Well, what if there was a secret to getting rid of that monster? 

Much like the monster himself, the average parts department’s obsolete inventory stems from one thing: special order parts returns. 

Special order parts are one of the biggest drivers of obsolescence. When customers put in a request for a specific part, they either order the wrong part, find parts cheaper elsewhere, or just return those parts without reason. As a result, they pile up on the shelves and are often forgotten. 

So, how can you prevent special order parts from piling up?

Why Obsolete Inventory is a Killer

The costs associated with obsolete inventory are astronomical. Obsolete parts do more than just take up valuable space; they carry inventory costs by occupying valuable space in the warehouse, reducing cash flow, diverting attention from more critical tasks, and tying up capital that could have been used elsewhere. 

If you’re not keeping proper track of how many older parts you have in stock, you may contribute even more to your obsolescence rate. You can end up over-ordering older parts that you already have in stock. Knowing exactly what you have in stock and is essential to ensuring you don’t overorder parts that contribute to more back-stock.

How to Set Up Your Return Policy for Special Order Parts

A well-defined return policy can help go a long way in reducing returned parts. This is especially true when dealing with specially ordered parts. Ordering parts that are harder to source for specific customers has a ripple effect on your inventory.

• It increases costs for your parts business by ordering an already difficult-to-find part, which contributes to higher costs to get that part to your shelves as quickly as possible.

• With the aftereffects of supply chain interruptions still being felt, getting special-order parts to you takes time. Time that your customers may not be willing to wait. 

• If the part ordered is incorrect, arrives late, or is no longer needed by the customer, instead of going back into the sales cycle for customers looking for similar parts, it gets stuck on the shelf and stays there.

So, what can be done about returns of special-order parts? This is where policy flexibility should come into play. 

If a part is ordered that doesn’t fit the customer’s needs, offer them to exchange it for parts they need at a small fee. This ensures that you don’t lose money on the parts you’ve already ordered and rotate out your existing inventory to make space on the shelves. This encourages your customers to make their purchases without fearing getting stuck with an unwanted item. You can also offer them a discounted or free service for installing that part.    

Having this much flexibility in your return policy strategy presents a few benefits for your parts business. 

• Reduced holding costs for obsolete inventory.
• Enhanced customer trust and loyalty due to the flexibility in the return policy.
• Better inventory turnover ratio, leading to increased profitability.
• Potential for repurposing or reusing returned parts for other customer orders.

Key Components of a Flexible Return Policy

Setting up a return policy that suits your and your customer’s needs is crucial. 

To set up the right return policy, you must have the right parameters.

Dealing with Setbacks

No matter how fair your policies may be, you’ll deal with some negative feedback and other setbacks from customers. The important thing is not to panic. Transparency and education are essential here. 

Educate your customers about policy stipulations to ensure clarity and establish a dialogue with them during their returns or exchange processes. This will help them better understand the policies themselves and establish relationships with customers that lend to increased brand trust. 

Set up automated systems to quickly process returns and restock items. When an influx of order returns or exchanges occurs, help your team process them as efficiently as possible. Utilize automated systems to help you keep track of returns, stay on top of customer comms, and accurately track your inventory. This will help you avoid obsolescence problems in the future. 

These can help you deal with any friction points between you and your customers to deliver the best overall customer experience.

Keep Your Inventory and Parts Sales Alive

While it may not be entirely painless, a strong and effective returns process can help you keep your inventory stable. Drive down obsolescence with flexible returns and exchange policies. Stay on top of inventory rotation with automated inventory management systems. Be consistent when communicating with customers about return guidelines to establish a trusting and transparent relationship. 

Looking for more ways to tackle even the scariest obsolescence rates? Check out our free guide, “Parts Manager’s Guide to Beating Obsolescence,” for more expert tips.

Are you spending too much time uncovering aging and idle inventory under films of dust? Trying to move aging inventory off the shelves and into the hands of car owners can be a challenge, especially when you don’t know the true state of your inventory. 

Inventory management is essential to the success of your parts business, especially when it comes to tackling the biggest inventory problem, high obsolescence. Without clean inventory data, you can’t effectively determine how much obsolete inventory you have or where you need to make adjustments to meet customer demand. Unclean data leads to inaccurate ordering and, eventually, poor stock levels, which leaves your business with lost sales opportunities and pile-ups. 

So, if your parts shelves are haunted by auto parts that seem like they’re past their prime, what can you do to lower obsolescence and still turn a profit?

