Physical Inventory is an important asset to any company, especially automotive dealerships. As such, it is critical that inventory values are properly reconciled during your year-end inventory count.

Unfortunately, many dealerships repeat the same mistakes every year, which increase the likelihood of disruption of inventory and, more likely, inaccurate reporting of inventory values.  

To ensure you are performing the most effective inventory count possible, here are some tips on how to avoid the four most common inventory mistakes.

1. Poor Preparation 

Before you start counting your parts inventory, it’s important you prepare your bins.  While ensuring you have staff to count is an important step, many companies feel that this is as much preparation as they need.

However, when preparing for your automotive parts inventory count, you want to ensure that you have taken the necessary steps to set yourself up for success. Before you start, you will want to:

Organize your parts – having parts out of place increases the difficulty of counting inventory and can increase the level of disruption. By ensuring that all parts are in their proper location and that each skew is easily identified, you can ensure that you are accounting for each part properly. Furthermore, it minimizes the amount of reorganization you have to do after counting so that you can focus on the task at hand.  Furthermore, eliminate as many dual locations as possible, doing so will reduce the chance for errors.

Identify non-countable areas – prior to doing inventory, clearly mark the areas you do not want counted with DNI (Do Not Inventory) labeling. This includes parts that have been pulled for a job still in progress and parts that are already in process of being returned. Before starting your count, identify all possible locations for countable inventory and make a map or list.

While these may seem like straightforward steps to take, many dealerships do not recognize the importance of ensuring they are prepared. In doing so, they can minimize the time it takes to count, reduce disruptions and increase accuracy.

2. Counter Preparation 

Similar to the above oversight, many automotive dealerships do not prepare their counters before starting inventory. While inventory seems like a straightforward task, employees do require training.

This training should include information on how to count parts and what parts are supposed to be counted. For example, you want to be sure that the counter can identify whether there are multiple units in a single package. 

Again, while this may seem obvious, inexperienced staff will miss this information, resulting in inaccurate inventory reconciliations or increased time spent recounting inventory.

By ensuring your counters know how to do a proper inventory count you can improve the accuracy of the count.

3. Failing to Investigate the Source of Discrepancies

In order to reduce the amount of disruption caused by inventory and in an attempt to return staff back to their regular duties, many dealerships will let discrepancies, that appear insignificant, slide. While these differences may appear to have minimal effects when looked at individually, the overall results, when totalled, could be significant!

It is critical that you also analyze minor discrepancies to determine whether they are truly insignificant or if there is a problem that needs to be resolved. Maybe the warehouse worker put the parts away in the incorrect place or maybe there is a supply chain process that could be improved. Whatever the reason, taking the time to resolve the issue now, will save you time and headaches later. 

4. Failing to Control the Inventory Environment

In an optimal situation, we would conduct our annual counts when the dealership is closed, but this is not always possible.

The problem is, it can get very confusing for employees if parts are being pulled from the shelf while people are trying to count them. As such, it is critical that a process be put in place, beforehand, to ensure that parts that have been freshly pulled are properly accounted for in the records.

By being aware of these common mistakes, and taking steps to properly prevent them, your dealership can help improve the accuracy of your inventory count.

If you would like assistance developing inventory strategies to improve your counting accuracy, or you are interested in hiring Pro Count West to conduct your inventory, contact us today.

Our team of inventory professionals are fully equipped with the tools and knowledge they need to ensure that your inventory is accurate and true while minimizing disruption.