For 1990-2009 cars

# PARTS DEPOT

#### SUBJECT: PARTS DEPOT -----------

OVERVIEW: A parts depot system supports the optimization of inventory within a market area. The depot system ensures high same-day availability for customers, while minimizing retailers' inventory costs and storage space requirements. This bulletin explains the parts depot concept and provides retail facilities with planning and implementation guidelines. The bulletin is organized as follows:

Part I: Definitions Part II: Benefits Part III: Depot Logic Part IV: Requirements Part V: Initiating a Depot System Part VI: Depot Authorization Form Part VII: Inventory Transition Part VIII: Reports Part IX: Appendix

#### Note: This bulletin does not apply to the EVI Depot System.

Knowledge of the following terms is necessary to understand the parts depot concept:

#### PART I DEFINITIONS

A. DEPOT GROUP

Two or more facilities with the same owner in the same geographical location which participate in an inventory sharing arrangement for specified parts.

B. DEPOT

A facility within the depot group designated as the stocking location for crash and/or C and D strata parts. The depot is responsible for ensuring same-day availability of the parts it stocks for the depot group.

#### Note: One facility may serve as the depot for both crash and C and D strata parts or two depot locations can be designated: one for crash, another for C and D strata parts. If two depot locations are designated (i.e., one for crash parts and another for C and D strata) two depot groups will be established. In this situation, satellites may belong to either or both depot groups.

There are different types of depots:

1) Retailer parts depot

A full-functional retail facility (i.e., vehicle sales, service and parts) with sufficient parts storage space that stocks and distributes crash and/or C and D strata parts for the depot group.

2) Warehouse parts depot

A parts facility with extensive parts storage space used specifically to stock and distribute crash and/ or C and D strata parts within the depot group. A facility code is not automatically assigned; it must be requested from the Market Area Manager.

C. SATELLITE

A retail facility within the depot group which does not stock crash and/or C and D strata parts, but instead receives these parts from the depot as needed.

D. CRASH PARTS

Parts typically replaced due to collision damage.

E. C AND D STRATA PARTS

Parts with low national demand (i.e., slow movers).

#### PART II BENEFITS

Retailers can expect the following benefits from a depot system:

A. REDUCED STORAGE SPACE REQUIREMENTS

By establishing a depot as the stocking location for crash and/or C and D strata parts, required storage space is significantly reduced at the satellites in the depot group. Storage space requirements for the depot group are considerably less than when these parts are stocked at each facility. (The overall reduction in storage space requirements for the depot group is approximately 15-30%.)

B. REDUCED INVENTORY INVESTMENT

Consolidating crash and/or C and D strata parts at one stocking location also reduces the combined inventory investment for the depot group. (The overall reduction in inventory investment for a depot group is approximately 10-25%.)

#### Note: Larger depot groups (i.e., those with several satellites) experience greater reductions in storage space requirements and inventory investment than groups with fewer satellites.

C. HIGHER SAME-DAY AVAILABILITY (STRATA C & D PARTS)

By aggregating (combining) demand from multiple stores at one location (i.e., the depot), parts not currently stocked are recommended to be stocked more quickly than they would if demand were recorded individually.

For example, a strata C or D (slow moving) part not currently stocked in the depot group will receive a stocking policy sooner by aggregating demand instead of recording demand separately at each store. The overall effect is higher same-day availability for the depot group.

D. REDUCED OPERATING COSTS

Use of a warehouse parts depot allows retailers to utilize less expensive real estate, thereby reducing fixed operating costs.

#### PART III DEPOT LOGIC

A. STOCKING POLICIES

- The total demand for all stores in a depot group is aggregated (combined) and used to calculate the depot's stocking policies. Therefore, demand recorded at all satellite stores directly influences the depot's stocking policies for crash and/or C and D strata parts. For those crash and/or C and D strata parts stocked exclusively by the depot, the satellites are considered "connected" to the depot.

- For depot group parts, a manual stocking policy change is required if a satellite wants to stock a crash part and/or a C or D strata part. The satellite must manually initiate a stocking policy maximum for any crash or C or D strata part that it desires to stock. When a satellite has its own stocking policy for a certain crash or C or D strata part, it is considered "disconnected" from the depot group for this part. Therefore, a separate stocking policy is calculated for this facility, based on its own demand; this facility's demand is no longer included in the depot's stocking policy calculation.

B. INVENTORY REPLENISHMENT

- The depot is replenished based on aggregate available and in-transit inventory quantities for all crash and/or C and D strata part numbers and facilities in the depot group. The available quantity indicated on the system for each facility and part in the depot group is combined to determine the total replenishment amount needed.

