3 Fatal Mistakes in the Parts Department

The Parts Department is an area that requires decisions involving large investments of money.

The probability of error and of suffering monetary losses is high, but it is also true that these can be easily reduced if specific tools and strategies are used.

The biggest mistakes in the Parts Department are making too many emergency purchases to avoid out-of-stocks, buying without searching for inventory in other warehouses, and placing orders solely based on intuition.

There are several reports your DMS can provide that help prevent these errors and ensure efficient management of the Parts Department.

Mistake # 1: You’re Not Controlling Dead Inventory

If you don’t control your immobilized inventory you can easily make the mistake of buying parts that are already in stock but have low or no activity. Buying parts we don’t need only serves to increase our capital immobilized in the parts warehouse.

Solution: Parts Order Suggestions; Immobilized Parts Report

A DMS can provide sophisticated statistical analysis tools to help the Parts Manager make informed purchasing decisions. And a good stock report lets you know which parts are in a “dead” state so that you can offer promotions and special deals in order to sell them. This will increase sales and also reduce insurance, rent, and other costs.

Mistake # 2: High Percentage of Emergency Purchases

This is a common error that occurs when the Parts Department lacks strategic management: To avoid out-of-stocks and deliver parts on time, emergency orders are placed involving higher costs and lower margins.

Solution: History of Monthly and Annual Sales

The Parts Suggestion tool mentioned above also helps Parts Manager avoid emergency purchases. And good sales reports help the Parts Manager discover sales trends and learn the purchasing habits of customers, in order to make purchase decisions based on these data.

Mistake # 3: Lack of Control of Inventory in Other Deposits

What happens if we buy a part that we do not have in stock, but we may have in stock at another warehouse? As in the first error, we will be tying up capital. This may have a low impact if it is a high turnover part, but if it happens with expensive and slow-moving merchandise the problem is considerable.

Solution: Transfer Suggestions Report

This report recommends parts that should be moved between warehouses depending on the activity and the inventory levels of parts at each location.