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Workshop inventory management: 10 steps to success

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Hello, and Welcome to Racext’s Car Magazine column, the column aimed exclusively at the world of 4-wheeled vehicles with news, insights and guides, available every day here racext.com, today in this article we will talk about “Workshop inventory management: 10 steps to success”

 

Workshop inventory management: 10 steps to success

You may already know how a mechanical workshop is always full of work for everyone on the team. Maintenance, negotiation and customer service are essential for the success of the business. However, you can’t forget about other internal activities, such as inventory management. Many labs waste a lot of money and energy by not organizing their merchandise properly.

Successfully managing workshop inventory affects much more than the placement of parts in your space. Efficient management of automotive parts and other industry assets speeds up the various daily activities and, above all, avoids wasting resources. The question is: how to manage more efficiently?

If you’re struggling at this point, don’t worry. Here are 10 simple steps to be more successful in managing your inventory. Additional action!

1. Check-in and check-out of items

The first step in gaining control over your inventory is knowing what’s available, what goods will be delivered, and what items have left the store. It is not enough to consider whether or not there has been a delivery from the supplier. You need an accurate record of the movement of goods to make any decision.

When making a purchase of material, for example, the finance department of the workshop must record these amounts and post them in their accounts. Also, when performing maintenance that removes an item from stock, the purchasing area must also monitor this output to schedule the next batch with the supplier.

2. Make regular inventories

Even if you have well-structured processes for tracking the movement of goods, it is not impossible for some errors to go unnoticed at the time of registration. The problem is not that they exist, but that they are ignored until they create problems. The best way to solve this problem is to have an inventory program to facilitate inventory management.

By definition, an inventory is when you look at actual inventory and compare what you find with company records. This helps reveal errors , as well as showing if there have been any unexpected shipments of goods. If too much merchandise starts “disappearing” you know it’s time to act.

3. Sort the pieces

The categorization of the parts consists in grouping the products according to their characteristics and purpose. This organizational process aims to ensure that inventory management is more accurate and dynamic.

Currently, there are several techniques that can help you rank your products. However, one of the safest and most efficient is, without a doubt, the ABC curve, also known as the 80/20 analysis.

This categorization technique has the function of informing the company which are the most important stock pieces. Therefore, the inventory is divided into three categories:

• category A : corresponds to the most important products for the company. In this case the value or sales volume of the piece can be taken into account – it represents 20% of the total and generates a yield of 80%;
• category B : refers to items with values ​​and quantities considered intermediate – can represent up to 30% of the total stock and guarantee a yield of 25% ;
• category C : refers to products of lower quantity, value and importance, which can correspond to 50% of the total and offer a yield of 10% .

Interestingly, these numbers vary from company to company. For this reason the ABC Curve does not establish a fixed rule, it only presents an indicator to help you manage your inventory . Its main advantages are:

• inventory optimization;
• waste reduction;
• more efficient planning;
• increase in profit margin;
• strategic investments;
• more accurate evaluations;
• more accurate deliveries.

To make good use of this technique, you have two options: use an ERP system (enterprise resource planning or integrated business management system) or a spreadsheet Excel. After making your choice, you need to follow the steps below to apply the ABC curve in practice.

List products

You must include information about:

• article code;
• description of the part;
• unit of measurement;
• Unit price;
• amount of sales ;
• total (amount) purchased after the product was sold.

organize your products

In this step, you need to list all products based on their values ​​- the ones with the highest values ​​are at the top of the table, okay? To find out how much a portion of your total sales represents, simply divide the total purchased by the product by the overall sales.

Distribute the pieces in categories A, B or C

The segmentation of each part is performed according to the table created in the previous step. In this case, by analyzing, for example, the products that represent 80% of your sales in a given period, you can identify the items that belong to category A and then proceed with the categorization process.

Remembering that, to ensure greater efficiency, it is necessary to reduce the stock of items of category A and B. Furthermore, items of category C must not be stocked. This practice prevents the product from being stopped and maintains inventory turnover.

4. Have a good relationship with your suppliers

It is easy for many auto repair shop operators to believe that auto parts suppliers , for example, are just shops where they buy essential garage products . However, there is a lot you can do if you think of them as partner . In this way it is possible to act together so that both of them benefit equally over time.

Creating a closer relationship with your suppliers can offer several benefits, such as being given priority in delivering new parts and better prices to negotiate. You can also return these favors by keeping a regular ordering schedule, for example. Plus, you can increase your order volume as your shop grows and achieves greater market reach.

5. Let your team do inventory management

Of course, good inventory management of automotive parts and other auto repair shop items doesn’t just depend on one or two people.

