The Signs of Poor Inventory Management

It’s easy to think about parts in terms of their cost. Finding the right items at the best possible prices makes financial sense, but that’s not the entire story. At the same time, parts inventory management also incurs costs, and keeping these in check is crucial for profitability. Whether you are a fleet or a service provider, poor inventory management practices have a direct impact on the bottom line.

Ineffective parts inventory management wastes time and money

It consumes capital that might have been better spent in other areas of your operation. Perhaps the most costly is that it increases downtime, which also negatively impacts customer satisfaction. Implementing effective inventory management practices is often the first step in controlling administrative costs and reclaiming lost capital.

Here are five signs of poor inventory management:

High parts costs as a percentage of maintenance and repairs
Increasing indirect labor costs when technicians spend time waiting for needed items
Reduced shop throughout when parts availability slows the completion of maintenance and repairs
Lower warranty recovery when the inability to track covered items leads to missed claims
Unplanned downtime resulting in reduced vehicle utilization caused by delays in receiving parts during service

The good news is that there are proven approaches to eliminating ineffective parts inventory management practices

One of the simplest ways to improve is to focus on parts room housekeeping. For example, easy access to frequently used parts for preventive maintenance and common repairs can keep service operations moving steadily. Arranging inventory so components for specific systems can be located quickly improves productivity. An organized parts room can also help identify infrequently used parts that contribute to increased inventory carrying costs.

With a better handle on your parts inventory, you can also facilitate effective ordering and purchasing practices. By utilizing data-driven analyses, you can ensure the right quantities of parts are in stock, shop throughput is not delayed, and eliminating the need for last-minute orders helps keeps costs down.

Having an adequate and correct inventory also stems from training technicians and parts personnel to recognize needs. Beyond including parts inventory topics in training, there are also parts management programs offered by industry associations, such as the National Institute for Automotive Service Excellence (ASE), which provides certification for specialists in medium- and heavy-duty truck parts. Recognizing the importance of training ensures that your staff is equipped to handle the complexities of modern parts procurement.

Not to be overlooked is the value of working with a reputable vendor

Leading suppliers of parts have resources that can be highly valuable. Those can include the ability to predict parts needs based on purchase histories. Additionally, they can help you evaluate the quality, costs, and availability of parts between manufacturers and locate hard-to-find items that are not typically carried in inventory. Due to these challenges, recent data indicates that fleets are moving outside traditional channels to secure the components they need to remain operational.

Parts vendors are also focused on streamlining the ordering and purchasing process with e-commerce systems that facilitate timely deliveries. Many fleets are now integrating fleet management systems directly with their suppliers to automate the restocking process. While those abilities have even greater value today considering supply chain challenges, they are now seen as an essential part of effective parts management for the long term.

FinditParts is the largest single-source Internet distributor of heavy-duty OEM and aftermarket parts. FinditParts is your partner in keeping your heavy-duty truck on the road.