GM to Order Dealerships' Parts

A new Web-based parts-inventory management system launched by General Motors Corp. for its North American dealers may have parts managers applauding.

The Retail Inventory Management system (RIM) provides dealerships with a recommended parts list and will order the parts automatically at no risk or cost to the dealer.

RIM has been around since 1990, when Saturn Corp. developed it for its dealers. In 1999, GM deployed the system in Europe and Brazil, and it plans to have most of its U.S. dealers on board some time in 2007.

Once a dealer signs up for the program, GM will download all of the dealership's parts orders from the dealer management system (DMS) from the previous 12 months.

RIM will calculate the optimal inventory level for each part based on the dealership's 12-month history. The parts manager, however, has complete control and can change any stocking level.

Dealers in a pilot program have been accepting RIM's recommended lists 98% of the time, says Bryan Burkhardt, director-retail inventory management for GM Service and Parts Operations.

Jack Tillman, parts manager for one of the pilot dealers, Bob Hook Chevrolet in Louisville, KY, says he no longer spends 90 minutes a day placing orders and running stock reports.

“The other systems are antiquated,” he says.

Once a part inventory falls below the recommended stocking level, RIM automatically generates a purchase order and shipment. Parts managers will have all of the information at their disposal.

Another benefit for dealers using RIM is 100% obsolete part protection, GM says. Currently, GM dealers at no charge can return 5% of non-selling parts.

RIM will generate a monthly material return form for any part number that has no sales activity for 52 weeks. Dealers will be reimbursed for parts with no sales activity that RIM ordered. GM expects participating dealers to decrease their obsolescence levels significantly.

Initially, dealers will see an approximate 16% spike in their parts inventory, but that levels off within a few months. Eventually parts investment should be cut in half. Tillman says he has reduced his inventory to less than $1.5 million — down from $2 million.

He says some parts managers might become concerned for their jobs because of the automatic ordering. “Don't be,” he says. “RIM is a step in the right direction, but it isn't perfect. There's still plenty for parts managers to do.”

Most of the problems are minor glitches that are common with any start-up, Tillman says. “Mostly, you just have to manage it a little, especially when parts numbers change or new products are being phased in.”

Participating dealers get a 4% discount on orders vs. 2.75% for non-participants.

Burkhardt sees increases in service revenues and customer satisfaction because parts will be in the dealership when needed, reducing downtime.