Four Steps to Help You Solve Your Issues with Surplus Auto Parts Inventory
Overstock in an Auto Parts Inventory dealership can lead to loss and waste. A well-timed marketing campaign or an unexpected surge in service needs may reduce inventory levels; however, unsold stock often takes up valuable space and capital.
There are steps you can take to reduce surplus and obsolescence, which will ultimately benefit your bottom line.
Define the Problem
Begin by identifying your problematic inventory. Make a list of parts you have an abundance of, need to sell at a reduced price, or are in danger of becoming obsolete.
Once you’ve done that, value each SKU individually. Take into account turnover rates, delivery times and profit margins as well as storage costs in order to assess whether keeping a product in stock outweighs its risk. In most cases, no. However, better planning and record-keeping may be needed in order to assess which areas require most attention.
Short-term solutions can be found.
Overstock with little prospect for future sales is usually a warning sign that something is amiss. Fortunately, the solution to this dilemma isn’t difficult: get rid of everything you don’t plan to sell.
Don’t throw out parts inventory just yet – there may be better solutions out there. Even if you don’t know the solutions, now is the time to create a reverse supply chain plan so that you know what steps to take if obsolescence does arise.
There are various disposal options to consider:
- Customers or other automotive service providers in greater demand can sell stock at discounted rates.
- Reuse and disassemble components for other uses.
- Reach out to other dealers in your Auto Parts Inventory area who might be interested in additional stock.
- Manufacturers offer parts return programs.
- Utilize these parts during training sessions by reusing them or disassembling them and training with them.
Identification Inventory Issues
Monitoring parts for obsolescence to guarantee you can unload them before their time has run out is a viable solution, though this can be expensive and pose a risk to your company’s reputation.
Instead, try to identify the source of your stock holdings. Common issues include:
- Don’t get too optimistic when forecasting sales.
- Communication between parts, service, and accounting departments often lacks efficiency.
- Technology changes also pose problems.
- Vendor issues include regular backorders, incorrect quantities and parts orders, inaccurate inventory records, as well as poor scheduling and planning.
- Marketing campaigns that do not align with the brand can have long-term effects.
Longer-term solutions may be possible for brands.
Inventory problems often go undetected, since inventory moves more rapidly than what can be recorded. Peak season is when parts come in and out of stock faster than what can be recorded.
Many things can go awry, from mismanagement to sticky fingers and forgetting to write something down. While you won’t find the perfect solution until you identify its underlying cause, there are steps you can take to minimize and eliminate problems, particularly with obsolescence or overstock.
Once you’ve identified the issue, there are some potential solutions to consider.
- Improved Procedures and Oversight
- Organizational Enhancements
- Inventory counts more frequently
- Better Forecasting
- Optimized ordering processes that are based on turnover rate and delivery frequency
Additional Resource:
https://www.rockauto.com/
https://boodmo.com/
https://www.drivparts.com/