Learning Zone

The impact of poor inventory management on fleets

By Ross Jephson
22 January 2021

Controlling parts and stock levels is an important part of fleet management  

We look at the proven approaches to having an effective parts management plan.

For fleets, poor inventory management processes waste time and money in several ways. With the costs of mechanical repairs increasing, addressing inventory management practices can reduce the risk of additional, unnecessary spend.

Ineffective inventory management can absorb capital that may have been better spent in other areas of your operation in addition to reducing productivity through increased downtime and which will have a negative effect on meeting customer service and satisfaction levels.

Are these issues apparent in your operation?

If so, it’s time to address poor inventory management practices with more effective programs and technologies.

Five signs of poor inventory management 

These five checkpoints are a good indication that your inventory management system needs some attention:

  • Rising part costs due to a lack of visibility and control over inventories.
  • Reduced workshop productivity through unnecessary time spent searching for parts.
  • Lower warranty recovery due to an inability to track coverage, leading to missed claims.
  • Reduced asset utilisation due to time spent searching for parts which increases downtime.
  • Declining customer satisfaction through delays to the delivery of goods and services.

Putting simple practices in place

It’s relatively easy to address poor inventory management practices and their consequences.

Follow these four tactical approaches to optimize you inventory management:

1. Organise your parts room 

When frequently used inventory is easy to access, workshop technicians can become more productive. Arranging inventory on shelves and bins so that components associated with systems, such as brakes and electrical items, can be located helps staff fill repair needs quickly. Good parts room housekeeping also helps identify slow-moving and obsolete parts that take up limited shelf space and raise inventory costs.

2. Improving visibility of parts inventory by creating cost-effective ordering and purchasing practices

Nothing reduces asset utilisation and impacts on customer service more than having maintenance or repair jobs delayed because the right parts are not in stock. By eliminating poor inventory management practices, the correct items and parts quantities are always available to meet maintenance and repair needs. Efficient inventory planning also promotes effective purchasing practices, reducing the need for those costly last-minute orders.

3. Train technicians and parts room staff to ensure adequate and effective inventory

When parts staff and technicians have the knowledge to recognise which parts are fast moving and need to be re-ordered more frequently, inventory needs can be met more effectively. Incorporating parts inventory topics into in-house training programs can help develop these skills. Nationally recognised parts management training courses are available to gain the skills and knowledge needed to successfully run a parts store.

Suppliers of fleet parts provide information that can help predict parts needs and establish effective ordering parameters to ensure adequate inventory. Along with details of your fleet’s previous purchases, an industry-wide view of parts usage can help compare quality, service life and costs among manufacturers. Parts vendors can provide integrations with purchasing systems that automate ordering – useful for when an emergency parts order is needed!

Streamlining inventory with software to reduce poor inventory management practices

There are numerous measurable benefits that come from using parts inventory management systems as part of an advanced fleet and asset information solution:

Automated inventory replenishment

This minimizes time-consuming administrative tasks as parts can be stocked based on usage and upcoming needs. Such software can also automate the purchase order process using pre-determined parameters.

 Software Integrations

Integrating your software ensures accuracy and reduces management time by seamlessly and automatically transferring parts information from repair orders for internal billing and for vendor returns and payments.

Parts management software

Linking data in warranty coverage for replacement parts improves processing and leads to a higher recovery rates for covered items.

Longer term, integrated parts management and asset history

Such systems can be a source of data on failures and usage trends, enabling much more informed vehicle, equipment and replacement parts purchasing decisions.

With a parts inventory management system, shop and technician productivity rises which reduces downtime for service events. This reduces maintenance costs alongside increasing customer service and satisfaction levels.

Inventory management isn’t just about cost, however, it’s also about profitability. Eliminating poor inventory management with an effective strategy will always have a positive impact on a fleets’ bottom line.

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