PARTS SCANNERS GAIN IN POPULARITY

More automotive retailers today are using bar code scanners in their parts departments as a dependable way to increase profits from their fixed operations.

Parts scan technology offers 50% productivity gains through faster, more accurate parts receipting and inventorying. Scanning also can help retailers reduce inventory errors and time waste, as much as 80% for the average retailer.

Scanners use laser technology to instantly read part information contained in bar code labels on the part or packaging as parts are received from manufacturers. Scanners then automatically store part numbers, quantities - and with some part scan devices, bin assignments - in the retailer's business system database.

Systems are available in shoulder-mount, hand-held infrared wireless devices, wired systems and units with integrated printers.

Most car and truck manufacturers now bar code parts, but Steve Dean, national dealer development manager for GM Service Parts Operations (SPO), says only a small percentage of retailers are currently using the technology.

He says many retailers don't realize the contribution scanners can make in improved efficiencies throughout the dealership - and in getting the right part to the right vehicle quicker so customers have a more positive service experience.

General Motors has been particularly aggressive at encouraging GM dealers to adopt scanning technology. At the NADA convention in January, SPO hosted a booth demonstrating the benefits that part bar code scanning offers retailers.

Dealer efficiency experts and part scan device users alike agree this technology can greatly simplify the parts receiving, inventory, and parts cycling processes and improve parts department economics.

"Without the ability to effectively track the parts inventory, a dealer or parts department is not going to be able to make money in the parts department," says Senior Manager John Dvorak of the Dealership Services Group for accounting and consulting firm Crowe, Chizek and Company LLP, Oak Brook, IL.

Uses Retailers typically execute three kinds of parts inventories, all of which can be greatly improved by using bar code scanning systems.

* Receipt inventory, which is executed every time there is a parts delivery.

* Physical inventory, a full audit of every part done once a year.

* Cycle counting inventory, a stock check performed periodically to ensure more accurate real-time tallies.

"Used as part of a complete program of inventory control and inventory management, parts scanners will save the dealership time and substantially increase accuracy of the receipt of parts, the sale of parts and - most important - the control of the inventory on the shelf," says CEO Mike Nicholes of Mike Nicholes, Inc., a parts department training firm.

He adds, "It can be a valuable tool as part of an integrated whole management policy." CSI up, errors down

Tom Finley, parts manager for Bachman Chevrolet, Louisville, KY, began using a parts bar code scanner called PartScan from ADP Dealer Services that features immediate receipt function.

He says, "We're saving 10 man-hours a week with just the ability to scan versus manually check in. The minute the scanner reads the part bar code, the dealer management system upgrades the part's on-order status to on-hand and the part becomes immediately available for sale - in under 30 seconds of time of scan to being sold.

"We average 500 lines a day receipt here, which used to take two men two to three hours to check in, and the office another 45 minutes to reconcile and enter into the computer."

He says his gross and customer satisfaction has increased.

"I'm not paying a premium to pick up a part elsewhere because we don't show it as available for sale or can't locate in the warehouse," he says.

When Burt Chevrolet, a dealership in Denver, CO, began using parts bar code scanners it reduced by half the labor to check-in stock orders.

"Doing the stock order check-in the traditional way was noisy and inefficient because we'd have five people calling out parts numbers and another person making sure it matched the information on the packing list," says Bill Davis, parts associate. "When that many people are participating and relaying information back and forth, mistakes are made."

Money, money, money Traditional manual part receiving takes the average dealership approximately 4.8 hours per week, excluding parts put-away time.

At an average employee wage of $10 per hour, that's $48 per week - or $2,496 spent annually on parts receiving, notes Mike Lippman of ADP, a former district parts and service for Toyota Motor Sales.

Most retailers who use scanners for parts receiving cut their processing time in half. For the average dealership using parts scanners, that time reduction adds up to $1,248 in annual savings ($2,496 x 50%).

"You can't underestimate how important it is to save the hours of labor," said Dave Zitz, Parts Director for Ruge's Auto Group, Red Hook, NY. "It gives you significant cost savings, but also gives your people more time to attend to other department needs."

"Focus on accuracy" Parts consultants estimate that a parts department diligently monitoring its manually processed inventory will find 50-200 errors per day that need correcting - errors a scanner would eliminate.

Fixing those errors is costly, taking six to eight minutes each. At six minutes an error to correct, even 50 errors would consume five labor hours. A retailer using a scanner should be able to cut those five hours per day by 80%.

"I like to think we were intensely focused on accuracy before, but the amount of time and effort to reach that same accuracy has lessened a great deal since we started using the part scanners," says Mr. Zitz.

In today's world of leaner inventories, it is more important than ever that parts counts be as precise as possible. Inaccuracies can result in ordering duplicate parts, or worse, assuming a part is in stock when it actually is not - then facing the angry, dissatisfied customer who planned his or her day around the installation of that component.

Such mix-ups can damage a retailer's CSI rating and tie up capital in unused parts.

"It's the little errors that eat you alive, because it's the small margins that you're dealing with," says Mr. Nicholes.

Bob Nyholm, manager of parts at Burt Chevrolet, understands the damaging effect those small errors can make to his bottom line, and now plans to use his scanner for cycle counting to achieve even greater inventory control.

"If I can decrease that labor process time with this technology, I can do my inventory more often, which will effectively make my on-hand counts more accurate," he reasons.

The use of bar code scanners in parts departments is expanding rapidly as the cost of equipment to create and read bar codes continues to decline, and more retailers are convinced of the technology's value.

Says Mr. Zitz, "When technology makes your job seemingly easier and less stressful, you always feel better about your job and getting more things done."

Jim Leman writes about the automotive retail industry, and in his spare time publishes a newsletter for owners of 1946-1949 Plymouth automobiles, from Grayslake, IL.