For Parts Managers, it can be difficult to keep in mind both a sales and investment perspective on parts. In the day to day, immediate demand trumps all else- sometimes resulting in an overall inventory that is sluggish, overstocked, and lacking in width. Here’s how comparing Months-No-Sale and Months-No-Receipt can allow you to better manage your inventory and avoid overstocking parts that take up valuable shelf-space and capital.
How overstocking happens
Imagine this scenario: you stock a filter that you sell 12 times per year- once a month. Your current on hand is zero (0). Now, your Manufacturer is offering a 10% discount from Dealer Net if you purchase 60 (5 cases). You make the purchase to get the discount, hoping demand might increase. Demand doesn’t change, and you continue to sell one filter per month. You purchased a 5 year supply of this filter. Each month that you sell a filter, the remaining balance of the inventory value stays in the 0-3 Months No Sale Value Category but the remaining balance will continue to age in the Months No Receipt or Last Receipt Date category. At the end of 25 months, since the original purchase, you have 35 filters left. The balance of the 35 filters are in the 0-3 Month aging value. The balance of the 35 filters are in the 25 & Greater again value in Months No Receipt.
Why it matters
When looking at the Months-No-Sale report, it’s natural to think your stock is healthy and active- but if you compare it to Months-No-Receipt you may find you’re grossly overstocked on many parts- and dragging down your overall inventory health and profits because of it. When parts are overstocked, valuable capital gets frozen, shelves get messy and full, and it becomes unnecessarily hard to support current demand. This kind of overstocking also negatively impacts inventory turn rates and excess inventory numbers.
For detailed examples of comparing these two reports, check out our free Sales vs Receipts ebook. If you have any questions about these reports, be sure to send us a message!PartsEdge is the powertool for your parts inventory and was designed by a Parts Manager and a DMS specialist who saw the gap between the demands on Parts Managers’ and the lack of resources to get everything done. PartsEdge saves Parts Managers hundreds of hours each year by taking all the guesswork out of DMS management and sourcing setup and optimization and allowing them to focus on creating a successful operation. As a result, our clients see an average 20% drop in total inventory, 15% less idle inventory, a 50% increase in ROI, and a 20% increase in parts sales. If you’re ready to put our parts power-tool to work, send us a message! We’ve been helping dealerships for over 20 years and our testimonials speak for themselves.