New GM system automates parts ordering

DETROIT -- General Motors says that its new Web-based parts replenishment system is helping dealers stock the right parts in the right quantities.

Dealers using the voluntary Retail Inventory Management system now have the necessary parts in their inventory 96 percent of the time, says Bryan Burkhardt, GM's global director of retail inventory management.

Dealers who don't use the system typically have the right parts on hand only 65 to 70 percent of the time, he says.

GM began rolling out the system in August in the United States. So far 1,000 GM dealers use it. Another 2,500 GM dealerships have signed up to use the system and are in various stages of implementing it.

GM anticipates that all 7,000 of its U.S. dealerships will be using the system by the end of this year.

Having the parts on hand when the customer needs them should boost satisfaction with customer repair work and keep the customers coming back even after a vehicle's warranty expires, Burkhardt says.

GM's system is an automated replenishment system. It recommends a custom parts inventory for each dealer based on national parts sales and the dealership's own historical sales. The recommendation can be approved or revised by the dealership's parts manager.

After approving the parts plan, any time inventory falls below the system's recommended level, an order is automatically generated on behalf of the dealership. The system replaces the existing way dealerships typically order parts -- in large batches at the end of the week.

Parts director Don Allen says he has been able to reduce the parts inventory at Vandergriff Chevrolet in Arlington, Texas, from $1.2 million two years ago to about $530,000 today. While reducing the quantity of individual parts on the shelf, he added 929 additional parts to the inventory, he says.

Allen has been using the system since August.

"One of the benefits I like is being more aggressive in bringing inventory in with the inventory protection that they give you," Allen says. "I also like the 90-day return policy on customer special orders."

Vandergriff Managing Partner Rick Cantalini says dealers must know exactly what's in their parts department, and write off those parts that have been laying around for over a year, to get on the new system.

"But we've really lowered our overall investment -- less cash, more gross and faster turn," he says.

The dealer maintains 100 percent control of what the system does or doesn't do, Burkhardt says.

"It makes recommendations based on the best available information," Burkhardt says.

"Nationally, we look at how a part is moving, data that dealers don't have on their own. We combine that with the actual demand at their dealership."

GM says that the system allows parts managers to focus on growing their business and less on administrative tasks.

The software was developed with Capgemini and has been proved already in GM dealerships in Europe and South America.

Worldwide there are 3,300 GM dealers now using the parts replenishment system. GM ultimately wants all 15,000 of its dealers around the world to be using this voluntary system.

Nationally, GM has reduced the return rate of parts from dealerships from 4.5 percent to 2 percent for dealers using the inventory management system.

You may e-mail Ralph Kisiel at [email protected]