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Specific to aftersales, the largest drain on cash is the Parts inventory.

We continue to be amazed at the luxuriously low expectation many franchised dealers have for stock turn. They tolerate 50 days’ worth of stock sitting on their shelves. This is in an age when almost every VM offers a daily stock order and delivers within two working days.

We know that 15 times turn – equivalent to fewer than 25 days’ demands – is achievable without compromising customer service.See our Stock Management Appraisal page.

Furthermore, space is freed up for other uses – extra service bays, say – and the risk of ending up with obsolete stock is greatly reduced.

Which description best fits your Parts stock: working capital or idle capital? See Hidden Treasure (or just a load of old junk?)

As a reminder, please send your comments to views@aftermarketsolutions.co.uk putting Views as your heading.

Posted 1 August 2013