By Dean Devore | November 12, 2024 – Rural Lifestyle Dealer
Every year hundreds of dealers across the country engage in the process of checking the accuracy of their parts inventory. Many are planning that event right now using one of two different processes.
I know some dealers who don’t regularly check their inventory. There is no law saying “thou shalt count your parts.” It’s not in the Bible either, I checked. It is hard work, and you may wonder if you’ve made it better or worse. However, inventory accuracy has a huge impact on customer satisfaction, and your parts inventory is a large asset on the balance sheet. I highly recommend dealers check their inventory.
The most common process to check inventory accuracy is a Physical Inventory. It requires you to count every part in your inventory, during a short window of time, ideally when the business is not operating. Counting and correcting thousands of parts is a huge task. You end up working long hours and sometimes feel like you are spinning your wheels — all the while, knowing you are going to relive this experience in 12 months. I wish I had a nickel for every hour I’ve spent counting parts until late at night fueled only by cold pizza and caffeine.
There is an easier and better way to improve inventory accuracy than doing an annual Physical Inventory. Cycle Counting delivers better long-term results. By definition, Cycle Counting is checking small subsets of your inventory on a frequent basis.
Top Six Advantages to Cycle Counting
- No brutal event, no significant downtime.
- More time is available to identify the root cause of an inventory error. Simply correcting the count does not solve the problem. We must address the root cause.
- The discipline of checking more frequently builds competency in maintaining accuracy.
- The frequency and volume counted can fit your business and season.
- Statistically more likely to catch an error closer to the occurrence.
- Inventory Accuracy can be measured more frequently as a metric.