The whole team has to take on some responsibilities so that the handling of goods is more efficient and the decisions made by management are more accurate. Even if your workshop is an SME (Small and Medium Enterprise), this joint effort is still very important.

Think, for example, about inventory control and merchandise documentation. Whenever a mechanic removes a part for any maintenance, they must record which item was picked up, when, and for which service it was headed. This set of information is what will contribute most to your administrative choices over time.

6. Organize the physical space of your workshop

A good storage of stocks, as well as the arrangement of goods, also considerably affects the efficiency of proper inventory management, as well as the daily productivity of the team. After all, if the items aren’t well organized within the store, the mechanics are likely to be unable to find a part they need in the midst of the chaos.

Using a very clear outline to define where to place each piece will go a long way in guiding the team. And of course, having some signage is also essential. Do not leave this environment dirty, do not stack boxes on delivery boxes or store products in highly exposed places. In addition to making everyday work difficult, it can also damage parts before they are used.

7. Be rigorous in controlling inputs and outputs

Has it ever happened that one (or more) customers went to your workshop looking for a part and couldn’t find it because it wasn’t in stock? Or have a full stock of a particular product but no requests? These two situations are the result of poor inventory management, in which there was no effective control of the incoming and outgoing goods.

Therefore, we have found that stock directly affects the success of your sales. For this reason, in addition to recording inputs and outputs, as we have already said, it is necessary to be rigorous in this control. When you do that, you have the following benefits:

• greater visibility of what goes in and out;
• increased security of stocks;
• waste reduction;
• development of more efficient purchasing strategies;
• compliance with delivery times.

To check your inventory inputs and outputs, you need to:

1. identify all items in your warehouse;
2. establish a standard for recording deliveries in your system;
3. create periodic inventories to verify that the physical inventory matches that of the system – losses resulting from theft, damage, expired products and errors in the system must be considered;
4. integrate with suppliers of your workshop;
5. rely on the help of software;
6. train your employees.

By following this step by step, it is easier to keep track of inputs and outputs, as well as significantly reducing the chances of failures affecting your sales.

8. Consider seasonality when shopping

All the tips presented in this article are intended to help you organize and keep your inventory on the go. In this sense, making your purchases considering the seasonal periods is essential to avoid two extremes that we have already mentioned in other tips: empty stock or full stock.

Both bring negative results to your business, as full stock is a sign of stuck money and lack of product is seen as lost sales. Therefore, when forecasting your sales, you can determine the quantity of goods that will be sufficient to meet the demand.

To make this projection accurately and efficiently, you need to carefully analyze the entire sales history of the company. Thus, periods of higher demand and periods of low demand can be identified. In that case, once again, using ERP software makes a difference.

This is because the integrated system allows you to identify in a practical and efficient way the parts with the highest turnover. This contributes to the preventive replacement of each product.

Interestingly, efficient inventory management goes far beyond understanding the importance of demand projections. To obtain a satisfactory result it is necessary to search for solutions on a daily basis in order to avoid errors and failures in their management.

9. Avoid excessive shopping

Another common mistake that can make inventory management of auto parts and other items a nightmare is overstocking. It is important to have enough parts to satisfy any request, but if you go too far, the chances are that you will run out of space, with a lot of unused merchandise and a huge drain on your cash flow.

This error is often the result of other problems we have already mentioned, such as lack of registration or poor tracking of goods in and out of your auto shop < span>. It’s always important to adjust the size of your purchases to audience demand and market changes. Especially when your inventory doesn’t have free space.

10. Have management software

For its advantages, we mention throughout the text the importance of using software in inventory management. This is because, nowadays, the use of technology has become more and more necessary in the management of a company. So the sooner you implement this feature to help you and your team with the more bureaucratic and repetitive tasks of a company, the better.

After all, relying solely on the ledger is never a good idea to track a business efficiently. This is because it can be easily damaged or tampered with. Using management software, these weaknesses are easily accomplished. In addition, it offers advantages such as:

• process automation;
• optimization and operational efficiency;
• historical sales record;
• data security;
• planning more efficient;
• effective control of products;
• process standardization;
• driving the company’s growth.

While records can be freely consulted by multiple contributors, it will always be possible to see who made each change, what the change was and when it was recorded. Another great benefit is that the software can generate activity reports more quickly and accurately, minimizing the paperwork involved.

Through these tips, we realize how efficient inventory management of automotive parts and other items is essential to ensure the smooth running of your repair shop. While keeping everything in order is a challenge, good returns can be achieved when the right measures are applied. So, don’t forget to put any of these tips into practice, okay?

 

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Workshop inventory management: 10 steps to success

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