Hey again, Fullbay friends! We’re back with another exciting recap from our first-ever Diesel Connect. In this article, we’re summing up some of the learnings from “Putting Your Inventory to Work,” presented by Luke and Zeb Todd from The Service Company.
You may know the Todds from other Fullbay blog posts; we’ve interviewed both of them on the subjects of price matrices and parts margins. They have multiple locations and “a pile of parts to keep track of,” so a lot of people were excited about this presentation.
The host—Fullbay COO Chris O’Brien—kicked things off with an audience question: “Using emojis, how do you feel about your inventory?”
The answer was a resounding “Meh.”
So, do the Todds hold the secret to easy inventory? Well…no, not exactly. But they come pretty close. Here’s some of what they covered!
YOUR INVENTORY PROCESS MATTERS
In a busy repair shop, inventory is changing all day, every day. Parts people, techs, service managers, and more may be constantly in there pulling things out. That’s how long it can take to go from a healthy state to complete disarray.
What can prevent that disarray? Good practices. Zeb gave several pointers everyone can benefit from. When the part comes in, you should:
- Make sure it matches what you ordered on Fullbay, the packing list, and the invoice.
- Make sure it has a place to live.
- Do your cycle counting!
The first and third points speak for themselves, but let us elaborate on that second point. You’ve heard the term “A place for everything, and everything in its place,” right? Someone ought to stencil that over the parts room, because putting a part in the wrong spot can throw off everything.
For example, Zeb talked about finding Freightliner visor lights with radiator bushings. This doesn’t necessarily mean someone put the lights in the wrong place, either—Luke pointed out it could be a new stock item and the stocker just put them where they seemed to fit.
To sum up, walking the shelves and making sure things are where they belong (and not where people may think they should go) will help you keep track of things.
YOU’VE GOT TO DEAL WITH OUTDATED INVENTORY
It happens to the best of us: we stock up on too much of one part, or we squirrel a part away and forget about it, and then it resurfaces months or years later.
Yes, it even happens to The Service Company, so you don’t need to feel too bad about that random ancient lug nut you found in a corner. “We’ve been in business for 45 years, so we still find things that fit triple nickels and things like that,” Luke said.
What you do with that old stuff is up to you. If you’re handling older or antique vehicles, some of those parts may come in handy. If stuff is rotted or rusted straight through, it may be time for the junkyard. But if you have usable parts that you know you aren’t going to use, there’s other ways to unload them. The Todds have shed old inventory on eBay and even hosted a “trucking garage sale” that apparently flopped but was still a ton of fun.
And while the presentation was about parts, and not Fullbay, the app did get a shout-out. Zeb counters some of the outdated stockpiling with the Fullbay velocity report, which—when run consistently—shows you what’s moving, what’s sitting, and what you need more or less of.
YOUR TECHS SHOULDN’T BE MESSING AROUND IN THE PARTS ROOM (IN AN IDEAL WORLD)
At last we reached the age-old question: do you let your techs pull parts on their own?
We’d like to note that if you have an ultra-small operation or are mobile-only, then this question might seem…well…superfluous, because of course your techs will be pulling parts on their own. But as your operation grows, it can really behoove you to get that parts person.
The hesitation around letting techs pull parts isn’t purely a fear that they’ll mess up the system. When your techs are in the part room, they are not wrenching. When they are not wrenching, they are not earning. Luke estimated a tech rustling around for parts might cost $2-$3 per minute. “If he’s waiting on a 9/16ths bolt, I’m festering, because I’m thinking, ‘We just saved 20 cents…but spent $9 doing it.’”
And when three or four techs are milling around looking for parts—forget it. We’re past festering and into, well, whatever happens after festering.
“Realistically, though, they need to keep moving,” he added. If a parts manager is busy and a tech can grab a screw real fast and then get back to work, then yes, that’s what’s going to happen.
INCENTIVIZE YOUR PARTS PEOPLE
Chris asked whether The Service Company offers incentives to its parts people. After all, they’re something of a unique breed; “the only ones that can solve the matrix.”
They do: each parts person receives a percentage of gross profit, to be paid quarterly. Luke says it’s somewhere around 2% of what they sell. They also offer a year-end bonus.
Your own mileage on this will vary depending on your size and parts revenue, but 2% is a good place to start if you’re contemplating incentive packages for your staff.
YOU CAN FIND A GOOD PARTS PERSON ANYWHERE
Lots of shops approach the parts counter in the following way: they realize they need a parts person, so they grab a tech from the floor and say, “Abracadabra! Behold the parts counter, for you are now in charge of it!”
(Okay, usually the tech is interested in the promotion, too.)
And while that’s a perfectly legit way to staff your counter and help people shift career paths, it’s not always the best way. Maybe your techs want to remain techs. The Todds have one guy who started out in their shop as an apprentice, didn’t really like it, and then moved to the parts counter when a space opened up. And he’s doing great.
In an ideal world, a parts manager has a lot of experience in the industry…but don’t discount the newbie who’s willing to learn and work their way up. “If you have a good attitude and a good work ethic, we’ll take that over experience any time, for parts,” Luke and Zeb confirmed when asked how they find the right people.
“One of my top-performing guys used to work on sewing machines,” Zeb added.
300 PRICE MATRICES IS NOT TOO MUCH
We’ve got a whole webinar dedicated to parts matrices (and a blog post if you want!), so we won’t get into the weeds about what matrices can do for you or why you should look into building one. Just know that Zeb has 300 of them.
Seems like a lot, right? Like it must have taken a year of his life to knock out?
“We left work and spent two days on [Luke’s] patio organizing the price matrices before we [imported them] into Fullbay,” Zeb reported. “I think we picked up 7% [in revenue] just doing that.”
The more you customize your matrices, the harder your inventory will work for you—and the more revenue you’ll see from it.