Stock Rotation and Changes: the Importance in Inventory

Todays’ topic: stock rotation and changes. There are many ways to improve your parts investment. One of the easiest ways is by following some simple steps in your dealership parts training process, which should be included in every Parts Managers standard training. Another way would be to investigate your stock rotation and change processes. 

Anyone who has ever worked or shopped at a grocery store, has learned a little about stock rotation, putting the oldest product out in front of the new product, by checking the production dates. Just watch shoppers selecting milk in your local grocery store as they dig to the back for the “freshest” milk!  Google defines it as “the process of organizing inventory to mitigate stock loss caused by expiration or obsolescence.”   

In the automotive world we do not have many items with end dates, and most of our products do not have seasonal packaging. But the practice of putting the oldest parts in front of the more recently received items is still important. This helps to prevent obsolescence or parts that may no longer have return privileges. This is known as stock rotation. 

 When was the last time you ran a report of new part number changes in your Dealership Management System (DMS) after a price tape update? 

 Parts that have been replaced by newer numbers, that can be classified as, mix/with or replaced by changes, should be moved up front and sold first. Today’s electronic catalogs are constantly updated with the newest information. They often do not list the older Part Numbers after newer ones have been released. This can cause the parts with the older number to not be sold. They will eventually be reported as obsolete.  

For some manufacturers part number changes, only the last character(s) of the SKU is updated. The location of the part may be next to the original. Other manufacturers numbering systems change the prefix, or even the whole number and in many cases the older version of the SKU could be bins away, or even rows away. Therefore, it is important to use the Stock Rotation Process for part number changes. You also want to physically move the older number in front of any new stock. We recommend using a removable label to update the SKU information so you can easily find that the number has been updated.  

Today’s automotive inventory systems have sophisticated part number change programs. They can merge the prior sales history with the new SKU, update the on-hand quantities, and show prior part numbers. Some DMS’s even have the choice to use a delayed part number change. This allows you to hold the change until the old stock is depleted. In either case, it is important to rotate your stock and label parts that have been updated with newer SKU’s. Train everyone in your department to always sell the older merchandise first and prevent them from becoming tomorrow’s Idle Inventory! 

ADMI includes proper understanding and idle inventory mitigation and planning techniques in all its most basic dealer parts training programs. For help with perfecting your dealer parts operation processes, procedures, and inventory investment, contact us today.

By Jim Gillespie