For example, assume the following:

- 1 Depot and 2 Satellites

- Stocking policies and available quantities:

Depot Satellite I Satellite 2 ----- ----------- ----------- Max=6 Max=O Max=O Avail=2 Avail=O Avail=2

#### Replenishment:

- Qty of 2 sent to Depot (since 4 are available within the depot group)

- Parts are replenished only at the store(s) with a policy on the parts. For example, if only the depot has stocking policies for all crash parts and C and D strata parts, these parts are replenished only at the depot. However, if a satellite store also has a stocking policy on certain crash or C or D parts, these parts are replenished at the satellite and the depot.

For example, assume the following:

- 1 Depot and 2 Satellites

- Stocking policies and available quantities:

Depot Satellite I Satellite 2 ----- ----------- ----------- Max=10 Max=5 Max=O

Avail= 1 Avail=2 Avail= 1

#### Replenishment:

- Qty of 8 sent to Depot

- Qty of 3 sent to Satellite I (Satellite I is replenished separately since it has its own stocking policy for the part and is disconnected from the Depot.)

C. INVENTORY TRANSFERS WITHIN A DEPOT GROUP

- When valid demand exists at the satellite, the locator system must be used to transfer a part. Provided the satellite store has valid demand for a part, a locate order must be used to transfer the part from the depot to the satellite. If the part is transferred without a locate order (e.g., using a manual purchase order), false demand will be recorded and stocking policies may be higher than necessary.

- When transferring parts for shelf stock, manual inventory adjustments are suggested (instead of the locator system) to avoid false demand. The Stock Outside Depot report is provided to depots monthly, identifying inventory designated to be stocked at the depot but physically located at a satellite(s). (Reference Part VIII - Reports.) The depot group may choose to transfer these parts to the depot or a satellite within the group.

- Satellite stores must use inventory available in the depot group before placing an order with the SSPO warehouse. To maximize efficiency and same day availability, satellites should use the depot (or other satellites with inventory) as their first option for locating a part. However, if inventory is not available within the depot group, the satellite that needs the part should order from the SSPO warehouse or a local pooling facility (if applicable). SSPO will monitor orders placed to the warehouse to ensure compliance with this procedure.

D. OBSOLESCENCE PROTECTION

- Because demand is aggregated (combined), quarterly obsolescence protection is only applicable when NONE of the stores in the depot group have had any demand or receipts on a part. Therefore, if any store in the depot group records demand or receipt on the part within the specified time period (nine or more months), even if the depot has no demand or receipts on this part, the depot will not receive a quarterly return/field scrap authorization.

- If a satellite is disconnected from the depot on a part, the satellite is treated separately for purposes of obsolescence protection. If the satellite has no demand or receipts on a disconnected part for nine or more months, the satellite will receive a quarterly return/field scrap authorization, regardless of whether the depot or other satellites in the depot group had any demand or receipts on the part.

E. OUT-OF-COMPLIANCE LOW CHARGES

- Out-of-compliance low charges are assigned to the depot. If the depot is out-of-compliance low on a part it stocks for the depot group, the depot assumes any applicable out-of-compliance low charges for this part. Therefore, if the depot has a stocking policy that is less than Saturn's suggested policy for a part (i.e., is out-of-compliance low) and a satellite places emergency orders, the depot is subject to the charges specified in Parts and Accessories Bulletin 96-PA-10. The Out-Of-Compliance Service Charge report is modified to indicate the particular facility which generated the order(s) for the part, if other than the depot. (Reference Part VIII - Reports.)

- If a satellite is disconnected from the depot on a part, the satellite is treated separately for purposes of out-of-compliance low charges. If the satellite has a stocking policy that is less than Saturn's suggested policy for a part (i.e., is out-of-compliance low) and places emergency orders, the satellite is subject to the charges specified in Parts and Accessories Bulletin 96-PA-10 for this part.

#### PART IV REQUIREMENTS

The following requirements apply to any parts depot arrangement:

A. SYSTEM CAPABILITY

- All depots must be linked to an AS/400 equipped with the current SRS Parts and business application software.

- A warehouse parts depot must also be set up as a separate company with its own facility code to allow a separate Ship To address. (Full-functional facilities already meet these requirements.)

B. SAME-DAY AVAILABILITY

Same-day availability is expected whenever inventory exists within the depot group.

- Obtaining a part from inventory in the depot group should always be the first option; if inventory is not available within the depot group, inventory can be obtained from the SSPO warehouse or a local pooling facility (if applicable).

