The Cost Savings with a Leaner Inventory and How PartsEdge Can Help

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Performing a perpetual inventory is the only way to get the job done

To me, there never has been any "rocket science" to effective inventory management. Whether it was in the parts manager's head or in a computer database. Most operate in a "minimum-maximum" orientation of individual parts' amounts. Product knowledge and "how techs work" (as to what parts they normally request for each labor op) is important, too. Especially in getting the inventory initially set-up. Being "pro-active" rather than waiting for "lost sales" to indicate what is needed BEFORE the need might exist can be "more work", but work rewarded in ultimate parts dept profits. There have always been different methods to calculate the "prediction of need" numbers. Whether in the logistics community, the DMS providers, the OEM programs for such, or "the seat of the pants" of the individual parts manger. With the last approach being more tricky to successfully orchestrate. End result, the default mode has become "what the computer says". "The computer" is not to be questioned, BUT in some cases, what it "says" can be fine-tuned for individual dealerships' unique needs via manual "minimum/maximum stocking level inputs". Then monitoring those particular levels to see if they might need adjusting slightly, plus or minus.

The parts of inventory management which can cause issues if they are not agressively-monitored relate to returns. Obsolescence returns and Special Order Parts returns. EACH is important as "old" parts cost money just as "special ordered" parts do. SPO parts being on the shelf after, say, two weeks past their receipt can be the result of poor attention by the Service Advisors in getting the vehicles back into the shop for their installation, by observation. This can be a touchy subject in some dealerships, unfortunately. Mis-diagnosis of the customer's complaint or SA issues can mean the parts are no longer needed before any "grace period" for no/low charge returns is exhausted. Related OEM re-stock fees CAN be operative, too! Obsolescence returns can be easier to orchestrate, ONCE they are submitted for. Warranty parts returns should be orchestrated by the Serv Dept Warranty Clerk, then held parts scrapped after their retention time has passed. Body parts which are received with concealed damage, from the OEM warehouses, need to be dealt with effectively to prevent loss of profits, too. Consult with the body shop operatives to offer some "repair time discounts" (compared to the net return amt from the OEM) is one option.

Modern inventory management models can be problematic in their recommended stocking levels. Some labor ops need a certain number of particular items, say fasteners, to do the job. Yet with decreased sales, a particular stock level can drop below the minimum level needed (if a min level is not specified). End result, if 4 are needed and only 3 are on hand, might as well not have those 3 on the shelf. AND an "emergency purchase" (and all that can imply) results. Product knowledge and how particular techs "work" is important to know. Part Inventory Management is as much about keeping what is needed, in the correct quantity, allowing for how many of a particular repair can be done in the shop per day, as it is about keeping the service dept "working and making money". Then factoring in the projected replenish rate from the OEM warehouse chain, too. Once effective coverage is established and the DMS can maintain it, after some periodic spot checks, including a small safety stock cushion, then the computer should be able to maintain the min-max inventory effectively, in theory. The result is keeping techs in their stalls, working, as "chasing parts" for emergency purchases is minimized, which can further reduce dept costs.