The Hidden Cost of Special Order Parts

How Poor Communication and Tracking Impact Franchised Dealerships’ Bottom Line

The dealership’s service department is crucial to profitability. Beyond routine maintenance and oil changes, service departments handle everything from complex repairs to special order parts (SOPs). While SOPs are essential for meeting customer needs, they also present significant challenges that can become a costly problem for dealerships. Poor communication, tracking and inventory management have turned SOPs into a silent money-drain for many dealerships.

1. Parts That Never Get Sold

When the service department orders special parts, the expectation is that these parts will be used for a specific repair. However, inadequate tracking and communication often result in SOPs sitting in the parts inventory indefinitely, contributing to an accumulation of obsolete parts. OEMs may not allow returns after a certain period, so if a repair is delayed or the customer cancels the service, dealerships can end up with parts they can no longer use or return. Worse still, dealerships still bear the cost of these parts, having paid upfront with no chance of recovering the money.

2. The Headache of Multiple Parts

The problem deepens when multiple special order parts are needed for a single repair. Customers should only be notified once all parts for a given order have arrived, making their repair completable, yet multiple parts in one order frequently cause confusion or piecemeal communication.

3. Lost Labor Revenue

Arguably the most financially damaging consequence of poorly managed SOPs is the loss of labor revenue. SOPs are typically ordered with the expectation that the repair will be completed, allowing the dealership to charge for labor.

When parts remain unused, the labor revenue tied to that repair is also lost. For high-ticket repairs, labor fees can amount to thousands — or even hundreds of thousands — of dollars annually. Service departments that fail to properly track parts or communicate effectively with customers and the parts department miss opportunities to schedule and perform repairs, directly impacting profitability.

4. Customer Dissatisfaction

The financial impact is only part of the problem. Mismanaged SOPs lead to significant customer dissatisfaction. Customers who order a part expect prompt service, but delays or unfulfilled repairs can lead to frustration.

Lack of communication between service, parts and customers often leads to poor customer experiences. Service advisors may struggle to provide accurate repair timelines, and customers may not receive timely updates about their orders. When customer expectations are unmet, dealerships risk losing current business and future service opportunities, ultimately damaging their reputation.

Addressing the Issue: Solutions to Optimize SOP Management

While the challenges surrounding SOPs are complex, dealerships can take steps to improve communication and inventory management to reduce their negative impacts.

1. Implement a Robust SOP Tracking System

A dedicated tracking system for SOPs can help address these issues. By leveraging technology to monitor each special order part, dealerships can ensure parts are installed on time, and excess parts are identified before they become a financial burden. This system should be integrated with the dealership’s existing dealership management system, facilitating seamless communication between service, parts and customers.

2. Establish Clear Communication Channels

Timely, automated communication between the dealership and customers is essential. Service advisors must understand the expected delivery timelines for parts, and customers should be automatically notified when their special order parts arrive. This automated system should also provide updates until the customer either picks up the parts or brings their vehicle in for installation.

3. Review Return Policies with OEMs

Dealerships should familiarize themselves with the return policies of their OEM suppliers to fully understand the timeframes and conditions under which parts can be returned. By knowing these limits upfront, dealerships can ensure the automated system notifies the parts department to return unsold parts before the deadline — either based on the manufacturer’s return policy or the dealership’s own policy.

Communication should be automated because parts department personnel often face challenges with timing, consistency and prioritization in their interactions. They frequently forget to send these messages or delay them unintentionally. As a result, the receipt of the special order parts can be overlooked or communication be sent too late, causing inefficiencies and potential customer dissatisfaction. Automation ensures that timely communication is delivered without delay, keeping everyone informed at each stage of the process. For example, automated systems can notify customers, service advisors and the parts department staff of necessary actions, such as returning parts based on policy at the appropriate time. This removes the reliance on human memory and intervention, ensuring that all stakeholders are informed promptly and accurately. By automating these communications, the process becomes more efficient, reducing the risk of errors, improving customer satisfaction and enhancing overall workflow in the parts department.

Putting It All Together

The issue of unsold special order parts due to poor communication and tracking is a significant, often overlooked problem for franchised automobile dealerships. By optimizing SOP management through automated tracking, improved communication and better inventory control, dealerships can minimize financial losses from uninstalled parts, ensure repair departments remain profitable and enhance customer satisfaction. When dealerships address these challenges proactively, they position themselves for long-term success, increased revenue and stronger customer loyalty.

Originally published in Auto Success Online