Top 5 tips for parts inventory management
By Stephanie Temple
There are many tried and true ways to effectively and efficiently manage your dealership’s parts inventory. From inventory quantity management to parts storage and supplier relations to inventory reporting, the many pieces of the puzzle can be overwhelming.
Following are five simple techniques that are commonly used in the outdoor power equipment industry:
1. Supplier partnerships: The suppliers you choose should make a commitment to your dealership and make your goals their top priority. When supplying parts to a dealership, vendors have the ability to enhance or undermine current inventory management techniques you may have employed. Look for vendors with a record of high fill rates, which in turn will translate to reliable service for you, and in the end, to your customers. You should also look for vendors with quick delivery time. There is great value in getting the parts you need quickly. Your customers will have faith in your ability to serve their needs and service their equipment, whereas you have the comfort of having a dependable supplier. Also, vendors who are flexible in their return policy, such as those offering reduced restocking fees and drop ship capabilities, take the extra step in making sure your business operates more smoothly.
2. Computerize: Computer software will enable you to label your parts with barcodes, allowing for easy tracking, easy reordering as inventory is sold, and less chance for mistakes from mislabeling and misplacement. As you move parts through the door, the computer software will automatically update your records and indicate when your stock needs replenishment. This also helps you track when parts are sold, so you can easily see trends per product category. This will help you prepare for the busy spring season or reduce the risk of overstocked inventory during the slow winter months. By using technology to your advantage, you will be well prepared to run heavy or light as the different seasons come and go — without the liability of unnecessary stocking. This also helps streamline parts ordering, as well as equipment service processes. By having a thorough understanding of ordering trends and patterns in parts consumption, computer programs can help you in the long run. Or, if you aren’t quite ready to make the jump to computerized tracking, you can stick with the tried and true “Time to Reorder” cards. This is called a pull, instead of a push, system. Please remember to replenish stock in a first-in, first-out basis. This ensures that your existing inventory will move out before the new, resulting in less product write-offs and reduced inventory costs.
3. Storage techniques: Keep your business operating efficiently with an organized and well-planned storage process. If you haven’t already, designate aisles and parts’ bin locations with a numbering or lettering system. Just as aisles are labeled in any retail operation, your storage area will benefit from this style of identification system. All storage areas, including aisles and bin locations, should be properly labeled. When storing replacement parts, there are two options: store according to product type or brand name. There are benefits with both organization styles. For dealerships storing parts according to product type, it saves time by knowing which aisle you need right off the bat. On the other hand, storing parts according to brand name will help alleviate improper placement of one product in the place of another, yet similar product. This will enable you and your staff to move easily through your storage area and easily locate a particular part. Don’t forget employee safety is your responsibility. If your storage area is unorganized and unkempt, there is an increased risk for employee injury.
4. Space maximization: Another challenge that is common to outdoor power equipment dealerships is limited space, whether it is in the showroom, service department or storage area. A great technique that has proven to be effective is the use of Stanley Vidmar cabinets. Dealers who use these cabinets have found a means for easy parts organization, maximization of the limited space available and customizable cabinet options to suit their specific needs. Plus, these cabinets can double up as a workbench or table top. Stanley Vidmar cabinets are capable of holding large amounts of parts in multiple drawers, which also come with dividers to make the most of the space. They also allow for easy parts organization, labeling and identification. If you find yourself struggling to make do with the space available for parts storage, these cabinets may be for you.
5. Reporting: It is vital to any inventory management technique that tracking and reporting be done on a regular basis. To establish a base starting point, it is recommended to report on current stock count and the cost associated with current inventory levels. It is also helpful to track the most popular parts and to have a handle on when parts categories are sold month by month. With the cyclical nature of the green industry, it is critical to understand customer demand based on the time of year. Plus, this will help compile a routine parts reorder report. By combining the results provided from these reports, you have built the foundation to a reliable and efficient parts inventory management technique. With this knowledge under your belt, you have the ability to manage your dealership’s stock needs and to meet your customers’ orders quicker and more reliably than ever.
Follow these inventory management techniques and your dealership will become a smoothly operating business with dramatically reduced waste and overstock. Inventory management needs will vary from dealership to dealership, so what works for your business may not work for the next. Only you can know what works best for your business. Apply the best combination of the aforementioned steps to your specific needs, and you will see continuous improvement through customer attitude and increased loyalty to your dealership.
Stephanie Temple serves as the marketing coordinator for Stens Corporation. She specializes in media relations, working closely with Stens’ product, technical and sales departments to bring the most up-to-date news and product knowledge to members of the green industry. She may be reached at stemple@stens.com or (812) 481-5556.
