Keeping parts profitable, not problematic

Jan. 1, 2020
For years we’ve used a hardware, clips and specialty-item inventory, scan and invoicing system. When technicians need items, they have access to an area where we maintain an inventory, and we use a scan tool to log information on what they use

Good systems and procedures will prevent bottlenecks.

One of the things we've been focusing on at our shop in recent months is reducing headaches — and hopefully increasing profits — regarding parts. For shops larger than ours — we have nine employees — a full-time parts manager likely becomes not only more cost-effective but nearly required. But for now, like at a lot of shops, responsibilities regarding parts get divided up among a number of us. That's made good systems and procedures all the more important. Much of what we do will work for any size shop, whether or not they have a parts manager.

Here are a few of the things we do to try to keep the parts side of our business organized and profitable.

  • In a column two years ago (see June 2005 ABRN), I explained that we mark on the parts order form from our estimating system for each job to indicate which parts have been ordered and to indicate any expected delays. We also note any supplemental parts we suspect will be needed once the vehicle arrives. That form gets stored in the plastic job file jacket we maintain for each job.

When a parts invoice for that job arrives, we date stamp it (which comes in handy when insurers have questions about when parts were delivered), and check off the parts on the order form that have been received (confirming parts numbers and prices). We also write an "S" (to indicate a supplement item) on the invoice next to any parts price changes. Again, this ensures that all the information needed for a supplement or final bill is in the job file jacket. A large difference in price also prompts us to check the part itself to make sure we received what is needed.

This system makes it easy to see at a glance on the parts order form which, if any, parts have not yet arrived.

  • Fasteners and other small parts have traditionally caused some of the biggest parts headaches. It's uncommon to forget to order a fender or to not be able to find it once it's in the shop. But clips and fasteners are easy to overlook, are often one-time use, and may not be needed until final assembly — usually the same day the vehicle is supposed to be delivered to the customer.

We've found a number of solutions that help. First, for years we've used a hardware, clips and specialty-item inventory, scan and invoicing system. When technicians need such items, they have access to a cabinet and storage area where we maintain an inventory, and use a scan tool to log information on what they use for each job. This system allows us to manage the inventory, but just as importantly, to print an invoice for these items for each job to make sure we receive appropriate reimbursement.

While I've seen such systems in many shops, a lot of shops don't take full advantage of the system by also assigning scan codes for additional items that aren't part of the system. Our technicians, for example, use the system to log tubes of seam sealer, structural adhesive, nozzles and other items needed for a job that might not otherwise get noted and billed for. Some shops have even taken it a step further by developing "kits" for different applications. For example, a "door skin replacement kit" would include all of the materials (such as grinding discs, sound deadener, seam sealer, etc.) needed to install the door skin.

  • We've probably all experienced having a tech come into the office on Friday afternoon to say that the belt molding clips that have been ordered and arrived are not the actual ones he needs. We try to get one of the clips that needs to be replaced into the job file jacket. This can help in ordering the correct part, and allows us to compare the new clips when they arrive with the old one — ideally at least a day or two before reassembly. It doesn't always happen, but having one of those sample clips in the jacket has helped us reduce those Friday afternoon scrambles.
  • More cars in the shop results in not only more parts in the shop — but, at least in our case, less room for those parts. That's led us to begin implementing a system I've seen used in other shops. It first requires all of our parts vendors to deliver parts labeled with at least our repair order number on the part, something our vendors have done for years. But in the past, we've asked delivery drivers just to try to keep all parts for an RO together on the shelving in our parts area.

More recently, we're working to set up a parts bin and rack system that is numbered 1 through 9. Delivery drivers will be asked to sort the parts into the proper section based on the last number of the repair order. We think we'll find, as the other shops we've talked to using the system, that this will help us more quickly locate the parts needed for a particular job.

  • If there's a part a technician ends up not needing, he places it in a "return rack" in the shop (we use a dry erase board in the parts area to list the parts vendors that have return parts to pick up) and informs the estimator so that adjustments can be made to the final billing. The estimator also marks a "0" on the invoice next to the part to indicate it was returned.
We created our own parts-return form to help us track return credits. It's a two-page, carbonless form that the parts driver signs when picking up returns; the driver takes one copy and the other goes into our accounts payable file so we can check to make sure we receive the credit on the next statement from that vendor. The "0" on the parts invoice also prompts the bookkeeper to make sure there's a parts return form in the files for that part.

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