Here are 4 steps to help you solve your surplus automotive parts inventory problems
In excess surplus automotive parts inventory can cause losses and waste in your dealership. Stock can be reduced by a well-planned marketing campaign and unexpected service demand spikes. The reality is that inventory once it becomes obsolete doesn’t usually do much other than take up space or capital.
Good news! There are steps you can use to eliminate excess and obsolescence. This will improve your bottom line.
Define the problem
First, you must identify the problem inventory. It is important to identify the problem inventory.
Once you have done that, it is time to evaluate each SKU. The turnover, delivery time, profit margin, storage, and shipping costs of each SKU should be determined. This will enable you to assess whether the cost of the product is worth the risk of obsolescence.
Look for a temporary solution
The solution to excess stock with low future sales prospects is often obvious, but it can be difficult to swallow. That solution is to get rid of it.
That doesn’t mean you have to throw it away. There are better ways to manage your automotive parts inventory. It is a good time to begin to plan a reverse supply chains plan if you don’t know how to solve the problem.
Some disposal ideas might include:
- Stock can be sold at a discount to customers and other automotive service providers that have greater demand.
- For other tasks, disassemble and reuse components.
- Reach out to other dealerships in the area who might need additional stock.
- Manufacturers offer part return programs.
- Training with the parts
- The parts can be scraped. Use the parts to train.
Identify inventory problems
Although monitoring obsolescence can help you unload parts before they become obsolete can also be a solution.
Instead, look for the true reason why you are always stockpiling more than you need. Common problems:
- Sales forecasts that are too optimistic.
- Poor communication among members of the parts service and accounting departments.
- Technology is changing.
- Vendor issues include backorders on a regular basis and orders that are incorrect in quantity and part.
- Inaccurate inventory records.
- Poor planning and scheduling.
- Marketing campaigns misaligned
Look for a long-term solution
A company with no inventory problems probably doesn’t know what problems they really have. Because inventory is a magnet to mistakes and errors by nature, it can be difficult for companies to keep their inventory in order. This is especially true during peak season, when parts are constantly moving in and coming out of stock faster that you can write it down.
Mismanagement, sticky fingers, and accidentally forgetting something are all possible causes of problems. However, there are steps you can do to reduce or eliminate problems. This is especially true when it concerns obsolescence/overstock. It is important to realize that the only way to solve a problem is to identify it.
When you’ve identified the root problem, there are several solutions:
- Superior procedures and oversight
- Superior organization
- Increased inventory counts
- Better forecasting
- Better ordering processes based upon turnover and delivery times