Best Practices for Truck Parts Inventory Management

Effective parts inventory management is crucial for business profitability, and it’s often a balancing act. If you have too little inventory, you risk fleets taking their business elsewhere, but having too much inventory can cause cash-flow issues and eat into profits. With the right inventory management practices, you can ensure you have the appropriate parts available in the correct quantities at the right time. Here’s how:

Categorize and Prioritize Parts

Different parts move at varying rates and must be stocked at different levels. Classify parts into A, B and C categories to help determine how much of each is needed. In the trucking industry, A parts move quickly, C parts are the slowest and B parts fall somewhere in between. It’s important to review the categorization for prioritizing parts regularly. Parts that move quickly today can become obsolete tomorrow as fleets retire assets, purchase new ones, and their technology evolves.

Use your inventory management software’s demand forecasting function to better predict future product demand. Demand forecasting uses historical data and market conditions to predict what parts you’ll need to stock in the future. When determining inventory stocking levels, consider the supply chain and other problems that can limit your ability to get parts quickly and adjust your purchasing practices accordingly.

Have Accurate, Real-Time Data

Use a consistent method for identifying parts and make sure your part numbers match the vendor’s. One effective way to do this is to utilize Vehicle Maintenance Recording Standards (VMRS), which ensures your part numbers are consistent with industry standardization and makes it easier to source them.

In addition, make sure your records of how many parts you have on hand and those on order match what’s actually on your shelf and what’s listed on open purchase orders. Also, record the number of days each part was in stock, as that’ll help you with reordering at the proper time.

Use the 80/20 Rule

For most businesses, 80% of their profits come from 20% of their inventory. Make sure you are laser-focused on managing that 20% and stocking those parts at the right level. Your inventory management program can set minimum and maximum stocking levels for your parts and notify you when you need to reorder.

Track Sales, Including Lost Sales

It’s essential to understand how many of each item is selling and how often. Additionally, look at the seasonality of sales. If some parts sell better in the winter, increase stock levels during the winter months and reduce them when spring arrives.

Track the times when you needed a part for a repair or when a fleet customer wanted to order a part but you didn’t have it in stock. These are called lost sales and tracking them can help you adjust inventory to better match your customers’ needs.

Conduct Routine Audits

Regularly audit your inventory by physically counting it. This practice helps you know exactly what’s on your shelves, identifies obsolete parts, and uncovers any parts shortages.

Choose Your Partners Carefully

Strong relationships with the right suppliers can be a competitive advantage, so be selective when choosing vendors. You want suppliers who can offer parts at prices that allow you to profit without sacrificing quality. Establish clear and detailed return policies and make sure you understand and follow them.

Consider working with vendors who give you real-time access to their inventory levels and the location of parts. If you don’t have a part in stock, you could use this functionality to get it quickly from somewhere nearby and prevent the customer from going to another shop to complete the repair.

Deal With Obsolete Parts

Obsolete parts take up valuable space in your parts room — space that could be used for revenue-generating parts. If you find some, return them within the stated time frame of your vendor’s return policy. If you miss return deadlines and end up with parts sitting on the shelves unsold for months or years, consider lowering the selling price to get them off your shelf to make room for the needed parts. If necessary, sell the parts as scrap or dispose of them properly and write them off as a loss.

These best practices will ensure you satisfy customer demand by maintaining the appropriate variety and quantities of parts on your shelf.