the dealership has invested in a dedicated parts website, SandersonFordParts.com, which was designed to attract retail business and further grow the operation. To develop this site, Wibben started working with a company, CaseyClick, a couple years ago. He reported that the site generates about 350 phone calls and 40 emails per month. He said, “That comes to around 17 phone calls per working day. This is all incremental business for us.”
While the websites generate some online sales, the vast majority of parts orders are actually placed over the phone. The number of orders made via phone calls compared to online orders is 20 to one, Wibben said. While only a small percent of the parts customers are online buyers, he has discovered that online customers “tend to be very price-conscious.”
While the websites help add business, the dealership has further expanded during its quest to build a parts powerhouse. Sanderson Ford also sells Ford Racing and Roush Performance parts, provides parts and accessories for TOMCAR off-road vehicles to the entire state of Arizona, sells parts and accessories for multiple brands serving the towing industry, and wholesales Volvo passenger-car parts.
Although the dealer has an additional store in Phoenix that sells Volvo and Lincoln, Wibben said management decided to wholesale the Volvo parts from the Ford store’s location since they already had the proper “systems in place to take care of the wholesale business.” He added, “We also base the Volvo Internet sales from this location because of the volume we ship on a daily basis.”
Regarding the unique items handled by the department like racing, towing and off-road parts and accessories, he said, “We always try to offer more than just the standard Ford dealer model. We’re constantly looking for additional product lines to carry. With the size of our warehouse and our existing delivery trucks and freight carriers, it only makes sense to have as diversified a product mix as possible.”
Sanderson Ford in Glendale, Ariz., has a mammoth parts department, which consists of two large parts warehouses spanning more than 120,000 square feet. The store's parts inventory is worth about $6.5 million, and on average, the dealership sells about $2.3 million in parts a month.
The foray into the towing niche is relatively new for the dealership. “We became the exclusive distributor for Jerr-Dan tow trucks for the state of Arizona a little over a year ago. That is a new industry for us, and we’re very excited about the opportunities with these products,” said Wibben.
With so many different offshoots in the parts operation, there are a number of different types of employees. For example, a separate group of parts specialists sells the towing, TOMCAR, Ford Racing, and Roush parts and accessories. He explained, “Customers that purchase these products have unique needs, so we try to segregate these product lines from our normal wholesale process.”
Accordingly, there are also various pay plan structures within the department. Wibben provided a couple of examples: “In our wholesale phone center, we have a plan that pays around 50 percent on the team’s combined gross profit and around 50 percent on the individual’s. This way, everyone benefits from the group’s effort as well as being rewarded for their own abilities.” Staffers at the shop counters are on group plans “since they work as a team to keep the technicians supplied with parts,” and those at the retail counter are on individual commission plans.
Kimmerle said the department strives to “hire a little bit higher caliber [employees] who will stay with us and want to make the business a career.” While there is “a little bit of turnover” in the department’s entry-level positions, the down economy has decreased turnover somewhat. Another result of the economic downturn, he said, is the dealership is able to operate with fewer people on staff because those people have taken on more responsibilities. However, that’s not all bad news for the employees because the dealership is able to pay them more.
When they need to hire someone for the department, Kimmerle takes the same approach as many other dealers and hires from outside the industry. “We’d rather have someone without bad habits. We’d rather train them.” He explained that since the parts department does “everything so systematically,” proper training is “all-important.” Along with other departmental managers, Wibben conducts some of the training. Kimmerle said, “Stan does an excellent job as a manager. He interacts with all of his people.”
Wibben also belongs to a parts 20 group. Kimmerle said, “They meet and discuss what’s going on in the industry, so we try to stay up on all the latest trends … When you get the [20 group members] all together, it’s neat to be able to bounce ideas off of other people with experience. It’s been a real beneficial thing to be a part of.”
And while the parts department occasionally runs into the typical day-to-day challenges, Kimmerle’s proud of the department’s success. “It’s very rewarding to continue to do what we do in this kind of economy. So we’re very thankful and blessed.”
Vol. 9, Issue 1