The Ghost of Obsolete Inventory

Perhaps the biggest nuisance to any parts seller is obsolete inventory. With yearly turnover, vehicle parts have a short shelf life. The longer they stay on those shelves, the more they end up costing you. Money tied up in aging and idle inventory reduces your incoming cash flow and often reduces sales opportunities, especially when dealing with newer buyers with younger vehicle models. 

Signs Your Shelves Are Haunted By Obsolete Inventory

How do you know your inventory has a higher percentage of ghosts? Well, there are a few tale-tell signs. 

Slow-Moving Parts

How many items on the shelves have been sitting there for months or years? How often do you see customers intentionally searching for those parts? If you have a high percentage of items that get little to no attention, they’re not likely to fly off the shelves, making them slow-moving. 

Inventory Audits Have Mismatched Numbers

With unclean data, every inventory audit produces different results. You may think you have an obsolescence rate of 15% at first glance on paper, only to find out after your yearly or monthly audit that you actually have a 50% obsolescence rate. If you find that percentage is rising and falling like an EKG graph, you’ve got a strong obsolescence problem.

How to Exorcize Obsolete Inventory

So, if obsolescence is such a horror show to deal with, what are some of the solutions to reduce it or, even better, profit from it? 

With the rise in older vehicles being kept on the road, more people are in need of parts that are harder to find. Having obsolete parts in your inventory could be the key differentiator for revenue generation and resuscitating your parts sales. 

Automate Your Inventory Management

Without automation, your inventory management processes will fall apart. It will be just as easy for your inventory to go right back to square one without consistent automated processes. Having inventory management software can help you keep an eye on how much obsolete inventory creeps up. It can also help you keep track of what inventory to sell at specialized pricing. 

To clear your inventory of a parts graveyard, what should you look for in an inventory management system?

• Bulk tagging capabilities: Tag parts accordingly and with ease all at once. The RP Obsolescence Tool can help you bulk-tag and price obsolete items instantly.

• Stock level status updates: Automatically update stock levels for employees and for customers shopping on your website.

• Sales trend data: Understand what parts sell well and what parts sell poorly so you can ensure you order the right volume of high-selling parts every time.

Reduce Special Order Parts 

To keep your inventory from being overrun by obsolete parts, you need to keep your biggest contributors at bay: special order parts. For the average parts seller, special order parts make up the bulk of obsolete inventory. These are parts that are not often ordered or sought out that your dealership specifically orders for individual customers. 

These types of parts present a few issues that contribute to your inventory’s obsolescence rate:

• They take longer to arrive, making it less convenient for the customer.

• They often are more costly, forcing customers to look for alternatives elsewhere.

• The wrong parts are ordered, resulting in a high rate of returns.

To help reduce the impact of special order parts, there are a few approaches you can take: 

• Have strict policies on special order parts returns. 

• Coordinate with the service lane to minimize overordering of special order parts.

• Send reminders to customers for parts pick-ups and arrivals.

Special Obsolescence Pricing

It may not seem like there would be an upside to a high obsolescence rate, but it has the potential to be greatly profitable. With more car owners keeping their older vehicle models, more people are in need of older auto parts than ever before. Having harder-to-find parts on the shelves can turn your parts business into a gold mine. 

To draw in customers looking for older parts, there are a few tactics to keep in mind:

• Set up special pricing, like discounts for obsolete inventory.

• Use shopping ads to list and feature obsolete inventory.

• Tag obsolete inventory for customers on your website for easy navigation.

These three tactics can help you reduce the likelihood of increasing obsolete inventory, better manage existing inventory issues, and promote obsolete parts as a strong revenue generator. 

Trade in Inventory Tricks for Treats

Resuscitating your inventory from the parts grave can be challenging, but it is possible. Utilize the right management systems to keep your inventory data clean. Do regular check-ins to ensure all systems are working properly. Implement specific policies to help reduce special order parts from overtaking obsolete inventory. List obsolete parts online with special pricing to attract parts buyers. 

By utilizing all of these strategies, you can keep your inventory from haunting you into lost sales. Looking for more ways to help fight obsolescence? Download our most popular “Parts Manager’s Guide to Beating Obsolescence.”

Knowing the cause of your inventory problems is the first step toward solving them. The more difficult step is implementing the right processes to fix them.

The Most Common Inventory Hurdles

What do most parts managers cite as the dealership’s biggest inventory issues? Overstock of slow-selling parts, low to no stock of fast-selling parts, missing inventory, and mistagged inventory are the most common inventory management challenges to overcome.

