Whether you run an auto repair shop or a dealership, parts inventory is one of the most vital parts of shop management. This means taking count of parts stock, what to reorder, vendor management, as well as verifying deliveries. Most shops still do all of this manually, but with the growing demands of an average auto repair customer, are traditional methods enough to ensure your inventory is always in check?
In this blog, we go over the core elements of auto parts inventory management and how an inventory management system can improve parts ordering workflows and boost efficiency.
Ways to improve parts inventory management and how software can help
It is a challenge for auto repair shops to manage inventory. Why? Depending on the size of their shop, they may require thousands of car parts, equipment, and tools for different car models. Product catalog changes and supplier variations are all it takes to make the situation much harder.
With a good system in place, you can turn these challenges into an opportunity to improve margins, workflow, and the overall shop experience.
Standardize part labeling and storage
Standardization of spare parts is significant to improving inventory control and cost efficiencies. The first step is identifying the parts used in your operations.
Once identified, catalog the parts in terms of make and model as well as specifications. This contains specific data of each part, including the part number, description, supplier, and price.
Once everything has been cataloged, each spare part should be given a standard part number so that it can easily be identified and tracked down. A unique identification number comprises a part number and company details. The unique numbers can be used on a barcode label and scanned as the inventory moves from checked in to stored to sold or checked out.
It is also important to organize the space for storing spare parts. Take a look at the space and start from physically cleaning the area. Take into account what components may be placed together and place clear bins so as to be easily accessible. Arrange shelves and label bins in the most convenient way possible.
Set and monitor stock levels
Setting minimum and maximum thresholds keeps your fast-moving auto parts always in stock.
When the inventory hits the minimum threshold, the system can alert for reordering. It is important to also set alerts for maximum thresholds in order to prevent surplus inventory that will increase holding costs.
Establish a reliable receiving and returns process
As a standard procedure, designate and maintain a clean space to open and count the received auto parts inventory. Receive and verify the inventory with the packing slip issued by the supplier. Make sure the correct parts with descriptions are obtained. Set aside any damaged, missing, or extra parts received.
Use the auto parts inventory software to mark received items on the purchase orders. Enter invoice details and confirm quantities received for accurate inventory data. Once you have checked the inventory, label the parts with unique numbers. Keep small items in labeled containers and ensure that all parts of the inventory are in the right place on the shelves.
For damaged and missing items, contact the supplier for clarification. Ensure these parts are returned on a weekly basis to avoid backup.
Schedule weekly cycle counts
Use weekly cycle counts as a more effective way to monitor the stock quantities. A yearly record is mandatory, but having periodic checks helps improve inventory-related issues.
Choose small sections and monitor periodically. This will be used to identify errors and discrepancies at an early stage to have correct records. An example of this is when a weekly cycle count shows a higher physical inventory count as compared to the system, which would then confirm that a technician made an error while inputting inventory data.
To avoid these issues, using a barcode scan system is a more reliable way to enter inventory data directly into the system just by scanning.
Clear out obsolete items
Obsolete items need to be moved out before they accumulate as losses in the inventory. Conduct quarterly audits to know which items are about to be obsolete. Increase promotion and market these items. Bundle a few items with high-selling items and offer it at a discounted price.
In case any of the items have not been sold, then you may recycle or return them at a cheaper rate. Sign a deal with suppliers to take back or exchange old stock. Adopt just-in-time ordering so that there is no surplus inventory.
Leverage auto parts inventory management software
Modern shops are now implementing auto parts inventory management systems that include dedicated modules for inventory management. The software helps you with real-time parts tracking, setting custom alerts for reorders, and even integrates with parts suppliers for easy parts lookup and ordering.
Enable multi-location visibility
Managers can have full visibility across store locations. They can identify slow-moving and fast-moving SKUs at the branches and make intelligent replenishment decisions at the branch to prevent overstocking and stockout.
Employees do not need to be connected to a single computer in the warehouse; mobile access means multiple locations can be linked to the same system, increasing the level of uniformity and eliminating silos. Basic inventory status or parts order is updated in all locations so you can always know the current stock levels in all branches.
By implementing these practical improvements, your auto shop can maintain well-organized shelves and reduce unnecessary inventory expenses as well as make sure that all technicians have ready access to relevant parts during repairs. This kind of control does not just simplify day-to-day operations but also lessens downtimes, improves repair turnaround time, and makes your team provide high-quality services regardless of how busy the workload or season is.
Additional steps to strengthen your parts inventory management process
Clean SKUs
Stock-keeping units (SKUs) are labels on auto parts that have a unique number. It can be scanned with the help of a barcode scanner to monitor inventory. In case the figure is not unique or wrong, then the barcode will fail to scan inventory. This is one of the reasons why you ought to have a standardized and regular system of part numbers. Keep it unique, such as following a combination of shop initials, part number, and item code.
Interchange catalogs
Maintain a list of automotive parts compatible with other makes, models, and years. These cross-coded catalogs assist the technicians in easily locating alternative parts in other OEMs or the aftermarket.
VIN decoding
The National Highway Traffic Safety Administration (NHTSA) provides the two free VIN check services that enable you to decode your VIN or check on a recall.
