This is the KPI that is the most valuable, useful and trustworthy when you want to measure how effective your Parts Stock is being utilised.
The calculation for True Parts Stock Turn only assesses the parts purchases for stock and excludes all parts that are purchased on a V.O.R. or E.O. basis.
This KPI provides you with the true effectiveness of your Parts Stock. Quite simply, the faster your True Parts Stock Turn, the less investment is required in your stock and the more profit you will retain as a result.
Example:
A) Annualised Stock Purchases = R486,982 B) Annualised V.O.R. Purchases = Ignore C) Parts Stock Value (at cost price) = R115,948 D) True Parts Stock Turn (per year) = 4.2 (A ÷ C)
Discussion:
Your franchise manufacturer usually provides this information to your Parts Department on a monthly basis. However, you may need to calculate the True Parts Stock Turn yourself as this is seldom shown.