Overstocked & Obsolete Parts

Nothing hurts your bottom line more than an abundance of parts that don’t sell fast. Overstocked inventory can lead to a variety of problems behind the parts counter.

First, it takes up space on the parts shelves that could be used to house more popular parts. 

Second, it quickly contributes to your obsolescence rate, the percentage of aging parts that don’t get sold. 

Third, it ties up cash that could be spent elsewhere to help drive revenue. Having dead stock that can’t be moved quickly is no help to you.

Understocked Parts

While overstocked parts hurt your bottom line, understocked parts hurt your customer retention. Without enough of the right parts on the shelves, ordering the parts your customers need takes longer. This drives customers away from your dealership to your competitors. 

Understocked parts can also make it difficult to accurately predict what parts will need to be ordered in future sales cycles, as there’s less product for you to pull data from.

Missing & Mistagged Inventory

The biggest headache for any parts department employee is missing and/or mistagged inventory. It’s one thing to have too much or too little inventory; it’s another thing to have inventory that doesn’t match your system data. 

When inventory gets mistagged, your parts department scrambles to find it. It can also result in labeling those parts as missing, leading to over ordering parts, and the vicious cycle starts all over again.

Tips for Solving Inventory Challenges

If your parts department is experiencing one or all of these inventory issues, how do you go about fixing them?

Streamline Your Parts Department

Inventory management can be a nightmare, but you can turn your parts department into a well-oiled machine with the right tools and strategies. Be consistent with your management processes, make data-driven decisions, and invest in high-quality digital tools to do the heavy lifting for you. 

Want more tips on how to manage your auto parts inventory successfully? Get more insights into how you can reduce special order parts returns here.

We are excited to announce a new solution to defeating obsolescence in the parts department with the release of our latest feature, the Obsolescence Tool. 

We’ve talked to thousands of Parts Managers, and one issue always seems to come up: Obsolescence.

It’s common for dealerships to have older parts on the shelves taking up space, with the average parts department’s obsolescence rate resting around 30%. 

The RevolutionParts Obsolescence Tool is designed to help dealers improve their inventory management by helping sell more obsolete parts online. It does this by allowing you to identify, tag, and configure custom pricing for obsolete inventory, then instantly list those parts across multiple selling channels—like eBay.

The RP Obsolescence Tool 

Shoppers with older vehicles have unique needs and are not going directly to dealerships for these older parts; instead, their first stop will be online, even before they stop at their local aftermarket sellers. 

In fact, 74% of parts sold start with an online search. 

Getting your obsolete parts listed online is easy, but getting them to sell is the challenge. Traditionally, the price of these older parts follows the pricing rules you set for the rest of your inventory. This pricing model doesn’t take the age or demand of older parts into account. 

Now, with the Obsolescence Tool, you can automatically tag any part that meets the criteria you set for an obsolete part. You can then configure custom pricing rules that automatically apply to all obsolete parts listings. 

This helps your obsolete inventory stay competitive online and attract more buyers, meaning you get higher returns on these obsolete parts than traditional methods of reducing obsolescence. With the Obsolescence Tool, your team will be able to sell obsolete parts in higher volume and increase revenue with minimal operational input–managing it all from a single platform.

The Impact of Obsolescence

Keeping obsolete parts in check is crucial as a high obsolescence rate can cut into profitability at the parts department. Older parts may be harder to sell, but they can pile up faster than you may realize. The biggest drivers of obsolescence are often errors in inventory management and an influx of special order parts. No matter how your parts department obtains obsolete parts, you want to get them off the shelves and drive the most revenue from them as possible.

Here are just a few reasons why high obsolescence can hurt the dealership:

• Wasted resources: Acquiring, managing, and storing obsolete parts wastes time and money for the department.

• Excess inventory: Unsold obsolescence can lead to storage issues and tie up capital for the dealership that could be used elsewhere.

• Difficulty forecasting demand: Storing parts that won’t sell makes it difficult to forecast the demand for parts accurately.

Obsolescence is natural in any parts department, but the key is to keep it low. This is where the Obsolescence Tool comes in. This powerful new tool helps sell your aging and obsolete parts so you can clear out this unwanted inventory.

Learn How to Reduce Your Obsolescence

Want to learn how the new Obsolescence Tool can help your parts department offload more obsolete parts? Click the button below to schedule a live demo with one of our eCommerce experts to see the tool in action.