Establishing an Effective Parts and Service Department Program

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This document focuses on establishing an effective parts and service department within a dealership. It outlines key performance indicators (KPIs) that can be used to guide and judge the department's performance, including parts gross margin %, service gross margin %, absorption, return on assets (ROA), turnover, sales per employee, customer satisfaction index, and sales growth. <br /><br />The document highlights the importance of achieving KPIs, implementing disciplined processes, and hiring, developing, and retaining the best people. It emphasizes the need to increase gross margin through factors such as tracking gross margin daily, using a standard charge billing system, and increasing service sales. The importance of weighted gross margin, which takes into account the sales mix, is also mentioned. <br /><br />Other KPIs discussed include absorption, which measures the extent to which total expenses are covered by gross margin, and turnover, which measures how many times inventory is sold during a year. The document also discusses the importance of parts contribution and sales mix, parts trend and sales growth, service trend and sales growth, fill rates and lost sales, sales per employee, and customer satisfaction. <br /><br />Finally, the document emphasizes the need for action plans and specific employee development actions to achieve the desired targets and changes. It also mentions the importance of time management and prioritizing actions to be proactive rather than reactive. The document concludes with contact information for further inquiries.

Keywords

parts and service department

key performance indicators

parts gross margin

service gross margin

absorption

return on assets

turnover

sales per employee

customer satisfaction index

sales growth