I hate the phrase “Garbage In, Garbage Out”. I know it’s true, but it feels like an excuse every time a computer program doesn’t deliver what I need. This isn’t exactly what we are talking about with Digital Dirt in your Parts Data. Let’s look at WHAT it is, WHY you need to address it and HOW to clean it up.
WHAT is Digital Dirt?
We are referring to demand history you don’t want. We call this “abnormal demand." In a nutshell, any time you make a sale that you don’t expect to repeat, we consider it abnormal. In most cases, abnormal demand will prompt you to stock a part you shouldn’t. In other cases, it may be a part you should stock but the quantities will be inflated. A few examples of abnormal demand could include:
Parts that are not wear related.
Parts or Accessories added to a new unit.
Parts sales outside your market.
Parts used for Warranty or Campaigns.
Government or Municipal orders.
I am not suggesting you pass up these sales. You should sell these parts, just make sure it does not affect your future inventory.
WHY you need to address Digital Dirt
Unattended, it will create more work and you won’t be able to use your system the way it was designed. Once you set up your planning parameters, your system can manage replenishment for you. However, if you have abnormal demand in your history, you will be eternally frustrated with the system and continue to plan your stock orders manually.
Not trusting or using your system is only half of the issue. Many manufacturers have some form of automatic replenishment system available for dealers. They are great tools that have revolutionized many industries, but these systems are also affected by abnormal demand left in your system.
I have the best job in the world. Every day I get to talk with dealers about their parts business. When I ask dealers how they like their OEM’s automatic replenishment program, I get one of three answers:
“I don’t like it. It makes crazy suggestions.” I usually find they have not dealt with the abnormal demand in their system.
“It’s Ok. I need to work with it more.” These dealers know they have some abnormal demand history, and they understand it is affecting the stocking suggestions.
“It’s great and it has improved my business”. These dealers actively prevent or remove abnormal demand.
HOW you can address Digital Dirt
You can either prevent it during order entry or correct the demand record later.
Prevention works best and it involves two steps:
Make sure everyone on the counter understands the difference between normal and abnormal demand. We still want that business and appreciate that customer – we just don’t want this transaction to affect our inventory planning.
Make sure everyone knows how to sell a part without recording demand. Consult your system provider for specific directions. Most will allow you to control it by line, by order or by customer.
Correcting demand history later works, but takes more time. Additionally, it means someone has to review demand records and decide what was normal vs. abnormal long after the transaction.
Here are some suggestions for correcting demand history after the sale:
Determine the window of time your stocking parameter is using to make suggestions. It is usually the last 12 – 18 months. Look for demand records in this window that you need to clean.
Start with all parts sold in that period where the cost is over $1,000 and it was sold 1 to 3 times. Make sure it was normal demand. If not, remove the demand record from your history.
Next, look at parts with a cost between $100 and $1,000. Look for parts that sold two times and take the same action.
Use unwanted stocking suggestions as a trigger to look for abnormal demand. There is a reason this part showed up on the suggested order, take action to correct the demand history.
You have too many part numbers and transactions to rely on the manual process of weeding out unwanted parts from suggested orders. Clean up your digital dirt so you can trust the system.