A vehicle identification number (VIN) is a 17-digit number that can be used to check the vehicle history. VIN decoding is useful before purchasing replacement parts. Some vehicle specifications are such that vehicle parts are only specific to certain VINs. This is why technicians need to perform VIN decoding so that they can get the correct parts and tools.
Supersession mapping
Supersession is when one part is replaced by a new part with a different part number. Check supersession by cross-referencing numbers in your system. This will make sure that you do not order a part that is already in stock simply because the part number changed.
Record vendor price list
Regularly update your supplier pricing in the system to maintain accurate costs and margins. You can keep a check on different supplier prices and ensure competitive pricing for your auto parts.
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6 Benefits of implementing auto parts inventory management software
When you are starting to grow your auto repair business to several locations, it is very easy to get overwhelmed with operations when you do not have the appropriate tools. Here’s how car parts inventory management software can help:
1. Check parts availability across locations
Inventory management systems are equipped with a centralized dashboard that offers real-time visibility across all shop warehouses. You can filter and view location-specific data on a single dashboard to track in-stock parts and reorder out-of-stock auto parts.
2. Streamline transfers
Establish regular work procedures at all the locations to transfer parts among the stores effectively. Train members about parts transfer and ordering so that they become aware of how and when to order inventory, and track transfers to ensure accountability.
3. Optimize stock levels
Set location-specific minimum and maximum stock levels based on sales patterns and service volume. Get low-stock alerts and reorder stock directly from the software. Control overstocking with maximum inventory thresholds and alerts for each location.
4. Share demand data
Make sure that there is coordination among locations to exchange customer, vehicle, inventory, and fleet data on a real-time basis. Provide store managers and teams the access to share trends or sudden spikes in the demands of a certain part. This enables the teams to replenish inventory on demand.
5. Coordinate bulk purchasing
Use automated inventory software to determine the standard part needs in all their locations and consolidate orders to achieve volume purchase discounts. This is then intelligently distributed in real time by the system so that each shop receives precisely what it requires, and there is also a reduction in wastage, and the procurement costs are reduced.
6. Monitor performance
Use automated dashboards to track key metrics such as inventory turnover, fill rates, and transfer efficiency across locations. The software warns of slowdowns or imbalances in advance, which allows taking corrective measures for operations to run efficiently and increase the overall productivity of the shop.
Measuring and improving inventory performance
Shop owners monitor appropriate KPIs and metrics on inventory to improve operations, reduce expenses, and minimize waste. The most critical ones with practical tips are given below.
Inventory turnover rate
A measure of how often inventory is sold and replaced over a period.
Why it matters: Low turnover rate means that there is cash tied up in stock parts that have not been sold, whereas high turnover rate means that the stock is being utilized efficiently.
Action: Order a smaller quantity of the slow-moving items. Promote existing unsold parts more so that they don’t gather dust.
Stock accuracy percentage
It calculates if the actual inventory in the warehouse matches the inventory recorded in your system.
Why it matters: Mismatched inventory level could lead to lost sales, excess inventory, or panic buying at very high prices.
Action: Conduct regular cycle counts and quickly resolve discrepancies to remain lean and efficient.
Days on hand
Average number of days auto parts remain in inventory before being sold or used.
Why it matters: Prolonged days on hand mean money lost and have a high probability of becoming obsolete.
Action: Establish targets by part type, and look at high “days on hand” parts every quarter to liquidate or adjust part quantities.
Dead stock value
Multiply the number of units not sold by the cost per unit. This will provide the total cost of the parts that are not sold within a set period, or more than a year.
Why it matters: Dead stock takes up valuable space on the shelves that could be used for fast-selling items. The investment is returned when inventory is sold, but with dead stock, the investment is lost.
Action: Check periodically on the parts that are becoming dead stock. Take action to decrease the dead stock value by discounting, returning, or recycling.
Cost per part
The average cost you incur in stocking, handling, and the movement of a single part in your system.
Why it matters: Indicates where process inefficiencies or high carrying costs lie.
Action: Use this metric to see how much inventory management has improved. Revisit metric results after investing in barcodes, better organization, or smarter purchasing.
Backorder rate
The percentage of part requests that were not fulfilled immediately because it was out of stock at the time of purchase.
Why it matters: It indicates that there was a higher demand of a particular part than supply. Increased rates of backorder may irritate customers and delay operations.
Action: Establish achievable expectations of customers and inform customers of stock status to ensure customer satisfaction. Diversify suppliers and improve demand forecasting to reduce backorders
Wrapping up
Investing in better inventory management doesn’t just guarantee all auto parts are accounted for, but also keeps your shop organized and efficient. The right auto parts inventory management software ensures you have full visibility of what’s in stock, what’s running short, and if there’s any dead stock.
Whether you have one shop location or multiple, leveraging automation to implement a consistent workflow results in faster repairs and happier customers.
FAQs
What KPIs are important for car parts inventory management?
Inventory turnover rate, days on hand, dead stock value, and backorder rate are some of the key KPIs of car parts inventory management.
Where can i get real-time stock updates on automotive parts
You can use an automotive parts inventory management system to get real-time updates on stock. The system alerts you when any parts are below the minimum threshold, so you can replenish stock immediately.
Can I track real-time inventory of used automotive parts online?
Yes. Many modern inventory systems integrate with vendors that sell used automotive parts. The system lets you see their availability, condition, and location in real time from any device.
