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What is Automotive Parts Inventory Management?

What is automotive parts inventory

Whether you run a dealership or a service shop, your automotive parts inventory is one of the most valuable assets your business owns. It is imperative to the smooth operation, and profitability, of your business.

On one hand, an inventory shortage can result in lost sales and frustrated customers. On the other hand, a large inventory can increase the likelihood of lost or stolen parts, is more susceptible to risks related to demand shifts and it holds up capital that could be invested in other areas of the business. Neither is a good situation.

To help reduce these risks, you need to successfully manage your automotive parts inventory

What is inventory management? 

Inventory management is the process of ordering, storing and using/selling automotive parts. When done properly, it can help streamline inventories to avoid stock overages and shortages, by helping you identify how much stock to order and when. 

Why is inventory management important? 

There are several reasons why parts inventory management should be a top priority: 

  1. Better ordering 

Accurate inventory management helps you get better oversight over your parts department and stock. If your records are correct, you will be able to track historical trends to determine optimal restocking levels and order dates. This enables your inventory system to effectively notify parts personnel when a part needs to be re-ordered.

  1. Reduces costs 

Proper inventory management will help reduce the risk of stick shortages. This means you are less likely to lose sales due to lack of stock or misplaced parts. In addition, storing the optimal amount of inventory will help optimize storage costs and labor associated with keeping inventories organized.  

  1. Resource allocation 

Well-maintained inventory records ensure that you’re optimizing all areas of your business, including space, capital, productivity and profits. Having too much inventory can take up valuable storage and divert capital that would be better used elsewhere, such as investing in more tools and upgrading equipment. 

  1. Service scheduling 

By maintaining an accurate parts inventory record, you can confidently ascertain how long it will take to get the parts you need to fix a customer’s vehicle. At a glance, you will be able to determine whether you have what you need. This will allow your staff to schedule service appointments more effectively.

  1. Customer satisfaction 

If a customer must wait longer to find out whether a part is in stock or they were told a part was in stock that wasn’t, it can have a negative effect on their opinion of your company. If your inventory records are properly maintained, you will be able to answer parts inquiries and fill customer orders faster. This will help your customer feel more confident about your business, improving their overall satisfaction.

  1. Time management 

Effective inventory tracking means that your staff will spend less time looking for parts and more time doing tasks that are focused on improving the operations of your business and increasing profits. This can include: 

  • Organizing parts to increase efficiency and access.
  • Finding ways to reduce inventory costs through better ordering.
  • Researching backup suppliers in case of an emergency.

Tips for improving your parts inventory management

Managing your automotive parts inventory doesn’t need to be complicated. There are many ways to improve your parts inventory management, including but not limited to:

Store your parts thoughtfully 

While it takes less time and thought to put new stock wherever you have space, considering where you put it can help reduce shortages, confusion and misplaced parts. Whenever, face part numbers outwards. If you can’t, write the numbers on the visible side of the package or on the shelf or bin that stores them. 

Taking the time to create an effective inventory organization system and then ensuring it is implemented and followed can result in greater accuracy. It will also have a positive effect on your productivity and dealership efficiency. 

Put parts back where they came from

This may seem straightforward, but many dealerships suffer from parts being put back in the incorrect place or not being put back at all. By ensuring that you have implemented a simple and time saving process for managing returned parts, you can increase accuracy and decrease the number of parts that go missing or get misplaced.  

Good parts personnel

Most inventory discrepancies can be attributed to staff cutting corners. One common example is staff assuming that the amounts received match the amounts ordered. As a result, they speed through the receiving process so they can move onto the next task. Similarly, when doing counts, some staff will assume that all the parts in a bin are the same without checking tags and packaging. However, parts often get put back in the wrong place and need to be organized before counting. 

By hiring staff that follow through and ensuring your staff are well trained, you can help reduce these errors. 

Complete regular inventory checks 

The more frequently you check your inventory, the easier it will be to spot errors and problem areas. This will have a positive effect on your inventory records and the way you manage your parts. 

If you are unable to check your entire stock, focus on the fastest moving items, parts that are more susceptible to error and the highest value parts. Take a couple bins each day throughout the year and check your accuracy. By doing so, you can identify the areas that need more attention. 

For more information on inventory management and ways you can improve your parts department for increased productivity and profits, contact us today


Guide to Optimizing Inventory MGMT


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