- Stores in a depot group must be located within reasonable distance of each other to allow same-day service.

C. TRANSPORTATION

- Deliveries within a depot group are the retailer's responsibility.

- Warehouse depots have the same transportation requirements as any retail facility (e.g., 24-hour access, suitable delivery area, etc.). Requirements for dedicated and non-dedicated service are specified in each facility's IRTP (Individual Retailer Transportation Plan).

D. WAREHOUSE PARTS DEPOT

- Warehouse parts depots are exempt from some of the critical image elements required for full- functional retail facilities. Plans must be coordinated with the Saturn Market Area Manager.

E. RETAIL OWNERSHIP

- Stores in a depot group must be owned by the same Retail Principal.

#### PART V INITIATING A DEPOT SYSTEM

The following guidelines apply when initiating a depot system:

- Retailers interested in a depot system should contact their Area Parts Specialist (APS).

- The General Manager, Fixed Operations Manager and Parts Managers for all depots and satellites in a depot group must fully understand the depot guidelines specified in this bulletin and sign a Depot Authorization Form (Reference Part VI) prior to implementation.

- A minimum of 30 days lead-time from the time Saturn receives the completed form is required to implement a depot system.

- SSPO will assume that the depot Parts Manager is the point person for the depot group unless notified otherwise.

- Retailers should direct questions concerning the depot system to their Market Area Manager (MAM), Area Parts Specialist (APS) and/or regional Distribution Analyst.

#### PART VI DEPOT AUTHORIZATION FORM

When retail facilities request SSPO support for implementing a depot system, the Area Parts Specialist (APS) and Distribution Team work with the facilities to complete the following form. This form identifies the facilities that will participate in the depot group and the type of depot system to be established (e.g., crash, C & D strata, or both). A sample completed form is shown below. A blank form which can be photocopied for use is provided in the Appendix.

Sample Depot Authorization Form

The retail facilities listed below have requested SSPO system support in implementing a depot group. We have read and understand the guidelines in bulletin 96-PA-09 and authorize SSPO to begin implementation. The depot system implemented for this group will remain intact for a minimum of 90 days. Stock Region Depot Stock C & D C=Central Status Crash Strata Facility E=East Market Name Facility S=South Area D= Depot (Saturn of ___) Code W=West Number S=Satellite (Y/N) (Y/N) --------------- -------- --------- ------ ----------- ----- ------ 1. Depotville 00001 S 8 D N N 2. Depotland 00002 S 8 D N Y 3. Sat-One 00003 S 8 S N Y 4. Sat-Two 00004 S 8 S N N 5.

Facility 1 Facility 2 Facility 3 Facility 4 Facility 5

General Mgr General Mgr General Mgr General Mgr General Mgr Date Date Date Date Date

Fixed Oper Mgr Fixed Oper Mgr Fixed Oper Mgr Fixed Oper Mgr Fixed Oper Mgr Date Date Date Date Date

Parts Managers Parts Managers Parts Managers Parts Managers Parts Managers Date Date Date Date Date

Mkt Area Mgr Mkt Area Mgr Mkt Area Mgr Mkt Area Mgr Mkt Area Mgr Date Date Date Date Date

Area Parts Area Parts Area Parts Area Parts Area Parts Specialist Specialist Specialist Specialist Specialist Date Date Date Date Date

#### PART VII INVENTORY TRANSITION

The following steps are involved in implementing a depot system:

1. New/revised policies are sent to the depot.

- Because demand will be aggregated (combined) for all stores in the depot group and incorporated into the depot's stocking policies, the depot will receive many new/revised policies as soon as the new depot system logic is implemented.

- It is critical that retailers approve these policies immediately so implementation is as smooth as possible.

2. Zero policies are automatically applied to satellite facilities.

- Zero stocking policies for all crash and/or C and D strata parts will be automatically applied to satellite facilities, thereby immediately stopping replenishment of these parts at the satellites.

- To assist retailers during this transition, the Distribution Team will send a report detailing which part numbers will have zero policies applied.

3. Replenishment does not occur until the aggregate (combined) inventory for the depot group is below the stocking policy maximum for the depot.

- The actual inventory location within the depot group does not matter.

#### PART VIII REPORTS

A. Out-of-Compliance Service Charge Report

As explained in Parts and Accessories Bulletin 96-PA-10 - Premium Charges for Out-of-Compliance Low Stocking Policies, a monthly report identifying specific charges is generated for any retailer who accumulates combined out-of-compliance low transaction charges exceeding $50 for the month. (Reference bulletin 96-PA-10 for a complete description of out-of-compliance low transactions and all associated charges.)

