Keep Your Parts Inventory Safe

After owning my Chevy dealership for only a couple of months (purchased after I retired from the corporate world), I had my parts department staff take a complete inventory. Much to my surprise and dismay, there had been significant slippage in the total inventory value. It was worth quite a bit less than it should have been.

A few months earlier, during the process of buying the dealership, I had arranged for some auto parts professionals (parts department personnel from a couple of nearby Chevy dealers) to do a complete inventory of the parts department. I wanted to know exactly what I was paying for. It proved to be a good thing, too, as the actual value of the inventory was considerably less than what the selling dealer had listed on his books. And we learned there were a number of obsolete and slow-moving parts that the pros recommended I not only exclude from the dealership overall purchase price, but consider pitching out. Based on their input and reduced parts inventory value, the overall purchase price of the dealership was reduced to reflect this difference.

Now, just a few months later, the inventory value was again dramatically lower. Furthering my concerns, the parts manager reported in a staff meeting that when he or his team would go to pull some parts for over-the-counter sales or in-house service work, sometimes the items were not there even though the computer listed them as available. I decided then to start a quiet but intense investigation to see why the parts inventory dollars were not what they should be and why parts were missing when the computer inventory showed them in stock.

I met with the parts department manager to find out why he thought the parts inventory was shrinking. I learned that when the parts department staff was busy, the parts manager was allowing technicians to pick out the parts they needed for service jobs. After learning this, I met with the Service manager and found out that he was aware of the practice and assumed it had my approval since the previous owner had allowed it.

Needless to say, this was not a good business practice, but rather than put an immediate stop to letting technicians go pick out the parts they needed for a repair, I asked both the parts manager and service manager to begin to quietly keep a close eye on which technicians were going into the parts department and getting parts and then find out which repair order they were billed on. With some investigation, we soon learned that one of the technicians was doing some auto service on the side out of his own garage, and we discovered that he was stealing parts for these jobs from my parts inventory whenever he had the opportunity.

The guilty technician was let go, and he was lucky I didn’t have him arrested. I might have, except his father was a good man who had worked for 30 years for my Dad. Out of respect for him, I didn’t have his son busted. But he did get fired. And after he was fired, some of the other technicians then revealed they had suspected that he was stealing but were reluctant to say anything.

Do not ever let your technicians pick their own parts, even if they are totally honest. I found that even the honest technicians, the ones who would never consider stealing parts, often forgot to report that they had pulled some parts for a repair, the part numbers and quantities so an entry could be made in the computer and on the RO. Once we found out the culprit for the parts shrinkage, new procedures were then put in place. From that point on, all parts needed by technicians for service work had to be on an R.O. and picked and recorded only by one of the parts department staff. No big surprise, but the next parts inventory that we took showed no mysterious shrinkage. If you don’t have such a procedure at your dealership, consider implementing one right away.

About Ben H. Sherwood

Ben H. Sherwood is a marine industry veteran and a marketing consultant who operates Sherwood Marine Marketing in Pleasant Prairie, Wis. For more info, click About on the main menu.

One thought on “Keep Your Parts Inventory Safe

  1. Ben: Your suggestions should allready be SOP for any marine business that wants to survive and make a profit. Parts & accessories income can be a valuable profit center, especially during a downturn, but it MUST be properly managed.
    Best, Ed Lofgren 3A Marine Service/Hingham, Ma.

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