Heavy Duty repairs can be very expensive depending on what they entail. Some of the engine component related repairs can span upto tens of thousands of dollars depending on the parts required to complete the repair. So keeping the cost of the parts to a minimum with appropriate warranties is key to keeping the HD repair costs in control to increase the profitability of the fleet operation.
From a recent study on the fleet maintenance operations service centers, it is concluded that cost savings or profit of the center is directly correlated to the cost of the parts & supplies. Parts cost is deemed as a controllable expense if procurement is done right in the Parts Department.
The cost of parts should be no more than 25% of sales. Your parts manager's job is not only getting parts priced and to technicians quickly, but getting good deals on parts, whether they’re buying them from your local vendors or manufacturers.
Tips and Tricks of Parts Procurement:
- The parts manager has a direct impact on shop profitability by working to keep the cost of parts at or below 25% of sales. He needs to have this metric constantly visible in front of him on a scoreboard, in real-time, so he can see how his actions impact it.
- Give your parts manager the tools to negotiate with parts vendors. Let him see the full pricing history of all his parts. Let him run reports showing the volume he has with each vendor, so when the Freightliner account manager comes by with free pens the parts manager can push him for better pricing.
- Use reports to make sure you’re only stocking the parts you’re actually using. Don’t just trust your gut feeling that you may be using/needing a lot; only parts that you turn over quickly (at least weekly; ideally multiple times per week) belong in your parts room.
- Leverage the preferred vendor status to get better pricing from the supplier.
- Consider rebuilding and reman options to keep the cost of the parts to a minimum.
- Explore after-market options to get the best possible pricing from the experienced and reputed industry expert in the category.
In conclusion, Parts Manager has a huge role to play in the fleet operation and overall profitability. Here at Majestic Diesel, we are happy to explain the options you have in terms of after-market new, reman and rebuilding of the parts as appropriate to save you thousands of dollars comparing to dealership part purchase option. Give us a call at (972) 579-3083 today to open an account with us.