Database accuracy is an often-overlooked aspect of inventory management. It has been said that you can’t sell out of an empty basket. The same holds true when you or your potential customer don’t know what’s in your basket. How can you sell an item you don’t show as “In stock”? Also, whether your inventory is controlled by your in-house DMS (Dealership Management System) or an OEM (Original Equipment Manufacturer) managed inventory system, parts reordering still comes back to accuracy of receipting and reporting sales on the correct part. Having strong parts training can support database accuracy.
With the hectic schedules of many parts departments, parts may come in and be shelved but not receipted in the system. We find this quite often in parts depts. This can cause a number of issues. Counter staff may pick up parts from outside sources when they check the DMS system and parts do not show as “in stock”. Many times, a counterperson will confirm a part that shows 1 on hand to verify but tend not to bin check if Quantity on Hand (QOH) shows 0. This could result in a lost sale due to the customer can’t wait for the part. Let’s say the parts request comes from your shop. Whether the customer stays, makes a return visit or leaves not to return this results in lost productivity in the shop. If they don’t return, this represents not only a lost sale but also lost revenue in the repair shop. Outside customers that view dealer’s inventory through a locator system may acquire through another source if part shows “out of stock”. This can result in an un-necessary lost sale and possible lack of confidence from outside wholesale customers in dealers stocking inventory. The customer may just call someone else next time.
Incorrect posting of sales can create un-intended consequences in a dealer’s stocking inventory. For example: Part A is needed and given out but part B is actually billed. This has several effects on the inventory. Part A will not only fail to be re-ordered but sales history will be understated. Part A will no longer be able to be located in the inventory and appear it does not need to be reordered. This will affect future BSL (best stocking level) and life cycle of the part. What about Part B? Part B will still be on the shelf although no longer showing in inventory. This creates a data inaccuracy and triggers a reorder of an un-needed part which will create an overstock situation. This will overstate BSL of part B and possibly extend its lifecycle.
What if a part is handed out but is not billed? This will cause inaccuracy and another set of concerns. Obviously, this will represent lost revenue for the dealership since the part was purchased from the supplier and no money was received for part or markup. Aside from this, the future availability of this part will be affected. The part will show in inventory but no longer be “on hand” and not be available for a future sale. The unreported demand will keep the system from ordering another part and effect future stocking and BSL.
While database accuracy may never be 100%, there are many good practices that will maximize accuracy. Good housekeeping with making sure all parts are properly checked in, receipted and binned in a timely manner is a great start. There are many other great tools to assure success such as stock order audits and zero stock boards. Efforts spent on accuracy will be well rewarded in the long run.
ADMI teaches and implements proven best practices that will keep the database accurate throughout the years, from one physical inventory to the next. For more information contact us today.
By Anthony Tanner