If the depot is out-of-compliance low on a part and a satellite places emergency or special orders for the part, the depot assumes any associated charges specified in Parts and Accessories Bulletin 96-PA-10. The Out-Of- Compliance Service Charge report provided to the depot indicates which facility generated the order(s) for the part, if other than the depot.

A sample of this modified report is illustrated below.

REPORT ID: ISTKRM20

OUT OF COMPLIANCE SERVICE CHARGE RETAILER CODE 00001 SATURN OF DEPOTVILLE PAGE 1

ORDERING PART PART ORDER ORDER ORDER SUGG CURR RETAILER NUMBER DESCRIPTION QTY NUMBER TYPE MAX* MAX* -------- -------- ------------ ----- ------ ----- ---- ---- 00003 21044396 WHEEL-STRG 1 123456 ESCO 1 0 00004 21077572 GLASS-O/S RR VW 1 123457 ESCO 2 0 00004 21097071 W/STRIP-RR S/D 1 123458 SCO 1 0 00003 21097250 W/STRIP-R/CMPT 1 123459 ESCO 2 0

OUT OF TOTAL COMPLIANCE DATE CARRIER CHARGE --------------- ------- ------ 1995-05-24 FED-EX OVER $12.70 1995-05-24 FED-EX OVER $14.36 1995-05-24 FED-EX 2DAY $10.20 1995-05-24 FED-EX OVER $14.50 ------ THE TOTAL POSSIBLE SERVICE CHARGE IS: $51.76

THE TOTAL CHARGES FOR THE NORTH EXCEED $50.00

B. Stock Outside Depot Report

The Stock Outside Depot report is provided to depots monthly. It identifies inventory design stocked at the depot but physically located at a satellite.

A sample report and definitions of each field on the report are provided below.

00001 SATURN OF DEPOTLAND PAGE 1 STOCK OUTSIDE DEPOT REPORT JULY 15, 1996

PART PART SATELLITE DEPOT DEPOT DESCRIPTION RTLR NET RTLR RTLR NAME INV INV MAX -------- ----------- -------- ----- --------- --------- ----- ----- 21O8O8O4 FENDER-FRT $100.46 00003 SAT-ONE 1 3 5 21080805 FENDER-FRT $100.46 00004 SAT-TWO 1

21007330 ENGINE $1200.99 00003 SAT-ONE 2 4 8 ASSEMBLY

END OF STOCK OUTSIDE DEPOT REPORT

#### Field Definition

Part Part number of part located outside depot Part Description Description of part located outside depot Retailer Net Net price of the part Retailer Facility code of the satellite retailer which has the part Retailer Name Name of the satellite retailer which has the part Satellite Inv Available inventory of the part at the satellite Depot Inv Available inventory of the part at the depot Depot Max Current maximum stocking policy level of part at the depot

PART IX APPENDIX

The retail facilities listed below have requested SSPO system support in implementing a depot group. We have read and understand the guidelines in bulletin 96-PA-09 and authorize SSPO to begin implementation. The depot system implemented for this group will remain intact for a minimum of 90 days.

Region Depot Stock Stock C=Central Status Crash? C & D Facility E=East Market Strata? Name Facility S=South Area D=Depot (Saturn of ___) Code W=West Number S=Satellite (Y/N) (Y/N) --------------- -------- --------- ------ ----------- ------ -------

1.

2.

3.

4.

5.

General Mgr General Mgr General Mgr General Mgr General Mgr Date Date Date Date Date

Fixed Oper Mgr Fixed Oper Mgr Fixed Oper Mgr Fixed Oper Mgr Fixed Oper Mgr Date Date Date Date Date

Parts Managers Parts Managers Parts Managers Parts Managers Parts Managers Date Date Date Date Date

Mkt Area Mgr Mkt Area Mgr Mkt Area Mgr Mkt Area Mgr Mkt Area Mgr Date Date Date Date Date

Area Parts Area Parts Area Parts Area Parts Area Parts Specialist Specialist Specialist Specialist Specialist Date Date Date Date Date

General Motors bulletins are intended for use by professional technicians, not a "do-it-yourselfer". They are written to inform those technicians of conditions that may occur on some vehicles, or to provide information that could assist in the proper service of a vehicle. Properly trained technicians have the equipment, tools, safety instructions and know-how to do a job properly and safely. If a condition is described, do not assume that the bulletin applies to your vehicle, or that your vehicle will have that condition. See a General Motors dealer servicing your brand of General Motors vehicle for information on whether your vehicle may benefit from the information.