Is There A Problem With Your Inventory Management Process?

  Mike Bachara   |     Mar 11, 2021

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Sometimes we fall victim to settling with what’s to be expected. Take for example the automotive industry … Often those who work in it have come to expect things like the frustration of warranty reimbursement or the fact that inventory has a habit of misplacing itself. 

But you don’t have to simply deal with these problems because they are the norm at many dealerships and service shops. Instead, you should be taking control and finding ways to improve your processes. That way you can be more efficient, increase income and improve customer service. 

So today, we’re going to look at the inventory problem and talk about what’s causing it and how you can fix it. 

But first, let’s look at the signs of poor inventory management. 

  • High inventory costs 
  • Stockouts have become the norm 
  • Your inventory turnover is low 
  • You’re constantly unloading obsolete inventory 
  • You regularly find errors and discrepancies between your records and physical stock
  • Customers are constantly complaining about delivery times or wrong parts 
  • You are losing customers  
  • Employees are constantly complaining about the same problems
  • Staff members have different processes for the same task 
  • You regularly misplace parts 

If you found yourself checking off many of the signs on this list, don’t fret or get frustrated. They’re common in many auto parts departments. So what are some of the main causes of these headaches? 

  1. Too Much Inventory 

To prevent stock outs you may have decided to invest in more inventory and storage space. The problem is the larger your inventory, the bigger your headaches because it’s just more that needs to be managed and kept in order. 

So instead of going bigger, get smarter. Use historical sales and turnovers to determine how quickly you go through stock and what parts are important to have on hand. Then prioritize your inventory to include more of the easy to offload, regularly used parts and cut back on high value parts or parts with high turnovers. 

  1. Too Little Inventory 

Reducing your inventory to save on space, improve capital and minimize organizational headaches can also seem like a good alternative. But this means you may increase your risk of stock outs and loose out on potential sales. 

Just like you would with a department that carries too much stock, use forecasting and key performance indicators to help guide in stock quantities and reorder points. 

  1. Poor Forecasting 

These days almost every dealership is using some sort of fancy software that can generate many of the important reports and numbers needed to make a proper forecast. The problem is some people don’t take advantage of them, whether it’s because they’re happy with their current process, afraid to give it a shot or generally distrusting of technology. 

But these reports can provide you with important insights that will help optimize your inventory stock and flow. But remember … your reports and records will only be as good as records, so be sure they are accurate and kept up to date. 

And that takes us to our next point …

  1. Defined Processes 

To make sure that your inventory is well-managed you need to be sure that everyone is following the necessary steps. And the best way to do that is by putting pen to paper and creating procedures that everyone can follow, no matter how new they are to the industry and your business. 

Doing this will help ensure everything from receiving to sales is done properly and it will help you identify problems more quickly. 

But don’t forget to update the procedures as changes are made, otherwise your team and the teams you work with will continue to make the same mistakes. 

At ProCount West we’ve created a helpful guide to identify ways you can improve and optimize your automotive parts inventory. Click here to get a copy.

For help managing your inventory or getting your records in order, contact us today

Guide to Optimizing Inventory MGMT

By Mike Bachara

Mike Bachara | Owner of Pro Count West
Mike Bachara | President Pro Count West

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