Dealer Development and Summit Toyotalift (Summit) recently collaborated on a Dealer 360 Review at Summit’s Corporate Headquarters in North Haven, CT. During the Dealer 360 Review, both teams identified Stock-to-Critical (STC) as an area of opportunity in July of 2023. STC is a metric that calculates the percent of Genuine Parts orders that are shipped via stock orders (TMH pays the freight) vs. critical orders (usually the dealer pays the freight). For example, an STC ratio of 50% indicates that the dealer is ordering Genuine Parts from Columbus critically 50% of the time (and paying the freight). The following summary provides a brief overview of the collaborative project and the results to date.
Summit and TMH started this pilot project by identifying the current state, the future state, and the gap.
STC Current State – Summit’s historical STC metric was 47% (at CYTD November 2023, STC was 47%).
STC Future State – Summit established an STC goal of 75% or more
Gap Identified – Summit targeted an increase of approximately 25% more stock orders (improve the STC ratio from approximately 47% to 75% or better
Once Summit finalized its goal, Summit, and the TMH team created an agenda. During the agenda discussion, it became clear that we needed support and direction from Summit’s Management Team, as well as Summit’s Parts Leaders. Thus, the team included Conor McKevitt (Summit General Manager), John McKiernan (Summit Corporate Aftermarket Manager), Summit’s Parts Leaders from all branches, a member of the TMH Lean Team, and TMH Dealer Development.
Our agenda began with Summit’s Leadership Team reviewing the Ideal State, the Current State, and the Gap between the two. Summit’s leadership team actively participated in the meeting to reinforce the importance and commitment to improving the STC metric.
After the foundation of the project was explained, Craig Lyon began reviewing and training the Summit Team on Weak Point Management and the concept of the “A3 Process”.
Using the “Weak Point Analysis” tools, the team executed a detailed analysis of each critical order. The analysis was driven by the “5 WHY Process” – created to ask “Why” at least 5 times to assist in determining the potential “Root Causes”.
After a very interactive session of “5 Why” Root Cause analysis, the team developed several root causes that could be negatively impacting the STC metric. The top root causes were identified as:
1. Not in Stock – No Reorder Point Review Process
2. Easy Process – Ordering all the parts critically, even if some of the parts were in inventory
3. No available reports – Their current software program was outdated to assist and support reporting requirements.
The team ultimately decided to initially focus on critical orders with a frequency of (13) lines over a 3-month timeframe.
The lessons learned from the Weak Point Management training, the A3 Problem Solving Tool, and collaborating on this project also led to identifying reporting tools that could help with managing this metric moving forward. The Summit Team discussed adding visual tracking of their actual results vs. the goal for the STC metric with at least a monthly review of the results and trends. Additionally, the team discussed the importance of Standard Operating Procedures (SOPs) that would help define the process, potential exceptions, approvals required to order a part critically, etc. Lastly, the Summit Parts Team requested some type of “exception reporting” to be developed to help manage STC on an ongoing basis (frequency of the report to be determined). The Summit Parts Team set an internal deadline to provide internal report requirements to John McKiernan for approval and further development, as well as, target dates for the SOP and visual tracking tools.
TMH Dealer Development has stayed in contact with the Summit Team and conducted an update in February 2024. As of CYTD February 2024, Summit has successfully increased its STC percentage from 47% to 57% at CYTD February 2024. Great progress in a short amount of time.
After the STC update, Summit discovered a few Business System challenges as the team reached out for more information. Summit is in the process of working on a few business system access challenges, as well as, some reorder point calculation challenges. The team largely attributes identifying the challenges and areas of improvement to the STC project, as well as the problem-solving tools and weak point analysis training.
The Summit Parts Team has been successful in challenging their inventory “Reorder Points” and inventory “min and max’s.” One branch reviewed the sales and units in operation (UIO) mix and made decisions to stock specific parts based on the population in their UIO. Many of the adjustments have been driven by enhanced reporting and the A3 and Weak Point Analysis tools.
Summit Toyotalift testimonial –
“I was excited for our parts team to have this opportunity to get some high-level insight and training in operating an efficient parts department. Bringing together our parts members from each location and having them work through the problem-solving process with the team from Toyota has been a great benefit to our company. The training was run in a manner that kept the entire parts team fully engaged. They were able to recognize the problems and challenges in a forum that identified the root causes of each and showed them how making a few ordering process changes would make a positive impact on their stock-to-critical ratio. Almost overnight, we started seeing our stock-to-critical ratio begin to rise. With daily order tracking, they watched the stock-to-critical ratio continue to climb and are motivated to this day to keep improving. This exercise was a complete success and brought a lot of value to our organization!” -John McKiernan, Corporate Aftermarket Manager, Summit Toyotalift
If you have additional questions, you can reach out to Michael Parker, TMH Dealer Development Manager at michael.parker@toyotatmh.com, or directly with John McKiernan at Summit Toyotalift at jmckiernan@summithandling.com.
Upcoming Webinars
Dealer Development is also excited about our next webinar with Gene Marks and the topic of “Cash Flow.” Please put this on your calendar for April 10 at 1 PM EST.
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