SET PAR LEVELS
You should not have more than 2 weeks’ worth of inventory on hand based on past usage. For Example: If you have only sold 5 of a certain air filter in a week’s timeframe, you should set your par level for 10. You would keep a maximum of 10 on hand for that particular part.
VENDOR DELIVERY SCHEDULE
Try to use 2 days per week that all vendors can deliver to you. This allows you the ability to manage the incoming deliveries more effectively and accurately.
VERIFY THE DELIVERY FOR ITEM TOTALS
When the vendor arrives to deliver product, always count in the inventory and verify it against the vendor’s invoice. Stock the shelves yourself or have an employee do it. Steer away from allowing the vendors to stock the shelves for you and then you just sign off on the delivery.
VERIFY THE DELIVERY FOR PRICE
Match prices on the invoices to the prior agreed upon pricing from that vendor. Vendors do not always inform you of a price increase, and may just pass it along on the invoice without notifying you.
COUNT YOUR INVENTORY
Counting inventory once per week is ideal, monthly counts are a must.
REDUCE YOUR INVENTORY ON HAND
Any inventory that is not moving should become an on-demand item for the future. Avoid keeping those types of items in stock. The easiest system of inventory control is to keep it down to as few items as necessary. To simplify your inventoried items and the counting needed, predetermine a list of items that you classify as inventory such as fluids, batteries, brakes, filters, etc. The smaller items that you do keep stock of such as bolts, clamps, fuses, light bulbs you may consider expensing these as you purchase them to simplify your task of keeping track of every item.
Designate one specific area of your shop to contain cores and parts that need returned. Establish a core and credits file system that should be updated daily – for example: when a core is pulled out of a vehicle, it should be tagged, put on the shelf and a copy of invoice for the new replacement part should be put in the file. This will remind you that you should be receiving a credit for that core when the parts vendor comes to pick up the core. If you have the items in the core file, there should be an item on the shelf tagged to match up with that. Once the vendor issues the credit slip, that should be taken and stapled to the invoice that was in your file and the vendor takes the core. This way you can follow a system to keep up with the returns and credits you are waiting on. You or your bookkeeper should see that original invoice and the credit that was issued to you on the vendor’s monthly statement. Never let a core, or part return sit on your shelf for more than 5 days.
PURCHASE ORDER #’S
Use PO numbers for all orders of parts to your parts vendors. All of these PO numbers should tie back to the individual work order for each customer. Never use names or the same word such as “shop” as PO#’s. It becomes too easy for employees or ex-employees to order parts/supplies on your account and you cannot track down the corresponding work order that that purchase should tie back to.
MONTHLY VENDOR STATEMENT RECONCILING
Each month when the vendor’s statement comes in, it must be reconciled against all of the individual purchases (invoices) throughout the month. Each invoice should have the PO# on it, and there should be no missing invoices that are on the statement. If there are invoices on the statement that you do not have a copy of (with your PO#) then request a copy from the vendor and verify that it did indeed belong to you and a work order that you did have in your shop. Sometimes vendors make mistakes and can charge things to your account that may belong to another establishment.