Best Practices: Comprehensive Inventory

What best practices do you stick to when performing a comprehensive inventory?

Really, how do you do it? Because this writer kept looking at the question and getting stumped. I don’t take inventory of many things. Maybe coffee beans.

But it’s a question we recently received, and we’ve learned that if one person is curious, others probably are, too. Any repair operation is going to depend heavily on how it manages its inventory—it’s even a big portion of your profit. So it makes sense that you want to know where everything is and how much of any given part you have on hand.

Except as we all know, things can…well…get away from us, and sometimes we forget to take inventory, or someone scans the wrong barcode, or neglects to add something to the invoice, and…and…you get the idea.

In short, stuff happens.

If it’s recently happened to you, and you’re wondering how to get ahead on inventory, you’re in luck. Chris O’Brien, COO of Fullbay and former fleet manager at Shamrock Foods, sailed to the rescue to walk us through some best practices for the task—whether you’re got a brick-and-mortar location, a lone truck, or some exciting combination.

Spoiler alert: the moral of the story is cycle counting.

INVENTORY BEST PRACTICES FOR BRICK AND MORTAR SHOPS

Before anything else, Chris says, you’ve got to assess the damage. “How long have you let this go?” he asks. The longer it’s gone on, the more of a mess you might have to clean up. After that, review these four best practices to start getting your shop’s inventory on the right track:

1. Manage your negatives. If you allow your company to sell parts negative, you’re not running a true inventory. You’re saying, “I’m not worried about physically having something on the shelf. I’m just gonna sell starters or oil filters in the negative.” Some shops do treat this as a strategy (“If I see I’m at -4, I know what I need to order”) but…honestly, not knowing what you have in stock at any given time is a quick route to chaos and is a sign that you do not have a good inventory system in place for your shop.

2. Batch your inventory into groups of work. “You can’t eat the whole pie at once,” says Chris.

(Challenge accepted…wait, we’re talking about actual pie, right?).

Prioritize!

Yes, folks, we’re talking about cycle counting. Particularly for the things that move the most, or the things that count the most. Losing a $2k part is more impactful than a couple $1 parts. Imagine your parts broken into three groups. Your A group is usually the fast-moving parts. “If all you can do is cycle count the As, try to do that on a regular basis—at least once a month,” Chris says. Cycle count your Bs at least once a quarter, and then your C products twice a year.

What’s with the A-B-Cs? That’s how we class types of merchandise:

• As are parts that turn over quickly (brake shoes, drums, wheel seals).
• Bs are ones that move a little slower than A’s, but still sell at a “normal” rate (starters, alternators, etc.).
• Cs are slow moving parts that might sell every few months or less frequently.

3. Figure out your storage game—and up it if necessary. How are you keeping your parts? If everything is piled up in corners in the building…you’re gonna have a hard time. Assess how you store your stuff. You may need to do some reorganizing of the shop—as well as retraining your staff to store things correctly.

For example, if you’re going into the negatives with filters, do some analysis. If you find two filters that look identical and you’re constantly transposing them because even the bar codes are nearly the same, “Don’t put them together,” Chris cautions, especially if they’re causing problems. Now, they may not be causing issues, but if you’re running into constant problems with negatives (see point 1), a seemingly innocuous situation like the above can continuously throw a wrench in your efforts.

Er, no pun intended.

4. Look at who owns parts. This is where things can get a little hairy. Who is ultimately accountable for your parts?

Do you have a parts person? Is the owner the parts person? Is the service writer writing orders and also trying to order parts?

If seven people are accountable for parts, that can be….a problem. If your parts are routinely walking away and everything is chaos, you might ultimately save money by having someone just be accountable for the whole thing.

(Or Fullbay can be helpful in that regard to track your inventory…just sayin’.)

So, those four practices are where Chris would start if tasked with getting a crazy parts situation under control. But there’s another element to the parts conundrum that often perplexes shop owners and techs, and that’s how to handle the mobile side of things.

Chris had some advice on that end, too!

INVENTORY BEST PRACTICES FOR MOBILE TECHNICIANS

Friends, it is time to rejoice: the mobile truck inventory need not be a great mystery. Why? It’s just another location. Treat it like a moving parts room. All the best practices we discussed above are applicable to just about any repair truck.

Then add on the following:

1. Make sure you’re marking up parts appropriately. There’s an old saying: Everything is more expensive on the road.

(Wait, did we just make that up? We are geniuses.)

Anyway, if you’re hauling iron out to a stranded driver 400 miles from the nearest Starbucks at 2 AM…yeah, that iron is going to be considerably more expensive. “You can’t go crazy with price-gouging,” Chris cautions, “but you’re taking all kinds of risks on these mobile trucks.”

So maybe you have a category that allows you to price the parts on the trucks higher. Just make sure you are charging for those parts. You’re providing a valuable, much-needed service when you perform roadside rescues. You should be compensated.

2. Imagine the service truck as your parts room. How you organize it is up to you, but you should know where things are. Like we said, “Treat it like a location.”

Hey, you know what you should do with that truck?

Cycle count it.

Now, if you’re rotating drivers constantly, maybe have a right side and a left side, so people aren’t constantly digging for things. But again, it’s just a location. Does it have negatives? Cycle count it and make sure you know what’s aboard and what you need.

Who should do the cycle count? Maybe it’s for the tech assigned to the truck— they audit it once a quarter. And if parts are missing, they pay for it. And if parts aren’t missing, they get a bonus.

That’s it. Those are our mobile-specific best practices.

OKAY, WE HAVE A LITTLE MORE ADVICE ABOUT INVENTORY

Instead of launching into all the ways Fullbay can help you (or your parts manager, or the seven techs you have trading off on duties) manage your inventory, we’re going to leave you with some food for thought:

Parts never cost what they cost you on the invoice.

We repeat: Parts never cost what they cost you on the invoice.

You’re never just paying for the part. Once you fork over the cheddar for the component itself, though, you’re also paying to ship it, receive it, store it. When you think about what all that costs you, Chris says, “You have no choice but to make money on parts.”

You’d probably bankrupt your shop if you didn’t.

Now, what if the worst should happen? If you start following the best practices above and you realize the problem is just too big—that it would take months or a year for your current employees to organize and make right while they juggle their actual duties?

Well, it’s time for outside help. Maybe that’s a parts person, but it may also be something else.

Chris knows several shop owners who have turned to temp help—usually someone’s kid home from college, looking for a job over the summer. You might also check in with local high schools and see if any math-loving juniors or seniors are looking for jobs. You add the youngster as a user in Fullbay and they spend a month or so just cycle counting. The kid goes back to school and the user gets switched off.

“Bring them in, get it done, set them out,” Chris says. “That’ll catch you and level-set, and it’s a way to execute.”

Best of all, everyone else gets to keep doing their job.

When it comes to performing a comprehensive inventory check, you’ve got a lot of options—even if your parts room has slowly descended into chaos. Remember, there’s always a way out, even though the path ahead may be difficult and strewn with zerks and mislabeled filters. You can do this! And yes, Fullbay can help. Give our free demo a whirl and see why shop owners swear by our inventory reports.