Controlling Your Parts Investment

You could be considered one of my best customers. You frequently place orders and often visit our stores to spend even more money buying parts. The problem is, I know you are buying parts that you don’t have to, and I want to help.

A successful appliance repair company needs very few things to operate. All you need are customers, good staff and parts. I would be prepared to bet that you spend a fair bit of time managing how and where you find customers, as well as caring for their needs. It would be a safe bet that you also spend some time acquiring and fine tuning your technical skills as well. As for the third component in this equation – it is very often the most ignored, yet potentially the most expensive or lucrative consideration – your parts inventory.

When visiting with a customer, it becomes immediately apparent whether they have ever taken the time to understand the costs and the benefits of an accurate and controlled inventory. This includes shop stock, and of course the all important truck stock. When asked, the average tech I speak with will say they have from $6,000 to $10,000 on the truck, but they are not sure.

Other important information that is often not known includes:

– turnover on their stocked parts.

– first call complete ratio.

– cost of a service call.

– time spent driving to and from parts stores, and being in the store.

It is true that some numbers are harder to calculate than others, but the importance of completing that service call in one trip is universally agreed to as a key factor in profitability. Controlling your parts investment, because that is what it really is, will not guarantee every call will be completed the first trip out – but it will make a significant difference.

The $10,000 question is: How can I control it? I am not trained in inventory management. The answer is: Ask your parts supplier to help you.

Parts distributors today run very sophisticated operations. We are experts in inventory management and need you to succeed. We are not looking to load you up on stock and then hope you can manage it. Always willing to share information, as well as time to help you maintain an effective inventory, we want to be partners. Yes, we want to stock your trucks and shop. Yes, we will take parts back. Yes, we will offer specials on truck stock orders including special payment terms, as well as guaranteed stock rotation, in a reasonable timeframe. Yes we can, and want to help you.

Ideally you are operating a computerized business. If not, there are many off the shelf solutions as well as industry specific options available to you. Basic inventory control programs can be used to generate usage reports, list items a variety of ways (brand, vendor, pricing), split shop and truck stock and even place automatic re-orders when your stock is used. When linked, or integrated with your billing and accounting software, you can maintain accurate pricing and maximize profits. Your parts supplier can provide similar inventory information. Distributors commonly offer inventory reports and fast mover lists by brand, your particular company’s purchase history, geography, warranty use and more. Inventory management might just open your eyes to a world of potential savings and profit. How many times have you ordered that same part, and did not have one in your stock? Or worse yet, you did have one but did not know or could not find it.

Learn more about inventory management and other service management topics by attending the Appliance Service Training Institute, February 9-12, 2011, in sunny San Diego, CA. To see all the details and register for the event go to www.asti.us.

BY: Dennis Fraser

District Manager

Reliable Parts Ltd

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s