Fourteen months ago, Reg Vardy plc established a stanalone parts distribution centre to serve the trade and 16 of its dealerships and bodyshops in the North-East.

Parts Solution has recorded its first million-pound month and is going from strength to strength. Mike Parker reports.

THE events of one August weekend last year still stand out clearly in the minds of David Crane and John Reay. Over three days, the trade parts operations in Reg Vardy's Nissan, Renault, MG Rover, and Fiat/Alfa Romeo dealerships in the North-East shut down and their stock was transported to a new centre near Sunderland.

Starting on the Friday, van after van arrived to drop off its load while a small army sorted, logged and put away the stock, led by Mr Reay, general manager of Parts Solution.

The deliveries continued all through Saturday and into Sunday, 90 drop-offs in total, amounting to £400,000 worth of parts covering an area of 16,000sq ft.

On the Monday, Parts Solution opened for business, delivering parts to trade customers from Northumberland to North Yorkshire and beginning supplies to 14 Reg Vardy workshops and two bodyshops.

The result is the biggest franchised parts distribution operation in the North-East, with an average monthly turnover of £900,000. In July, it exceeded £1m.

The idea to create a central distribution base for the four franchises in the region had seemed like a logical step. Previously, six dealerships had run their own parts deliveries to the trade, supplying to bodyshops and local garages.

But this meant that some customers received up to two deliveries a day from each franchise - as many as eight daily visits by Reg Vardy.

Mr Crane, the franchise development manager, said: "It seemed to make more sense to have a fleet of vans each covering a particular part of the region that could deliver parts from all franchises and even improve the service overall by making more deliveries each day. Customers would have one point of contact and one bill."

The apparently simple idea proved more complex in practice. First, there were the manufacturers' concerns to address.

Mr Crane said: "Part of our planning of the project had to be to convince our manufacturer partners that it would work and it would work well."

Despite the challenges, the business plan identified many benefits: the ability to build up a detailed history of each part going through one IT system would mean a better and more efficient stock rotation, as well as savings at the centre and increased profits on parts through dealerships.

A building for Parts Solution was found halfway between the A1 and the A19 at Rainton Bridge, not far from the group's support centre near Sunderland. The building consists of a 16,000sq ft warehouse, which today boasts in excess of £600,000 worth of stock across 12,000 lines.

In addition to the warehouse team of nine staff and 14 van drivers, the operation is made up of a telesales centre, where 14 colleagues are sub-divided into smaller teams for each franchise and each with a team leader. The majority were recruited from Reg Vardy dealerships for their depth of franchise knowledge, so are able to offer a professional service for Parts Solution's 1,000 actively trading customers.

They take up to 800 calls a day, and feedback from customer surveys on the quality of service has been very encouraging.

Yet Mr Crane admitted the first four months were tough. He said: "The challenge was in juggling the competing demands of establishing a trade business and making sure we gave a high level of service to our dealerships.

"We are still looking at our processes to improve this day by day.

"One area we underestimated was the complexity of goods-in, with stock arriving at different times, in different formats and with different paperwork and handling requirements."

The issue has been addressed by operating a night shift to restock before the following day's deliveries begin.

Mr Reay said: "It has taken a period of time to make people realise that we can deliver a better level of service by having a larger stock base, better delivery capacity and people dedicated to the telephones.

"We are now selling, on average, £41,000 worth of parts or an articulated lorry packed to the roof every day.

"With these volumes, we are achieving a good stock turnover, which is a well above the industry average."

Fourteen vans cover the region with Reg Vardy operations and the bigger trade customers receiving four deliveries a day.

The operation has increased the volume of trade parts business to the group by 60 per cent in the last quarter, compared with the same quarter last year, while the margin earned on parts sold through Reg Vardy's workshops in the region has increased by an average of two per cent.

And there have been other benefits, such as the freeing up of space in dealerships that previously sold parts to the trade, that has now been turned into extra workshop space and valeting areas.

Mr Crane said: "I think most people would acknowledge that it was a brave and innovative venture, and we are realistic that there is still a long way to go.

"Our competitors have not lain down and died, they have upped their game and have worked hard to retain the business they had.

"We have allayed the manufacturers' short-term fears but we still need their support as we move forward."

Mr Reay said: "We have a dedicated and passionate team, who are focused on improving our service month-on-month.

"When we look back at where we started and where we are now, all the long hours worked are now paying dividends and there is no limit to how big we can grow."