Typical OPE technician: I expect to have the
parts in stock I need to complete equipment repairs. I never want to box up a
unit and wait for parts. The tech makes a good point, but your shop can't
afford to have this tech do all of your parts ordering. Maintaining control of
your parts inventory through proper management, especially with the aid of
computers and inventory software, is a key to success for your
business.
Every facet of an OPE dealer's business is affected by its
parts inventory:
- SERVICE DEPARTMENT: The shop needs parts in stock to
complete repairs. Techs can make more money for their shop if they do not need
to box up units and wait for parts.
- SALES DEPARTMENT: Sales expects the service department to
back them up by repairing equipment on a timely basis. Repeat equipment sales
depend heavily on how well the customer's current unit repair needs are met. An
adequate parts inventory is vital to keep repairs on time.
- PARTS DEPARTMENT: The parts department profit margin is
higher than unit sales. Customers are less likely to order parts if they have to
special order everything they need. To keep part sales volume up, servicing
dealers need to stock parts.
Your store needs parts to take care of your
customers, but you can't stock everything. Too much parts inventory can eat up
business capital and take up a lot of floor space. It is always a challenge to
maintain a balance between customer parts needs and smart parts inventory
management.
Parts inventory management
begins with determining what parts need to be stocked and when parts need to be
reordered. Usage should be the determining factor on what parts should be
stocked. It is not a good idea to reorder parts only when you run out. Most
dealers who manage their inventory avoid running out of parts by setting MINIMUM
QUANTITIES to trigger when to reorder. Most also set MAXIMUM QUANTITY levels to
avoid parts overstock. Seasonal parts usage should be factored into setting
min-max levels. A computerized inventory control system will make it much easier
to tailor parts-stocking levels to meet dealers' needs.
Without the aid of computer and inventory software,
inventory control is left up to experience and guesswork. Dealers using a manual
system are more likely to not have the parts in stock they need and be
overstocked in many other parts. The manual system is also much slower to use
because the owner, counter person, and tech never know what parts the shop has
unless they go look into the stock boxes.
Dealers who have not computerized their parts
inventory and parts sales should consider doing so. It will take a commitment to
purchase adequate computer hardware and business/inventory software, pay a
nominal support fee, and make a concerted effort to learn how to use the
package. Of those dealers we spoke to that have converted to a computer-managed
system, none could imagine going back to their seat-of-the-pants manual parts
system. The switch has saved dealers time, increased profits, and allowed them
to better serve their customers. The computer system also gives them the tools
to truly manage the parts inventory.
A computerized inventory system
gives OPE dealers the tools to manage the stocked parts, but the human touch
still needs to be part of the equation. There will be no parts usage history for
a new equipment model. Bring in a small quantity of common maintenance and
service parts to prevent customer delays for the new models you are selling.
Consider stepping outside the recommended parts max levels for fast-moving parts
if a supplier offers special seasonal pricing or dating. You may want to cut
back on stocking quantities if you feel a part's sales will go down because of a
product improvement.
No matter how diligent a dealer is in controlling
inventory, the store will end up with unneeded parts. The shop may end up in a
parts overstock situation because usage goes down due to an equipment model
change. There will always be some mistakes in looking up parts. Occasionally, a
customer might not pick up a special order part. Your tech may order in parts
for a repair and later find out the unit is not worth fixing.
These
overstocked and unneeded parts are not making the store any money. This
slow-moving inventory can become inactive and dead inventory that takes up space
on your shelves. The dead stock often becomes the obsolete parts you cannot
return to your supplier. It is important to have a plan for timely return of
dead or slow-moving inventory. You may want to consider eating a restocking
charge and immediately return expensive, unneeded parts like engines, short
blocks and hydraulic pumps. An annual slow-season parts return is more practical
for most overstocked parts.
Distributors
often offer incentives to companies that manage their inventory with slow-season
annual parts returns. Consider the following before making a parts return to
your supplier:
- Find out what parts your supplier will accept back. Suppliers will not take
back obsolete parts or parts that have been superseded. Often, they will not
accept back electrical components, hardware and items with a limited shelf life
like batteries.
- Keep parts clean and in their original packaging. Do not write pricing or
customer names on parts. Use price tags, and write on stickers that can be
peeled off.
- Get a return authorization for any parts you are planning on returning.
If your supplier won't take a part back
and you can't sell it, consider scrapping it. We don't care how good you are
about managing your parts inventory, you are going to end up with turkeys you
can't sell. The more years you are in business, the more this dead stock
expands. We understand that scrapping something you paid for is difficult. To
make it less painful, budget a percentage of parts to scrap every year.
Having parts in stock your tech needs to
complete most repairs without waiting on non-stock items is important. Stocking
the parts your customers expect your shop to have is important. Managing your
parts inventory based on usage can keep your tech happy, your customers happy
and most important your bottom line happy.
