Mike's Inventory Management Blog

Beginning inventory is a current asset and is the value of your automotive parts inventory at the start of an accounting period. 

Beginning inventory is an important metric – it’s needed to determine the cost of goods sold (COGS) for your company’s income statement. It’s also used to calculate key performance indicators (KPIs), including average inventory and inventory turnover, that give you important insights into how your business is performing.

Annual inventory counts are an important part of managing any automotive parts department. They confirm your inventory is accurately recorded come year-end and tax-filing season. 

Automotive parts inventory control may sound like a straightforward responsibility. But if you have had any experience behind a parts desk, you know this is one of those things that’s easier said than done. Specific skills and strategies are needed to properly control inventory, without it things can quickly get out of hand. 

Managing your automotive parts inventory is time consuming and costly, but it is also a necessary investment to ensure you can provide your customers with the service they expect. It’s simply a critical process to many areas of your business. 

To ensure you are managing your inventory as effectively as possible, it is important to consider the software you are using and the data it produces.   

What is the importance of automotive parts inventory software?

Inventory management software is the foundation of any automotive parts department – it helps you maintain an accurate inventory, get a picture of your overall position and manage your purchasing processes. But finding the right software can be a difficult task. 

While there are a number of options in the automotive industry, an assessment of your needs can help narrow down your choices. 

Some of the main benefits of an effective auto parts inventory software include:

Inventory errors can majorly affect with your dealership’s bottom line. And a lot of the time that has to do with errors in counting. That not only affects your cost of goods sold, but also your balance sheet, and that means the overall picture of your company’s financial position can be skewed. 

Let’s look at what we mean in more detail …

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.

To properly assess your inventory and any changes you make to the management process, there are certain metrics you need to be tracking. Some metrics you need to be tracking all of the time, while other metrics will depend on your current goals. And you may also need to track certain metrics so that other departments can properly analyze and report for their team. 

A new year is always a time to rethink the previous year and start fresh to optimize your business. With 2020 being a year of upheaval and disruption, everyone is looking forward to work and home life returning to normal as soon as possible.

Inventory counts are an important part of managing your automotive parts inventory for many reasons. It helps …

1. Minimize theft 
2. Identify obsolescence 
3. Determine the turnover of each SKU 
4. Ensure your records are up to date

When you can, you should try to do multiple counts per year, even if you’re just focusing on the items that cause you the most grief. But if you do decide to only do one, it should be at year end. And that’s because the year-end inventory is what gets your records ready for tax season.

Are recurring discrepancies a problem for your automotive parts inventory? It’s a problem many Parts Departments must deal with. Luckily, there is an easy way to improve …