April 23, 2013
Inventory management can be tricky.
Unless you sell beer and potato chips on Super Bowl Weekend, you never really know how many – or what kind – of anything you’re going to need at any given time.
Shelved inventory complicates cash flow.
Not enough inventory complicates customer service.
I’ve always tended to err on the side of “I’d rather have it and not need it than need it and not have it.”
However, that may not translate well for trucking parts, with literally thousands of components that can be ordered, which leaves the burden to bare as having what you need when your customers need it.
Most businesses combat overstock by only ordering high volumes of common parts. More niche and unique items are generally either special orders or ordered in low quantity.
Still, even with the best strategies, you can get stuck with the excess.
You may have read the article Monday about Surplus-Solutions.com, the website that helps dealerships and garages auction surplus parts.
They also help fill downtime in the maintenance shop.
If carefully managed, the two can go hand in hand.
If I have an excess of Item X, I want to find a way to get those parts on trucks.
For the purposes of discussion, let’s say my surplus is radiator hoses.
And let’s say Tuesday from 9 a.m. and 1 p.m., my service department is pretty dead.
On Tuesdays from 9 a.m. to 1 p.m., my shop is going to offer a discounted radiator inspection.
On one hand, I can generate a few extra bucks. I’m charging for the inspection and for any fluids I may change or flush.
My guys would be there anyway, so I may as well keep them busy.
Remember, even if you charge your base cost, you’re creating cash flow because the employees would be there regardless.
As part of the radiator inspection, of course, I look at the hoses. Some of them are bound to need replacing, so I have created an opportunity to move some excess inventory at a respectable margin.
Whatever your surplus parts are, they are most certainly a wearable part. And every service shop has a few hours in the week that are slower than others.
Make the two work hand in hand by offering inspection and replacement services at a discount to move the parts.
In offering the discounts, you will likely hit a previously untapped market; the cost conscious driver.
Some advertising cost likely should be built into your developmental plans, but considering the average cost of repair – and considering this venture generates cash that is 100 percent “gravy” – it shouldn’t be an excessive drag on profitability.
If reputation and cost savings are on your side, a boon in business is likely soon to follow.
Jason Cannon is Online Managing Editor for Truck Parts & Service. Follow him on twitter at @By_Jason_Cannon.