Auto Parts Inventory - March 12, 2024
In our recent blog, titled ‘How to Prepare Your Inventory for a Physical Count - Part 1’, we gave you some tips on how to prepare for your upcoming physical inventory. Now we continue with those tips with the second part of the list.
Your physical inventory count will only be as accurate as your parts department is organized. That is why, before you start counting your automotive parts, it’s important for you prep your inventory.
Doing so will help improve the accuracy of your count and ensure your physical count is completed as efficiently as possible. Following the initial seven tips in our first blog, Pro Count West continue with eight more tips to help you prepare your inventory for a physical count:
Check with your system administrator to verify that you have access to all functions to perform a physical inventory. This will include all parts functions, all reporting functions including Service Department parts work in process, and if you are reconciling you will need access to pull general ledger (GL) figures.
In order to attain an accurate inventory number from the parts side of the ledger, you will need to collect all reconciling information. Items will include all shortage and damage claims submitted, parts received and not invoiced, parts invoiced and not received, used cores sent back to manufacturers, and any returns sent to outside vendors that have not been received.
We require proof and documentation of these items, and so should you.
You will need to pull a report that shows all service repair orders that have parts billed on them, but not yet closed. There is also a report for parts counter tickets that are not closed you will also need to pull.
Depending on whether or not your DMS uses “real-time accounting”, you may have to pull parts tickets and repair orders that have been closed, but not yet through accounting. These are very relevant to the physical inventory count.
Parts that have a core value that have already been installed are part of your physical inventory. Be sure to walk the shop to make sure all parts with a core value have been turned in.
Keep an eye out for used batteries, they often get missed. Also, be sure to look for parts with a core value in your warranty retention area.
Any parts in your special order bins that have been prepaid or pre-billed must be pulled out for the day of the inventory, or at the minimum clearly marked “DO NOT INVENTORY”. By counting these parts, you are over valuing your parts inventory.
As stated earlier, one of the most critical steps in a physical inventory is the cutoff. Many times, invoices and credits are sent to the office to be posted, however many times they do not get posted at all. Maybe the person who inputs goes home sick, or misplaces some invoices, who knows the reason.
If you create a cutoff time, you can easily verify what was or wasn’t posted in accounting. After the cutoff, hold all invoices and credits and record them on the parts side for reconciliation.
This is the most common mistake that is made when performing a physical inventory in house.
Be sure to include any “NPN” Parts in your totals. These are parts with no part number, not controlled by the DMS - the list should be very short if any, but if there are any parts you were billed for that weren’t counted or billed, this is where they need to be listed.
The final step in the reconciliation process would be to pull all parts related to GL balances. Again, the timing of this depends on whether you use batch processing or real time accounting.
Don’t pull this number until all other steps in the physical inventory process are complete, and you have finalized all checks and variances.
At Pro Count West, our team of inventory professionals will take the steps necessary to ensure your inventory records are accurate. To find out how we can help your team get ready for your physical inventory count, or to have our team come in and complete the task for you while your department focuses on other tasks, contact us today!
