Devising an efficient system of counting and maintaining a stock of inventory items has long been an arduous task for many shop owners. But the old methods of cataloging by part or item numbers have all but disappeared since the proliferation of electronic catalogs and the use of computer software programs to track stock-keeping units (SKUs).

Inventory management is necessary for owners who want to maintain a stocking service for quick turnaround to help ensure total customer satisfaction. The "fill rate" of an item on a managed inventory list must be maintained to avoid shortages of frequently used items. Even when utilizing an inventory management system, occasional shortages will still occur.

To be successful in today's fast-paced, highly-competitive environment, shops need to have the necessary parts in stock or have reliable suppliers to meet customer demands at a moment's notice. Either way, shops must have a practical, efficient method for managing inventory in order to stay in business and satisfy their customers.

Shops in larger cities tend to have more options for inventory stocking. Since there are often numerous parts suppliers nearby, there is less of a need to stock certain parts. Shops that stock belts, hoses or other hard part items sometimes do so only to find a marketing niche in their area. Stocking inventory can sometimes yield the benefit of bulk discounts.

However, some shops refuse to stock any items at all. Frequently, the philosophy here is that the shop does not want to "tie up" money in unused inventory that often depreciates while sitting on the shelf. The plus side of this philosophy is that the shop does not spend much time or money on an inventory system since it depends solely on its parts suppliers to stock the items the shop moves frequently.

Profit drain, with regard to lost sales, is always one risk a shop takes when it depends upon a parts network outside of its in-house forum to supply inventory management needs. Shops that are outside of the "net" of a warehouse supply area, as well as those which depend upon niche markets for their success, can use automotive computer software programs to list, count and order parts automatically.

The benefits of keeping significant quantities of parts in stock are not always clear. The financial benefit must be high enough to justify not only the cash expenditures for the stocked items, but also the time and money spent managing the inventory, whether it is for employee time or for computer hardware and software.

One Missouri shop owner said he routinely stocks accelerator and clutch cables at the expense of a couple thousand dollars at a time. His philosophy follows in stride with the manufacturers' recommendations that these items be replaced at time/mileage intervals or whenever a clutch replacement is being handled, and he said his customers usually accept his suggestion that these parts be replaced. His bottom line, he says, has been better since the shop started stocking its own cables.

He also reiterates the fact that he has few comebacks by following this practice.

Graham Automotive of Springfield, Mo., has been in business 27 years. Owner Dan Stomboli said that inventory management has pretty much become a thing of the past since parts houses have "geared up" with electronic ordering. Still, he concedes, his shop has a limited amount of inventory that is tracked with a software program, and daily ordering has become the ordinary business practice that his facility uses to keep inventory management at a relatively simple level that can be grasped by anyone in the organization.

Another Springfield shop owner said he carries only those items that might otherwise hold up a job by having to be back ordered, even though his shop moves these parts only once or twice a year. He stocks the items and sells them for "premium" prices because he has them immediately available for installation. In addition to consumers paying these premium prices, other shops sometimes buy these parts from him when they need them immediately.

Some shop owners think simple "garage-keeper" software programs are the best buys for inventory management. Some use customized programs, and others rely on integrated shop management systems or similar "do all" package systems.

Tire stores tend to use some of the best inventory systems on the market. The reason is not surprising considering the fluid nature of the tire business and the importance of having the right tires in stock. Custom-designed software systems are the most often used programs for these businesses. Many tire dealers also depend on "corporate designed" systems for total shop management as well as inventory control when they are associated with a franchise. The biggest plus of having one of these systems, according to several shop owners, is having a comprehensive, proven inventory management system that tracks problem areas and automatically makes corrections when needed.

Body shops use integrated management systems to track inventory, in addition to performing tasks such as payroll and estimating. St. Louis Auto Body, Springfield, Mo., keeps parts on-hand only for jobs already on site. Parts are stored in a separate building until they are needed for the repair.

Inventory of paint in body shops is usually kept in stock and managed with customized inventory systems integrated as part of the shop's master management program.

Shops that have been using computers for estimating and for technical programs should look to expand those efforts toward a good inventory software program. The most important part of any inventory programming effort is finding the time to set it up properly.

Comprehensive business software programs that incorporate inventory functions as merely one of many features are not always the best choice for a shop. Take the time to search out automotive-related programs, establish that the program will perform the functions you need and make sure to find out which systems have been working well for your fellow association members.

Take the leap into the new millennium with a well-devised management plan, and make that plan part of your business operation. By counting on a quality inventory management program to bring you into the next century, you will facilitate the success that comes from good overall management techniques.

Charitable Inventory
Do you have old, unused inventory that has been accumulating dust on your shelves for years and has little or no chance of ever being used? Consider donating the parts and supplies. Educational Assistance Ltd. (EAL) accepts donations of new and used excess inventory from companies and corporations nationwide.

By exchanging these goods for scholarships within their own national network of accredited colleges and universities, EAL provides educational assistance for many needy persons each year. Items not appropriate for trade-off to colleges can be sold outright to support the program and its efforts.

More detailed information about the program can be made available to members by calling Pam James at (630) 690-0010.

Inventory Software Features
Following are some standard features that adequate shop inventory management software programs should include:

• Encryption: Represents a dealer code for any particular item to be followed on inventory roles.
• Tax digest information: Answers whether the item taxed at the time of sale (retail) or by the purchaser (resale).
• Inventory tracked: Represents the majority of items found as SKUs in typical automotive inventory. In some cases, software will track operations and automatically reorder parts or supplies when needed. A typical example is a case of grease cartridges for chassis lubrication. If 12 typical lube jobs deplete a cartridge, and there are 12 cartridges to a case, then after 144 lube jobs have been tracked by the inventory block, automatic reorder will take place.
• Sales price: Items may be bumped up or down individually or as part of a trend across the inventory block. Criteria for pricing up or down may be initiated by a single vendor code on the last reorder.
• Last sale date: This is important data used to measure the amount of time an item sits on a shelf, or the "movement rate" of that particular item.
• Costs: This refers to the standard buying prices of items stocked. This area may also track trends in price increases on items.
• Sales traffic: Shows the total activity of a product or group of products as they move in or out of inventory. This function is used by programs to identify trends through a graphing format, or to alert inventory managers of changing factors that may affect gross profits or result in bottlenecks in operations.
• Quantity price structuring: Used by inventory programs to track and maintain quantity levels, and ensure adequate buying levels set in the program's directory. In any given program, the upgrade of an item because of increased upward traffic will cause the program to automatically seek out the next buying level during the automated reorder.
• Alternative vending: Used to store a second or third choice of a stocked item from an on-site or off-site source. This data may be manipulated by off-site vendors with regard to each individual shop's buying venue.
• Register, totalizer records: Includes the on-hand dollars, purchase units, purchase dollars, unit sales total, etc. Shipping dates may be projected, and order confirmations will be accumulative if more than one order date has been set.

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