I do my best to not directly call out industry vendors (most of you do a good job of figuring out who I am talking about), but when it comes to DMS providers, it’s kind of tough to not use names. There just aren’t that many of them.
I’m not going to say that Lightspeed EVO mis-calculates the Months No Sale (MNS) metric, I just don’t agree with their methodology. The problem with their calculation is that MNS is calculated purely off the current date, and the last sold date for each item. In cases where you have a part that has been received, but never sold, the MNS field doesn’t increment (because there isn’t a last sold date), so the MNS field just remains at 0.
Why is this a problem? Well, for dealers who measure and track obsolescence (in my case we consider a part to be obsolete when it has gone 12 months without a sale), the canned reports in Lightspeed will show that the inventory is a lot healthier than it actually is. I once worked with a company that had overpaid $420,000 for current parts inventory by using the stock MNS field. Their agreement was to pay dealer cost for all the stock that was 12 months or less no sale, and they didn’t understand how the system works. For them, it was a very painful lesson.
Here is an example of a report I ran this morning. I included the parts from one supplier and the standard MNS field. As you can see, there are some items where the MNS field remains at 0 because those items have never sold, even though some of them were received in September of 2020.
There is a solution to this issue. I’ve chosen to build a new Months No Sale Calculated (MNSC) field. Here is the methodology I use, working down the list
- Last Sold Date (LSD) populated with a valid date then MNSC = Today’s date – LSD
- If the LSD is blank then look at Last Received Date
- If the Last Received Date (LRD) is populated with a valid date then MNSC = Today’s Date – LRD
- If the LRD is blank then look at the Setup Date for the part
- If the Setup Date (SD) is a valid date then MNSC = Today’s Date – SD
Also, if there is a valid date for the LSD and LRD fields, I’ll calculate 2 MNSC metrics and use the smaller of the 2. I do this because if a part had a sales date that was a few years old, but then its received again, I assume that it’s either a special order for a customer, or that the dealership wants to give that item a second chance at life of on the showroom. I could argue this methodology either way, but this is the way I chose to do it.
For 99.9% of your parts, this methodology will calculate an accurate MNSC using an understandable process. I have seen a few situations where a part can make it into the system without a LSD/LRD/SD, but these are few and far between, and can be dealt with on a case-by-case basis.
Here is a second example of the report from above, but this one includes my custom MNSC field, right next to the standard MNS field. You can see a lot of differences between the two.
Once you have this report in your system, you have a much better overview of your inventory and how old it actually is. The first time that dealers look at inventory using this new calculation, they are usually shocked (and not in a good way).
Since my report also works off a daily calculation, you can see aging grow from one day to the next. In EVO, the MNS field just rolls over once a month, so you only see a lot of new items on that report when a new month rolls over.
If you’d like a copy of my EVO report, feel free to shoot me an email and I’ll be happy to send you a copy. Reports in EVO are easy to share as they can be exported and imported using the menu located at the top of each Custom Reports page. If you don’t see these items on your screen, then ask your system administrator to enable them for you.
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